HK Stock Focus Potential bullish breakout in BYD

Medium-term technical outlook (1-3months) on BYD Company (HKG: 1211)

Key technical elements

The 27% decline from its recent 06 Oct 2017 swing high area of 81.80 has managed to stall at a 61.45 major pull-back support of a former ascending range resistance that has been taken out on 15 Sep 2017. Interestingly, the aforementioned decline has taken the form of “bullish flag” formation which represents a retracement of the steep rally seen after the bullish breakout on 15 Sep 2017. This “bullish flag” formation tends to represent a potential continuation of its prior up move after the break of the upper limit of the “flag” which is now acting as a near-term resistance at 72.50.
Another the positive sign is that today’s (12 Jan) push up from its minor swing low of 11 Jan 2018 has tested the upper limit of the “flag” with a higher volume from its previous 3-day average volume which indicates an increase in demand. In addition, the daily RSI oscillator has staged a presignal bullish breakout from its corresponding descending resistance which suggests a revival of medium-term upside momentum of price action.
The next significant medium-term resistance stands at the 88.40/92.50 zone which is defined by the major swing high area of Oct 2009 and a Fibonacci projection cluster.

Key levels (1 to 3 months)

Intermediate support: 67.00

Pivot (key support): 61.45

Resistances: 72.50, 81.80 & 88.40/92.50

Next supports: 56.95 & 52.00

Conclusion

Therefore as long as the 61.45 key medium-term pivotal support holds and a break above 72.50 is likely to reinforce the start of potential impulsive upleg to retest 81.80 (06 Oct 2017 swing high) to target the next resistance at the 88.40/92.50 zone.

On the hand, failure to hold above 61.45 should invalidate the bullish scenario to trigger an extension of the corrective decline towards the next supports at 56.95 follow by 52.00 (major ascending range support from Feb 2015).

Chart is from eSignal

Disclaimer

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs. While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments. City Index recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets. It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com.au, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. GAIN Capital Australia Pty Ltd (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

City Index is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.