LEARNAFRCA: Bullish counter-attack at an oversold territory


Monday, December 7, 2015 09.30 AM / Harish Shahi, The Analyst 

A closer look on the daily chart of
LEARNAFRCA reveals that stock is falling down consistently by taking support of the downtrend line and is making successive lower highs and lower lows. It seems the bears are beating the bulls black and blue and dominating them at every nook and corner.

Stock has declined from N1.60 to N0.60 with a sharp sell-off and we can see bloodbath on the daily chart. After arriving at an oversold territory of N0.60 level, we saw a panic reaction where bulls denied moving down further and a counter-attack appeared which created the hope for a bullish momentum at an initial level.

The stock is facing strong bearish momentum and the current counter-attack could be limited as it’s an early buy signal.  We will get further bullish confirmation once stock trades and settles above N0.80 level. A bullish divergence of RSI indicator can be seen on the daily technical chart which is providing bullish signal.

Overall stock is trading strong downtrend and sustaining below all major and minor EMA lines. If it sustains above N0.80 level then it will change our view from bearish to bullish. It will provide further presence of buyers and will provide more strength to the bulls; this could trigger acceleration to the upside with N1.20 as next target.

All odds are in favor of the bulls and indicating a bullish signal. Both investors and traders are displaying bullish tendency towards the stock for the time being, they will get more aggressive once it trades and settles above N0.80 level.

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What Next?

A piercing pattern candlestick followed by bullish engulfing candlestick is generating bullish signal. A bullish crossover on MACD indicator is also favoring the bulls. Both RSI and CCI indicators are providing bullish signal from a negative territory.

Intraday bias remains bullish on the stock as long as N0.50 level remains intact. The N1.00 level is key resistance level followed by N1.20 while N0.50 can be considered as key support level followed by N0.40 level.

Trade Idea:
Based on the charts and explanation above, traders can buy above N0.80 for the target price of N1.20 and N1.50 with the strict stop loss of N0.40. The tentative time frame would be 6-8 days.

NB: Return on Investment based on trade idea above does not take cognizance of brokerage commission

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