CIMB’s share price may trade higher after the strong move just above the support level yesterday. After rebounding close to our upside target highlighted in our previous report, the stock has finally succumbed to selling pressure. In fact, it is one of the market underperformer in the past one month and it even printed a fresh 1-year low on Wednesday. However, sentiment may change after the strong close yesterday, forming a “Bullish Engulfing” candle, which usually precedes a rebound. This shows that the price is responding positively to the support of the September low, which is also the low of May 2010. It is also backed by the bullish positive divergence of the daily RSI. As such, purchase can be made above RM6.56 with a stop on close below the psychological RM6.50. The first target is RM7.15, which is the low of 20 Oct, although a rebound of up to 50% of the June-Sept decline at RM7.77, also the 9 Aug low, can be reasonably expected should RM7.50 be broken. However, the share price may trade lower if RM6.50 is broken and the stock may trade as low as RM6.00, a 50% retracement of the 2008-2011 rally and also the 2007 high.
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