UBA: Not a time to buy in the bloodbath, just wait for the right time


Tuesday, August 18 2015 08.30 AM / Harish Shahi, The Analyst 

A closer look on the daily chart of UBA reveals that stock is falling down and making successive lower lows and lower highs; heading towards south side.  From long term prospective, we can see that a rounding top pattern is in the process of formation and it will be completed once bears approach the N3.00 level which is not far away from the current level.

A downtrend line is also lying on the daily technical chart which is providing supply pressure.  Bears were controlling the game and dominating the bulls at every nooks and crannies. We can observe that bears are in full aggression and sustaining below all major and minor EMA lines. For the time being, bears are not providing any chance to the bulls to settle down even. The bulls should wait for the key support to attempt the bounce.

The short term trend is down according to the daily swing chart, and momentum appears to be in favour of further downside. A sustained move above N4.00 will signal the presence of buyers and will provide more strength to the bulls; this could trigger acceleration to the upside with N6.00 as next target. 

All odds are in favor of the bears and indicating a bearish signal. Presently, stock is trading below all major and minor EMA lines but candles are generating reversal signal. Both investors and traders are displaying bearish tendency towards the stock for the time being.


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What Next?

Three black crow pattern followed by three consecutive bearish marabuzo candlesticks are generating bearish signal. Both RSI and CCI indicators are providing us trend reversal signal from oversold territory and generating bullish signal.

Intraday bias remains bullish on the stock as long as N0.50 level remains intact. The N0.80 level is key resistance level followed by N0.95 whereas N0.50 can be considered as key support level followed by N0.40 level.

Trade Idea:
Based on the charts and explanation above, traders and investors can wait for the time being and let it fall first and once it comes down at the support level then we can initiate the buy position i.e. N3.0 level for the target price of N4.00 and N4.50 level with the stop loss of N2.50 level.  The tentative time frame would be 12-15 days.

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

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To View Technical and Interactive Chart with Indicators like MACD, RSI, Stochastic, Moving Average, Bollinger, Williams %R, MFI ... Click HERE

For further details, kindly contact analyst@proshareng.com 

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