269314 2693142017

Since our last analysis dated on 06 December 2016, Bank of China (HKG: 3988) had rallied as expected and met our first upside target/resistance of 3.88/91 (printed a high of 4.08 on 16 February 2017) before it staged a 11% pull-back (click here for a recap).

Now, let’s us examine its latest technical elements.

Medium-term technical outlook on Bank of China (HKG: 3988)

(Click to enlarge charts)

Key technical elements

• Since its 24 June 2016 low of 2.90, the medium-term multi-month uptrend for Bank of China remains intact as it continues to evolve within a bullish ascending channel. The upper boundary of the ascending channel now stands at 4.25/4.36 which also confluences with the former congestion range support seen between 19 Jan/10 Mar 2015 before a steep decline of 33% occurred that led to it to print a low of 2.83 in February 2016 and also a Fibonacci cluster (see weekly & daily charts).
• The key medium-term support now rests at 3.79/72 which is defined by the pull-back support of the former broken descending trendlline resistance from 16 February 2017 high and the lower boundary of the aforementioned ascending channel (see daily chart).
• The daily RSI oscillator remains bullish above its corresponding support at the 53% level. In addition, it still has room for further potential upside before it reaches an extreme overbought level of 86% since 10 April 2015 that has led to major swing high of 5.68 seen on 28 April 2016. These observations suggest that medium-term upside momentum of price action remains intact.

Key levels (1 to 3 months)

Pivot (key support): 3.79/72

Resistances: 4.08 & 4.25/4.36

Next support: 3.30

Conclusion

Therefore, as long as the 3.79/72 pivotal support holds, Bank of China is likely to shape another upleg to retest its intermediate resistance at 4.08 (16 Feb 2017 high) before targeting 4.25/4.36 next.

However, failure to hold above 3.79/72 may damage the medium-term uptrend to trigger a correction towards the next support at 3.30 (former congestion range top from 14 Apr/08 Jun 2016 & the 61.8% Fibonacci retracement of the up move from 12 February 2016 low to 16 February 2017 high).

Charts are 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.