Strategy for short-term trading on CSCL (2011-02-24 2866.HK)

2011-2012 Budget announced a series of plan to help ease the property markets, leading the rise of stock prices of property companies. I have made wrong predictions yesterday but TA on the chart will not lie.

Today I am gonna post my analysis on one of the shipping companies: CSCL (2866.HK). It appears to be quite attrative to buy this stock, anticipating a bounce of around 10% in short term.

Daily chart of 2866.HK:


I have identified a long-term up-trend line shown in red. Stock price has never been below this line since the low in May 2010.

This line can be treated as a very powerful support. Stock price touching this line can somehow be expected to bounce.

Price of CSCL now is 3.4, it still hasn't intercepted with the uptrend line. The support is at around 3.30.

MACD just dropped through 0-level, and there won't be much obstacle to the bounce due to momentum of the stock price.

Therefore, when the stock price hits 3.30, it is definitely a buy signal. The upside resistance is at around 3.60, which is around 10% of profit. Of course, you have to set your own stop loss point.

If you would like to buy it now, then stop loss point should be at just below the red trend-line. Upside target is the same, so it is around 6% profit and 4% loss, around 1:1 risk/reward ratio.