Above is the daily chart of Dragon Hill Wuling Automobile Holdings Ltd (0305.HK), which is a small-cap stock priced 1.09 currently.
Yesterday this stock surged 5.83% which caught my attention. I analyzed it and found somehow interesting result.
From the chart, we could see that starting from mid-March, the stock price has been rising from 0.87 to around 1.16 in early-April. Then a double top was formed.
Last week, led by the poor markets, 0305.HK dropped below trough level. We might have thought about shorting the stock at this point; however, yesterday it managed to get back above this level which showed a potential bullish signal.
The price is still been limited by the 20day Simple Moving Average. If it breaks this resistance, we could expect it to reach 1.16 without difficulty, which is around 5% rise.
Of course we are not looking for such a little gain. Therefore, we have to observe whether the buying-power is strong enough to break the double top level as well.
If so, 1.30 is expected. This level would be the next resistance.
Tracing back in the past (late October), the stock blew off from around 0.65 to 1.6, which was around 146% surge. Interestingly, the price stopped rising there and started sliding down, but I think that there was no obvious evidence on distribution stage.
Therefore, another blow-off might happen again. Let's just put this stock in our watch-list.
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