Capitaland: Technical analysis can be simple.

Some readers asked me if I could teach them technical analysis. I have always declined, saying that it is easy enough to pick up. There are many good books out there and many good websites where one could pick up technical analysis.

Technical analysis can be quite simple. For example, this weekly chart for Capitaland shows the MACD rising in a wavelike pattern into positive territory. This means that longer term momentum has turned positive. It is also quite clear that price action broke out of a base formation and has seen a reversal in trend.

Now, does technical analysis tell us if the price would continue to rise or fall? I would be hesitant to say "yes". Technical analysis shows us resistance and supports. It shows us the probability of something happening but never certainty.

In this instance, technical analysis tells us that there is probably resistance at $3.25 in the event that the share price continues to rise. It also tells us that immediate support is probably at $2.75 in case of a pull back. $2.75 is the top of a double bottom formation and it is also where the 50w MA has flatlined. It is also where the rising 20w MA could form a golden cross with the 50w MA in the coming weeks.

Anyone who is thinking of going long would probably be happy doing so in case of a pull back to $2.75 thereabouts while anyone thinking of selling could do so at $3.25. Simple enough? Just don't think of technical analysis as the Holy Grail.

CapitaMalls Asia: Going XD on 23 April.

CapitaMalls Asia is paying 1.5c dividend per share on 9 May. It will go XD on 23 April.

What is termed as a true golden cross is going to transpire in the daily chart. This is when the 100d MA forms a bullish crossover with the 200d MA. This is usually an indication that the downtrend is well and truly behind us and any pull back to support is an opportunity to add to or initiate long positions.

A pull back could well happen. The rising price in recent session has not been accompanied by higher volumes. Indeed, the MACD might see a lower high forming, signalling a weakening positive momentum. In fact, a negative divergence could form.

We could see price pulling back initially to the support provided by the 20d MA at $1.56 and perhaps even $1.455. However, bear in mind that in rather bullish circumstances, we could see price moving sideways, doing a correction using time. In an uptrend, a sideway movement is more bullish than bearish.

A successful breakout would see the first upside target at $1.83.

Related post:
CapitaMalls Asia: Net profit up 42.6%.