“Twice bitten, third try shy?”

Hello all,

Hope you all are having a good weekend. Recently this blog has reached a couple of milestones, statistics-wise. I would like to take this time to thank you all for your support in contributing comments and visiting this site. In business, they say consumer is king; in investing, cash is king; in blogging, readers are king. (Could not find a suitable word that started with the letter c!) I would not be here if you all readers do not keep coming back. So I appreciate the support that you all are giving me. I created this site as a way to hone my technical analysis skillset. How so? By posting publickly, I will “be urged” to be careful and thorough in my analysis of charts. My aim in starting this site was to show, anyone who cared to know, my brand of technical analysis; and to receive comments on my style – if it is negative, take it as constructive advise when I see it fit.

Moving on, I have watching Hong Leong Asia closely for the past week or so. My last post on HL Asia talked about a parallel channel, which is now invalid since price broke below the channel and has stayed below ever since. If you were to search for H22.SI on the search bar on the right side, you will see the past posts I have written on Hong Leong. In the chart below, you will see two patterns – an upward triangle, and a parallel channel.

Hong Leong broke out of its triangle, only to reverse the up move and make it a failed triangle. After that, I posted on Hong Leong being in oversold territory as it was hovering at the bottom of the parallel channel. The next day, Hong Leong gapped down and has never recovered. Re-looking at Hong Leong’s chart, I can see another pattern that encompasses both of the patterns shown in the chart above. Below, you will see a larger, symmetrical triangle. This triangle would be considered a confirmed pattern as I have a downward breakout. Volume behaviour confirms this as a valid, confirmed triangle. Taking the height of the triangle and projecting it from the point of breakout, I have a downward target of $2.50 for Hong Leong Asia. One look at the 50- and 200-day MAs will only reaffirm my bearish stance on Hong Leong for the short-run. Right now, I see a support level of $3.00-$3.05 as what is holding onto price right now. Any break below this support level should see Hong Leong hit its target.

So, will I be afraid Hong Leong will not go down to the target that is in place because of a triangle pattern despite a previous triangle failing? No, as a chartist, I take what I see on the chart. Even if a stock “defies technical logic”, I will still trust in what I see happening at present, and act accordingly, knowing that more times than not, I will succeed.

All analyses, recommendations, discussions and other information herein are published for general information. Readers should not rely solely on the information published on this blog and should seek independent financial advice prior to making any investment decision. The publisher accepts no liability for any loss whatsoever arising from any use of the information published herein.

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