This week, we specially picked AirAsia and the revision of its previously published case studies, to illustrate how technical analysis helps investors finding trading signal, and then hold it for an uptrend.
Chart 1: Airasia, as at 26/05/2010.
As indicated by A, price of Airasia tested the RM1.10 support level, which is a support level in June 2009, before its rally. Due to the memory of traders, the effect of this support level is still effective, and therefore, if price should rebound from this support level and later break above the 14, 21, 31 EMA, there is a chance that Airasia could break away from this recent downtrend.
Chart 2: Airasia, as at 2/6/2010.
As shown on chart 2, price of Airasia rebounded from the RM1.10 support and testing the 14, 21, 31 EMA. However, it has failed to break above the 14, 21, 31 EMA dynamic resistance, thus the immediate technical outlook is still bearish bias.
Chart 3: Airasia, as at 4/8/2010.
After successfully breaking above the 14, 21, 31 EMA, the technical outlook turned positive. Although price retreated as trader took profit, price of Airasia managed to stay above the 14, 21, 31 EMA, which is now serving as a dynamic support, and even breaking above resistance, making new highs. Therefore, technically, provided that price of Airasia is supported by the 14, 21, 31 EMA dynamic support, the uptrend is still intact, thus a good idea to hold.
Chart 4: Airasia, as at 18/8/2010.
As shown on chart 4, price of Airasia precisely rebounded from the 14, 21, 31 EMA on the 13th of August, forming a higher low, thus suggesting that the uptrend is still intact. Therefore, as long as the 14, 21, 31 EMA is still supporting the uptrend, it is a good idea to remain in position, until price should break below the 14, 21, 31 EMA, then only it is a signal to take profit.
Chart 5: Airasia, as at 8/9/2010.
Since breaking above the 14, 21, 31 EMA on the 6th of July, price of Airasia is still trending in an uptrend, gaining about RM0.64 or 49.5% in value. Meanwhile, the 14, 21, 31 EMA, is still serving as the dynamic support for this uptrend, and technically, the bullish biased movement shall remains intact as long as price is still supported by the rising 14, 21, 31 EMA. Other than the dynamic support, price of Airasia is repeatedly forming higher-low, and therefore, this shows that the uptrend is still healthy.
Chart 6: Airasia, as at 15/9/2010.
As shown on chart 6, the uptrend of Airasia remains intact, as it is still supported by the 14, 21, 31 EMA, and investors can choose to hold, until price should break below the 14, 21, 31 EMA. Next resistance for Airasia is at RM2.200 and RM2.15.
Chart 7: Airasia, as at 6/10/2010.
As shown on chart 7, despite being resisted at RM2.26, price of Airasia is still supported by the 14, 21, 31 EMA, and this suggests that the uptrend since June is still intact. Therefore, investors can choose to hold and use the 14, 21, 31 EMA as trailing stop reference, and provided that the price is still supported by the 14, 21, 31 EMA, and price is still forming higher-lows, this means that the uptrend is still healthy. Just keep in mind that, if price should break below the 14, 21, 31 EMA, take profit.
| 4 Q Rolling PER | 8.66 times | Dividend Yield | 0.00% |
| Dividend | Dividend Yield | ||
| 31/12/2009 | 0 sen | 0.00% | |
| 31/12/2008 | 0 sen | 0.00% | |
| 31/12/2007 | 0 sen | 0.00% | |
| 31/12/2006 | 0 sen | 0.00% | |
| 31/12/2005 | 0 sen | 0.00% | |
Table 1: Airasia – 5099, yearly dividend, dividend yield, and net profit ratio.
Conclusion:
Rome is not built in one day, and its certainly takes time to form an uptrend, and no one could predict a trend by just 1 or 2 day of technical data. Please be reminded that an uptrend is started with a simple technical rebound, but then later forming higher low and breaking new high, then only a beginning of an uptrend is visible. The repeating of higher low and new high prolong the uptrend, and meanwhile, a strong volume is needed whenever price break new high. Forget about prediction, its is a total waste of time. Knowing to spot the uptrend formation, and have a trading plan to go with it is much more practical.
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