As expected, BreadTalk has broke through its resistance at $0.65 and out of its ascending triangle formation albeit sooner than anticipated (refer to BreadTalk Challenging Resistance and the chart below).
This breakout has driven prices up. Prices are currently challenging the next resistance at $0.70 (refer to the chart below). When prices reached $0.70 previously, the 5-for-1 bonus shares issue caused prices to drop to $0.49 - an over-reaction by the market. Anyone who was braved enough then would have made a handsome profit by now. Also, anyone who entered at the 14 day moving average like I pointed out as a good entry point, would be sitting on some delightful paper profits now as well. Nonetheless, is there still room for the stock price to move up?
Well once again, we can see another ascending triangle formation. Any breakout would result most probably in another spurt. As mentioned in my last post on BreadTalk, volume is still very low. Previously I debated this low volume as either a weak push up or perhaps a lack of sellers as they hold the belief that the stock is more valuable than current prices. With the price breaking out of its formation and resistance, and with prices still continuing to slowly creep upwards, this is leading me to believe the latter. With this reasoning, I believe it is still possible for prices to climb further. From the chart below, we can see that prices have hovered at resistance for the last four days. However, will it continue to move higher just yet?
Turning to the indicators for a clue, RSI shows BreadTalk stocks are pretty overbought at the moment while MFI and OBV suggests steady accumulation has been ongoing. Stochastics and MACD however, hint that some selling may be starting despite ADX indicating that the trend is currently relatively strong. Furthermore, ADX DI+ has dipped below ADX 14d supporting the view that selling may be occurring behind the scenes. Immediate support lies at $0.675. Next support lies at $0.66.
My take: Prices looks likely to hover between immediate support and resistance for the next couple of days since profit taking may be taking place while waiting for the 14dma to catch up. The 14dma also provides some support should prices dip below $0.675. That said, I expect prices to break through the $0.70 and head higher thereafter. When this will happen is anyone's guess. My guess is that it will happen by the end of the month. Only time will tell if I'm right.
Good luck everyone.
Vested,
~K
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