China Shenhua (1088-hk): No Signs of Stabilizing

China Shenhua reported that commercial coal production fell 0.4% on year to 24.7 million tons in May and sales were down 10.1% to 37.2 million tons...

Downtrend 2

China Shenhua (1088-hk), a top Chinese coal miner, reported that commercial coal production fell 0.4% on year to 24.7 million tons in May and sales were down 10.1% to 37.2 million tons. For the first five months of the year, production grew 0.9% to 121 million tons and sales rose 1.2% to 167 million tons.

In April, the company announced a 22% decline in 1Q net income, following a 5.5% drop last year. Its share price has been trending lower since the beginning of 2018, as its earnings results have repeatedly disappointed investors.

From a technical point of view, China Shenhua shows no signs of stabilizing as shown on the daily chart. It keeps trading within a long term bearish channel drawn from the January 2018. In fact, it has recently formed a double-top bottom pattern and is threatening the neckline. Bearish investors might consider $13.48 as the nearest resistance, while a break below the nearest support at $11.96 would open a path to the next support at $10.72. Alternatively, above $13.48, prices are likely to rebound to challenge the next resistance at $14.18.

Source: TradingView, Gain Capital

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