Featured Trade (HK Stock): Kingsoft eyeing to test its major support

Medium-term downtrend remains intact for Kingsoft

Medium-term technical outlook (1-3 weeks) on Kingsoft Corporation (HKG 3888)



Key technical elements

  • Kingsoft, a major Chinese software company that has key operations in video gaming development, mobile apps, cloud storage platforms and office software has continued to evolve inside a major “descending range” configuration since its all-time high level of 34.95 printed in May 2015. The lower boundary of the major “descending range” is now acting as a support at 9.17 which also confluences with a Fibonacci projection cluster level at 8.42 (see weekly chart).
  • In the medium-term, the share price of Kingsoft has declined by 67% from its 21 Mar 2018 high of 31.10 and continues to evolve within a descending channel with its resistance at 13.76 (see daily chart).
  • From its recent low of 10.06 printed on 30 Oct 2016, its price action has staged a rebound in a “Bearish Flag” configuration with declining/lacklustre volume. These observations suggest a “dead cat bounce” where a fresh impulsive down move shall materialise next (see daily chart).
  • Longer-term momentum analysis as indicated from the weekly RSI oscillator remains bearish as it is still capped by a significant corresponding resistance at the 43 level without any bullish divergence signal.
  • The key medium-term resistance stands at 15.36 which is defined by the swing high areas of 22 Aug/28 Sep 2018 and the 23.6% Fibonacci retracement of the on-going medium-term down move from 21 Mar high to 30 Oct 2018 low.

Key Levels (1 to 3 weeks)

Immediate resistance: 13.76

Pivot (key resistance): 15.36

Support: 9.17/8.42

Next resistance: 20.65/22.35

Conclusion

The medium-term downtrend remains intact for Kingsoft. As long as the 15.36 key medium-term pivotal resistance is not surpassed, its share price is likely to stage another round of potential downleg to target the key major “descending range” support at 9.17/8.42.

However, a clearance above 15.36 negates the bearish tone for an extension of the corrective rebound towards the next resistance at the 20.65/22.35 zone (former congestion area from 20 Nov 2017/10 Jul 2018 & 50% Fibonacci retracement of the on-going medium-term down move from 21 Mar high to 30 Oct 2018 low).

Charts are from eSignal



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