Capitaland: 20wMA, the resistance to watch.

Quite a few people asked me what do I think of Capitaland as I have not said anything about it in a while. Well, if we look at the weekly chart, it is obvious that the downtrend is intact.

However, the higher low on the MACD which accompanies the lower low in price gives us a positive divergence. Being in the weekly chart, it suggests that we could see a recovery in price eventually.

A recovery could meet with resistance provided by the declining 20wMA. If we notice, this MA has functioned as resistance since late October 2010. Yes, Capitaland's downtrend has gone on for more than a year.

The 20wMA is important because:

1. For traders, this is where they would probably sell.

2. If the 20wMA holds as resistance, price would probably form a lower high and continue to move lower.

3. If the 20wMA breaks and price moves higher on the back of increased volume, the downtrend could be broken and it might even reverse. Short covering could push price even higher.

What would I do? Sell at resistance at least partially. It is never wrong to take profit, especially in uncertain times such as now.

Hyflux: Early stage of trend reversal?

I was going to blog about Hyflux last night but I got home rather late. Anyway, Hyflux's share price has been rather bouyant. Immediate resistance at $1.28 is a relatively weak one but it does not mean that it cannot prevent price from going higher.

People sometimes ask me how do I tell if a resistance or support is weak or strong. If it was tested many times before, it is strong. If it was tested many times before in the weekly chart, it is even stronger. It is stronger if it had not been compromised when tested in the recent past. Of course, there is an element of subjectivity here and these are just my little ideas.

Yesterday, a white candle with a long upper wick was formed as price closed at $1.27 after touching a high of $1.30. Volume was relatively high but the long upper wick suggests some selling pressure was present as traders locked in gains.

MACD is still rising in positive territory which suggests that there is positive buying momentum. The lower trading volume in the first two hours of the current session suggests a possibly less exuberant Mr. Market. So, do I sell? I could do so and book a gain.

However, I see that the declining 50dMA has acted as support. It is currently at $1.215. The 20dMA has turned up a few sessions ago and looks like it could form a golden cross with the 50dMA in time. So, with immediate support at $1.215 and with the MACD rising, there is a chance that price could go higher, given some time.

In the weekly chart, it is worth noting that the MACD has turned up and completed a bullish crossover with the signal line. However, it is still in negative territory. So, momentum is still negative in the longer term and any upward movement in price could be fraught with obstacles. Having said this, the development in the weekly chart suggests that selling pressure has eased and could see investors loading up at supports with less trepidation.

A higher high could see resistance provided by the declining 100dMA tested. This is at $1.39. Before that, we might see gap filling at $1.365. For anyone who is in the money, a partial divestment to lock in some gains could be considered. For anyone who would like to add to his long position, buying as close to the support of $1.215 as possible would be nice.

P.S. I am unable to include charts in this blog post. I might do it later this evening at home. Of course, the charts could look different by the close of today's session.

Daily Chart:

Weekly Chart: