Yangzijiang topped?

Hi everyone,

I have an analysis of Yangzijiang, BS6.SI, for today.

After a dizzying 500% climb from October of 2008, Yangzijiang’s share price has been sliding around over the past few months. Below, I have weekly charts of Yangzijiang – one is a price chart, and the other is a chart of indicators.

Yangzijiang made new highs throughout 2009 and 2010, and that formed an upward parallel channel on the chart. I recall wanting to post a chart of Yangzijiang last year, seeing how strong the trend Yangzijiang was in. For some reason, I did not get it here; and thankfully I did not. Right now, it does seem like Yangzijiang has made a top at the $2.00 region. The indicators were painting a – rightful – bullish picture while Yangzijiang kept going up and up. Thumbs up for the indicators there. I will show you all some indicators below. Click on the chart to read the annotations.

 

Now, the upward channel has been violated towards the downside, so it shall be history. The latest chart pattern I have identified is the opposite of the upward channel – a downward parallel channel. It is a possibility that after such a run-up, Yangzijiang may be in a small correction phase. Those who like using wave theories on their charts may consider this retracement as Yangzijiang taking a breather before the next leg upwards. I am not too well-versed with wave identification; whether it be Dow theory, Elliot Waves, Gann Waves, just to name a few. For me, I take the downward channel that I identified as a bearish pattern, and so I will hold a bearish view on Yangzijiang.

I do not like how Yangzijiang has crossed below the 200-day MA. That is a bearish indication. Also, the 50-day MA has just crossed below the 200-day MA. If you were to refer to the chart on the indicators again, you will see bearish crossovers all over the place. These are indicative of a downtrend in place. Typically, I will look for a chart pattern that gives me confidence that a stock has topped. In this case, parallel channels do not tell us tops and bottoms very well. So, I do not have a specific downward target for Yangzijiang. I have included fibonacci retrcements to help me out here. 38.2% is the level closes to price now, so in the next few months I will be looking for Yangzijiang to continue downwards and test $1.38. However, do not be surprised if a mini rally northwards ensues. Price is at the bottom of the channel I identified, so there is also a possibility for a technical rebound.

Let’s see how this goes.

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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