Stock to Watch: Pantech [5125]

Looking at the chart of our local index, we can see that the index is now consolidating within a 28 points range (Resistance of 1793; Support of 1765). A spinning top was formed on Thursday with slightly greater volume than the previous days, signalling a possible reversal. In fact, with both the Hang Seng (Hong Kong index) and Nikkei (Japan index) forming long lower-tail spinning top with high volume, the possible reversal of these two leading market in Asia could potentially pull our index up on Monday, thereby creating a better sentiment for shares to reverse/ move higher.

klci (3) (1)
Having said that, there are still plenty of oppportunities for us to tap on and among them is the popular oil and gas small-cap, Pantech, which would be the focus of today’s discussion. While the expected better sentiment on Monday could turn the share price around, thereby taking away the opportunity to profit, it would be best if we could get ourselves ready in the event that the expected better sentiment does not materialize (Possible since at the time of this writing, US index is falling).

pantech

After rising steeply for 6 days, share price of Pantech retraced before moving up again to test its previous top. Notice that a black shooting star was formed on the 20th of May with high volume. This provide us with the first signal of reversal. On the subsequent day, as the share price of Pantech closed lower than the 20th May’s low, the reversal became more apparent and we can consider this as a possible double top pattern, which is a bearish reversal chart pattern. Once the swing low of RM0.93 (the immediate support) was breached on last Thursday, it was confirmed that the share price would continue to slide in the intermediate term. How can we profit from it then? Well, we can trade the swings.

Relying on support and resistance solely, RM0.81 would be a good entry point for traders since it is the resistance-turned support. The strength of this support level is further enhanced by the fact that this price level is also THE beginning of the huge price movement. But RM0.81  is not the price level that the aggressive traders should be looking at. I’m not sure whether you notice that I drew a horizontal line at RM0.83 that does not connect any highs/ lows. This is the implicit support that is somewhat equally important – if not more important – than the explicit support (those that can be seen clearly in any charts). It is the point where the intraday support is created and could possibly be an intermediate term’s support, provided that certain criterias are met. As you can see from the intraday chart below, bases are built on the RM0.83 and RM0.865 level, making them possible reversal points in the future. But why RM0.83, not RM0.865 then? Because it doesn’t meet the Relative Volume Density (RVD) criteria (This is a proprietary trading tool/ formula). I have provided the RVD termometer at the right side of the chart below to show the density of the volume traded at each price level, with darker colors indicating greater density in transacted volume.

pantech intraday
Since the intraday support of RM0.83 has the greatest density among all price levels, naturally it will be the level that the market might respect in the intermediate term. So aggressive traders should start accumulating at RM0.83, though the reinforcing effect of technical analysis will not help at this level (because not many can see this!). On the other hand, conservative traders should just stick with the RM0.81 resistance-turned support. Be sure to cut loss if the trading doesn’t work as planned.

One Response to Stock to Watch: Pantech [5125]

  1. Victor says:

    Hi Deric,

    That is quite an interesting review of Pantech you have here. I just have one question. Which software did you use to monitor the RVD? Thanks a bunch.

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