China Milk Products Group may see more near-term upside in the days ahead following the double formation of a tweezers bottom and the harami pattern at the intersection of its 2.5-month uptrend line and key resistance- turned support level.
With both the RSI and MFI indicators signaling a rebound at the oversold level and the ROC indicator on the brink of a positive crossover following its recent sharp bullish reversal, these seem to support bargain hunting after the recent steep 2-week correction of 22%.
We expect the rebound to meet an initial resistance at $0.595 (1-year downtrend line and Oct ’08 high), breaking which, the next key resistance is at $0.715 (minor peaks in Jul – Aug ‘08)
Immediate support is meanwhile pegged at $0.445 (2.5-month uptrend line and key resistance-turned-support level), ahead of $0.36 (minor trough in Apr ‘09).
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