Coal Production (2010-06-20 China Shen Hua analysis)

As I have mentioned, I would put my foucs more on Hong Kong stocks rather than international markets like forex and US stocks. Now I would try to do analysis the HSI components which are relatively safer but later I might switch to small stocks too (once I found my analysis becoming more accurate). However, the methodologies for these two categories are totally different. For big stocks with high volume, I would use more technical analysis. But for those small stocks with dollar or even cent-stock price, I would use candlestick reading instead.



So the above is daily chart for China Shen Hua (1088.HK) which is engaged in coal production and sales. It has dropped from 42 (in Jan) to 28 (in May), but we can see that the price is still well supported by the long-term uptrend line. This means that we can be optimistic to this stock as long as the support holds.

The price is now testing the resistance area of 30.8 - 31.4. The trial on Friday clearly failed and price falled back below 30.8. However, given my bullish view on HSI and global markets, Shen Hua would probably be given a great push to break this area and probably go straight to 33 which is the interception of the fibs and downtrend line. This is a major resistance and if it breaks, then just hold this stock for longer period as it might go as high 36 or even 42.