Technical Update: United Wire Factories Company United Wire Factories Company (SE:1301) – Saudi Stock Exchange.
Last week ASLAK broke out of a double-bottom reversal pattern, while at the same time ascending above its 55-day exponential moving average (ema) for the first time in almost five months. The breakout swing was accompanied by increasing volume -- bullish.
Subsequently, resistance was found at 40.70 five days ago, with the stock falling lower and back below the initial breakout trigger of 38.00. Today, ASLAK fell 3.4% to close at 36.89 and ended back below its 55-day ema.
There is a good chance ASLAK could make another run higher and exceed the recent 40.70 high. The target objective derived from measuring the double-bottom formation is higher, at 46.50, and the next notable resistance zone doesn’t start until around 43.90. That zone is noted on the enclosed chart, and you can see that the first phase of it ends around 46.00, almost matching the double-bottom target.
Next, watch for signs that the current decline could be over and that buyers are starting to dominate again. Volume has dropped during the pull back, which is what we would want to see to support the possibility of further upside following the pull back.
So far the decline off the 47.7 peak has not even hit the minimum 38.2% Fibonacci retracement level at 40.75. That’s the next price level to watch for signs of support, and it matches the beginning of a prior short-term resistance zone (now potential support). The 50% retracement is at 38.6, and the 61.8% at 36.45. However, a decline below 34.5 support starts to put the potential follow-through from the double-bottom pattern at risk of failure.
(www.marketstoday.net)