As observed, the negative divergence seen in the charts 2 weeks ago has manifested as the bearish event that happened last week. The index took a dive but was able to recover on the last trading day.
The white candle that was formed last Friday seems to have some backing of the bullish traders because the value turnover for that day was almost as high as the value turnover on Thursday.
With regards to area patterns, we can see that the recent bearish activity broke the standing support line that was formed since the start of the year. That line can be interpreted as the lower line of an upwards channel which has a target level near 4550.
Now considering that the recent bearish activity broke the support line, it is possible that the continued “bullishness” last Friday is just a return move to the support-turned resistance line. One thing to observe for the coming week, is if the index can rise above that support-turned resistance line.
Also, be on the lookout for the impending small head and shoulder formation. It is possible that the return move might not be able to go above the resistance line and might turn into the right shoulder of the head and shoulder formation.
For next week, if you would try to take advantage of the “bullishness” that started last Friday, do dispose all of your positions IF the index is unable to move above the resistance line. If that occurs, that is a definite sign of weakness for the index.
As I have posted last December, for those who would like to go long on a stock, CEB is one stock that you could put in your long term hold list. As of last Friday, this stock was able to create a new higher low, which means, this stock is now slowly moving its way back to the trader’s list of buy items.
Looking at the white candles formed, we can clearly see that volume is significant, which means there is a growing demand for this stock. So if you would like to take advantage of this stock while in its early stages of growth, now is the time to do that, provided that you are willing to go long. Coming from a downward trend for more than 1 year, you definitely would not see this stock immediately skyrocket with its price. There will be a sideways movement before this stock starts to trend upwards, that is why this stock is only for those who can hold this for the long term. But definitely, your waiting will be rewarded later on.
ABS (Chart: Daily Resistance: 34.60 Support: 32.32/30.30)
Looks like there is renewed interest for ABS. Coming from a downward trend for more than a year; this stock has started the year right by creating a new higher low, which means it is now slowly recovering from the bearish trend.
Seeing the volume on white candles formed in the past 2 weeks, I can say that like CEB, this stock is now slowly making its way to trader’s buy list.
As of the moment, the bullishness of this stock is stopped by the resistance line at 34.60. RSI is very much overbought so expect that the resistance line would hold its ground and the stock would start going down this week, which would probably give you an opportunity to buy this stock between 31-32 price levels (or lower).
Observe by next week if the stock would be able to again create a new higher low, which is a further confirmation of the stock’s recovery.
If this stock remains bullish by next week and breaks the resistance line, the target level of the breakout of the channel area pattern would be near 39.
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