jaredlee283

YZJ Shipbuilding Entering Support region.

Long
jaredlee283 Updated   
SGX:BS6   YZJ SHIPBLDG SGD
we are now entering a historical support range of 0.70 - 0.88. This is a strong support which has held multiple times in the past (July 2009, September 2016) with a subsequent bounce off this range. Price level in specific i am looking at 0.79 as the crucial support which has been continuously tested but has held for the past 3 days after a bounce from the lows of 0.73.

In addition, a bullish divergence is observed on the Daily RSI, with a possible MACD reversal up. This suggest that in the near term, a bullish scenario would see a price reversal at 0.79 towards the upside

Fundamentals:

Potential Catalyst for upside:
  • YZJ Shipbuilding just secured a deal to build up to 10 Vessels (2 vessels confirmed and 8 more optional) in a contract worth USD$1.15 billion.
  • Cases in China are decreasing with most cases being imported. As the Chinese Government's effort to isolate imported cases and control the spread of COVID-19 kick in, factories and shipyard production will soon normalise and share prices will soon return to pre COVID-19 levels above $1


Potential Downside Risk:

Corona Virus Risk still looms over the global economy, with most companies expecting weak Q1 & Q2 earnings. Should the virus situation expand past Q3 2020, we can expect global trade to dramatically decrease, which will likely affect the commencement and subsequent completion of the other 8 vessels on Yangzijiang's order book.

Trade active:
Update as of 27th April 2020.

Hope everyone is well and good. As expected, the price tested slightly below our support of 0.795 and has since rebounded to $1. Recommend taking partial profit at this point but if you are in for the long run, $1.07 is a stubborn level to break but if we are able to maintain above this price point we should be able to retake $1.10.
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