Dairy Farm hits another 18-month high on 27 Jan 2017. It has risen consecutively for the past six trading days and has surged 13.3% from an intraday low of $7.28 on 20 Jan 2017 to $8.25 on 27 Jan 2017. This has significantly outperformed the STI, as STI was only higher by 2.0% over the same period.
How high can Dairy Farm go? Read on below for its chart analysis…
Based on Chart 1 below, Dairy Farm is on a strong uptrend, as depicted by its upwards sloping exponential moving averages (EMAs). All the EMAs are rising. However, there are some noteworthy points.
- RSI closed 87 on 27 Jan 2017. This is the highest level since 1990 and indicates extreme overbought conditions;
- Dairy’s Farm supports are spaced quite a distance away from one another. Typically, a cluster of supports (i.e. each support is close to one another), provides stronger support than individual support point which is located far from one another.
- Dairy Farm closed at $8.25. This is higher than the average analyst target price of $8.20 from Bloomberg.
Based on the above factors, there is a good chance that there may be some technical retracement in the near term, or at the very least, any near-term gains are more difficult to come by. Notwithstanding this, it is likely that any potential weakness is likely to be a retracement, and not the start of a trend reversal.
Near term supports: $8.16 / 7.95 – 7.97 / 7.72
Near term resistances: $8.39 / 8.50 / 8.54
Chart 1: Dairy Farm all-time overbought since 1990!
Source: Chartnexus as on 27 Jan 2017