Yanbu Cement Company (SE:3060), which trades on the Saudi Stock Exchange, broke out of a bullish Inverse Head & Shoulders reversal pattern five weeks ago on trade above the neckline at 66.50. Resistance was subsequently seen at 72.25, with the stock completing a 32.6% advance off the 54.5 corrective low from December 2014, and a 61.8% Fibonacci retracement of the full downtrend from the September 82.50 peak.
Since hitting the 72.25 peak YNCCO has seen one leg down, followed by a slight bounce, and is still forming a second leg down. Yesterday, YNCCO closed up 0.38% at 68.75.
Given that the measuring objective or target derived from the Inverse Head & Shoulders pattern is at 78.50, the odds favor a continuation higher once the current retracement is complete.
There are a number of price areas to watch for support that could halt the decline and turn YNCCO back up. The only price area that looks to have some confluence relative to the others is the 63.50 to 63.38 price zone, which consists of prior support and the 50% retracement level. Therefore, watch for some bullish entry signal off any of these price levels for signs of strengthening, with a special eye on the 50% retracement, if it gets that low.
Potential support:
• Neckline support = 66.5
• Declining AB=CD = 66
• 38.2% Fibonacci retracement = 65.47
• Symmetry of current decline with prior decline is reached = 65.25
• Previous support from January 2014 = 63.5
• 50% retracement = 63.38
• 61.8% Fibonacci retracement = 61.28