When to start cropping? (2011-04-06 1288.HK analysis)

Hang Seng Index surged 1.46% on Monday, breaking the red resistance I mentioned in previous post. Now we would have to see whether the index could stay still above the line or not.

Today I am going to talk about 1288.HK Agricultural Bank of China (ABC). It is currently facing a big difficulty.

Daily chart of 1288.HK:


Agricultural Bank of China had its IPO only in July last year, and had surged over 30% in a few months. However, due to the poor market atmosphere, it dropped over 50% since the high.

In past two months, ABC was gaining along the green up-trend line. It did test the line for a few times but the up-trend line appeared to be strong enough to keep its bullish trend.

We could see that in last three trading days, ABC had a crazy rise and finally, it got back to its previous high.

This is the difficulty ABC facing now; the horizontal line is actually very strong. Besides the fact that it is the previous high, this level is also the 261.8%-fibs level, using the starting of the bullish trend as 0% and the first crest it reached. Both contribute to the selling power and hence ABC has high chance to retreat.

MACD almost reaches it all-time high and should start to fade a bit. Volume is not that high enough to break such a strong resistant too.

I expect ABC would fall, and start to consolidate between the green up-trend line and the horizontal line. There will be a support at around 4.3.

Then it might break the previous high and record a new high. The resistance above it would be at around 4.73 predicted using fibs retracement shown in red. If ABC breaks 4.51, it would be time to buy.