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Featured Trade (HK Stock): Sun Hung Kai Properties bearish signals at major resistance

Medium-term technical outlook (1-3 weeks) on Sun Hung Kai Properties (HKG: 0016)



click to enlarge charts

Key technical elements

  • Hong Kong properties stocks are the leading pack that propel that on-going recovery seen in the Hong Kong stock market since Oct 2018. The Hang Seng Properties Index has rallied by 26% from Oct 2018 versus a gain of 18% seen on the broader benchmark Hang Seng Index on a closing price basis. Sung Hung Kai Properties is a major property developer in Hong Kong.
  • The on-going rally of 35% from the share price of Sung Hung Kai Properties from its 25 Oct 2018 low of 99.50 to 21 Feb 2019 high of 135.30 has reached a major resistance zone at 137.60/134.70 which is defined by the upper boundary of the long-term secular “Symmetrical Triangle” in motion since Jan 2008 swing high and a Fibonacci retracement/expansion cluster (see weekly chart).
  • The recent up move from 25 Jan 2019 has been accompanied by a declining volume, price action has formed a daily “Bearish Engulfing” candlestick pattern on 25 Feb 2019 right below the 137.60/134.70 major resistance. In addition, the daily RSI oscillator has broken below a significant trendline support in place since 18 Oct 2018 (similar the start of the on-going recovery seen in the price action) after a bearish divergence signal being flashed out at its overbought region.
  • The next significant medium-term support rests at 117.70/115.40 which is defined by the former swing high areas of 14-21 Sep/07-20 Dec 2018, the ascending trendline from 12 Nov 2018 low and the 50% Fibonacci retracement of the entire on-going recovery from 25 Oct 2018 low to 21 Feb 2019 high.

Key Levels (1 to 3 weeks)

Immediate resistance: 134.70

Pivot (key resistance): 137.60

Supports: 126.85 & 117.70/115.40

Next resistance: 147.00

Conclusion

If the 137.60 key medium-term pivotal resistance is not surpassed, Sun Hung Kai Properties is likely to stage a potential multi-week down move to target 126.85 follow by 117.70/115.40 next.

However, a clearance above 137.60 invalidates the bearish scenario for an extension of the recovery towards the next resistance at 147.00 (major swing high of Nov 2010).

Charts are from eSignal



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