hk stock focus petrochina long term downtrend remains intact 2692972017

Medium-term technical outlook on PetroChina (HKG: 0857)

(Click to enlarge charts)

Key technical elements

• The recent year-long rally from January 2016 (coincided with the 26.05 low printed on the benchmark WTI crude oil) had stalled at the median line of a long-term bearish descending channel in place since April 2011 high (see weekly chart).
• The lower boundary (support) of the aforementioned long-term descending channel rests at 3.60/50 which is also defined by a Fibonacci projection cluster (see weekly chart).
• The recent price action has staged a bearish breakdown from a medium-term ascending channel support from January 2016 which suggested the year-long rally from January 2016 low of 4.16 is a corrective up move and the stock may now resume a bearish impulsive downleg within its long-term downtrend.
• Both the weekly and daily RSI oscillators remain bearish below their respective corresponding resistances. In addition, the daily RSI oscillator continues to inch downwards  below the 50% level without any prior bullish divergence signal. These observations suggest that medium-term downside momentum of price action remains intact.
• The key medium-term resistance stands at 5.65 which is defined by the pull-back support of the former broken ascending channel support and the former swing low area of 10 March/07 April 2017.

Key levels (1 to 3 months)

Intermediate resistance: 5.40

Pivot (key resistance): 5.65

Supports: 4.81 & 4.16

Next resistance: 6.50

Conclusion

Therefore, as long as the 5.65 pivotal resistance is not surpassed, PetroChina is likely to see further potential downside pressure for a decline to retest 4.81 before 4.16 (January 2016 low).

On the other hand, a clearance above 5.65 may negate the preferred bearish bias for a squeeze up towards the next resistance at 6.50 (median line of the long-term bearish descending channel).

Charts are from eSignal

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