City Developments - Positive breakout from key resistance could mean further upside potential

City Development could see further upside potential after breaking above both the 30-day and 50-day MA and the S$8.56 key support-turned- resistance level via the formation of a breakaway gap on heavy volume.

With the RSI indicating a bullish divergence to the price action over the last 3 weeks and the MACD exhibiting a sharp bullish crossover yesterday, they suggest that the downside momentum might have waned.

A technical correction to retest the S$8.56 resistance-turned-support level is likely but a successful retest at this support could confirm and form a base for the next leg of recovery.

However, should the 30-day MA cross under the 50-day MA, this breakout could be a false one.

But should it be confirmed, we expect the stock to test the initial resistance at S$9.75 (support-turned-resistance level and 2-year downtrend line), breaking which, the next resistance is at S$10.70 (minor peaks in Aug ‘08).

Beyond the key S$8.56 support, the next support could be found at S$7.80 (minor troughs in May and Jul ‘09).

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