Thursday, July 30, 2009

China XLX - Bullish breakout suggests medium-term upside

Key resistance breached. Having been range-bound over the last 10 months, China XLX is likely to head higher in the medium term after breaking above the top boundary resistance at $0.48 yesterday on heavy volume.

More upside in the medium term. The MACD indicator has also just risen above the centerline following its recent bullish crossover, pointing to more upside possibilities in the weeks ahead.

Possible near term consolidation. However, as the RSI is currently showing heavily overbought signals, a consolidation could happen soon – we advocate accumulation as the counter heads back towards the new support base at $0.48.

Immediate resistance at $0.56. Beyond the immediate resistance at $0.56 (minor peaks in Aug and Sep ‘08), we expect the subsequent resistance to be at $0.68 (support-turned-resistance level).

Immediate support at $0.48. Immediate support is pegged at $0.48 (key resistance-turned-support level), ahead of $0.41 (resistance-turned-support level).

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