Jardine C&C - Potential breakout at key resistance

Jardine Cycle & Carriage could be poised for more upside in the weeks ahead. It has not only managed to break above its 1.5-year downtrend resistance line but also closed above the key resistance-turned-support level of $18.34 (last seen in early Apr ’08) on relatively high volume.

We note that the bullish breakout was accompanied by both the RSI and Accumulation/Distribution indicators rebounding off their near 4-month uptrend line recently. Coupled with 100-day MA crossing above the 200- day MA a few days ago, they seem to suggest a renewed strength in the uptrend momentum.

However, on a cautious note, we would advocate waiting for a successful retest of this resistance-turned-support level or the 1.5-year downtrend line, which should serve as confirmation of the breakout.

Immediate support is pegged at $18.00-$18.33 (key resistance-turned- support level), ahead of $16.49 (3.5-month uptrend line).

Should the breakout materialize, we expect an initial resistance at $20.28 (Apr ’08 high), breaking which, we see the next resistance at around $22.34 (minor peaks in Nov ’07 and Jan’08).

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