Stock to Watch: Maybulk [5077]

Our focus today is on Maybulk, a share which had moved by more than 30% since January. With the uptrend becoming clearer and steeper, is there any more opportunity ahead or is the correction about to come soon? We shall answer these questions by looking at the chart from both the bull’s and the bear’s perspective.

maybulk1
After forming a minor double bottom in December, price started to move higher and had successfully created a few higher highs. This, coupled with the lower lows formed in months prior to the formation of the double bottom, had made the rounding bottom formation clear. The down-wave that occurred in mid-March after the successful creation of the rounding bottom could be treated as the “handle” of the cup-and-handle pattern, which is essential for share price to climb to higher grounds. After breaking above the right edge of the “cup” 2 days ago (bullish), the share price is currently “resting” at its major resistance-turned support of RM1.64, providing traders a good opportunity to accumulate. As long as the share price stays above its uptrend line, we would expect the bull to continue to dominate in the near future, bringing Maybulk’s share price higher.

Having said that, the price development of Maybulk’s share is not entirely bullish, however. Using Elliot Wave Theory to analyse the price waves of Maybulk (refer to chart below), we can see that it is currently in wave 5, which means if a “perfect Elliot wave” is to occurred, a 2-wave correction is expected to come soon, making any upside gain limited if we were to purchase the share now. With RM1.70 being the major resistance and also close to the Fibonacci 123.6% level of wave 2, it would be reasonable to expect Maybulk’s share price to begin correcting after hitting RM1.70. Alternatively, price may move slightly higher to RM1.74 before retracing since RM1.74 is the immediate horizontal resistance after RM1.70, which is also near to the Fibonacci 138.2% level of wave 2. Such a retracement is expected to happen anytime between this week to early May, where the “Sell in May” theme would provide a reason for investors to exit the market, thereby creating a selling spree that could send the stock lower.

maybulk2
Given the current situation, where price is still on an uptrend, earlier buyers of this counter should not be fret and should continue holding the shares until further bearish signal is shown (breaking below its uptrend line or its horizontal support of RM1.64). Aggressive traders/ scalpers who have yet to participate in this share could choose to accumulate some shares at RM1.64/ RM1.65 and expect a 6-10 cents reward in the near future, at the same time betting on a possible breach above RM1.74, with a tight 2-cents cut-loss point. Amateurs/ Longer-term traders may just choose to stay at the sideline and wait for the inevitable correction to happen before acquiring shares of this company at more lucrative prices.

Leave a Reply

Connect with:

WordPress Social Login is not configured yet!
Please visit the Settings\ WP Social Login administration page to configure this plugin.
For more information please refer to the plugin online user guide or contact us at hybridauth.sourceforge.net

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>