Wilmar’s chart – interesting scenario

Hello traders,

The January rally in equities has brought about quite a few interesting charts. Today I have Wilmar, which has a chart that seems to suggest both upside and downside. Baffling right? Let’s take a look

First up, take note of the general long-term downtrend Wilmar is in. Lower highs and lower lows give us a large downward parallel channel. The recent run up puts Wilmar close to the top of the channel. And, as chartist, that is a straightforward indication of sellers coming in soon. Also, if you take a look at some indicators, we are seeing a bearish divergence occuring. While price made a higher high, indicators did not follow, instead they made a lower high. This divergence is a bearish indication. Not all indicators are showing this bearish sign though, so it is not such a strong case from the indicators as a whole.

Now, if you look close at recent price action, you will see a familiar chart pattern. A cup and handle seems to be in the making. It is not confirmed yet, so we will have to wait and see. Looking at how property counters performed so well coming out of their cup and handles (see Capitaland), Wilmar and a few others may also break towards the upside. This is the baffling part. For me, I would prefer to respect the larger pattern – downward parallel channel – however, I must not ignore a current pattern if it can be found. So, trading-wise, we simply have to wait and see which side Wilmar will take.

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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One Trackback

  1. […] just as it hovered at the top of its large downward parallel channel. Compare the charts here, https://technicalanalysistalk.wordpress.com/2012/02/12/wilmars-chart-interesting-scenario/ , to the one I have below. Yes, strictly speaking, Wilmar did poke out of the channel. However, we […]

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