Technical Analysis Of FGVH : How To Play This Election Counter

Last week Malaysia's Prime Minister, Dato' Seri Najib Razak came to Bentong to officiate what they call Felda 2.0. Along with him came a number of high profile ministers, the Menteri Besar of Pahang, businessman and many prominent figures.

When you have the PM and so many top politicians hanging around your neighborhood (turun padang), you know that the election is just around the corner. Since Bentong is more of a hilly area surrounded by tons of forest and plantations, it was more like "turun padang dan masuk hutan".

I was also there among the crowds to witness the event with my wife and her fellow teachers. For your information Felda Bilut, Bentong is the first Felda in the whole of Malaysia. Now they want to turn it into Lembah Digital Bilut. I just hope that they will equip the whole of Bentong with Unifi because my streamyx is a bit "cacat" at times.

Because Felda is closely connected to the government, many investors will start to wonder whether the election fever will cause FGVH to skyrocket and line their pockets with lots of Ang Pau money for Chinese New Year.

Here is an honest and realistic look at FGVH.

How To Play This Election Counter

In order to play this election counter, you need 2 things:

  1. A downtrend line
  2. A horizontal line

I'm not joking.

You want to be able to separate the rumors and the election fever and the news and just use lines. I will explain later how you can profit from this counter.

But first let me take you on a tour of the bigger picture so that you will know where FGVH stand in the grand scheme of things. Let's start with the monthly charts and work our way down to the daily charts.

The chart above is the monthly chart of FGV's share price. As you can see, it has been in a bad downtrend since its inception. It is only in 2015 that this counter started to bottom out and made higher lows.

At this moment, FGVH just broke out of a monthly triangle. You can see the heavy volume as investors stepped in to buy the breakout above the downtrend line.

The process of breaking out of the monthly triangle has not completed yet as it has not hit any target nor has it hit a stop loss which is below the uptrend line.

In this kind of range trading environment, you as an individual player in the market need to employ a guerilla hit and run type of trade. Buy today...sell a few days or 1 or 2 weeks later.

You must be like the Vietcong. Come out from the jungle and attack attack attack and vanish fast. Don't be like the American and put the whole firepower behind this stock and lose money when it turns against you. Felda is still in a trading range.

The only time you want to have the helicopters, tanks and nukes out is when FGVH breaks the horizontal trendline I have drawn in the monthly chart above. As some of you know, this is what we call a monthly ascending triangle. If FGVH can break above 2.50 then it forms the ascending triangle breakout and may be able to hit 4.00 which is where the next resistance area is.

The chart above is the weekly chart of FGVH.

As you can see, it recently broke a weekly downtrend line which is where investors start going in and this send the counter higher for 2 weeks. Support 1 is at the lows near the breakout and support 2 is below the trendline.

Long term investors will not want to see FGVH drop below support 2. This will be the breaking of a weekly uptrend line and can often send stocks lower.

Okay, now let us switch to your battlefield which is the daily chart. If you are an individual investor, then this is the chart you want to fight in with regards to this election counter.

Remember earlier when I said you need to use the "downtrend line" to make money in this stock?

Because the stock is in a long term trading range, it is quite dicey to buy and hold. Trading ranges are suppose to make the stock go up and down and up and down and take money away from the uninformed investor.

But this is what you can do...

There will be times when the stock will correct very nicely and you can draw a downtrend line to connect the declining prices. Notice how there are so many downtrend lines I have drawn in the daily chart.

  • Whenever the stock breaks an uptrendline...you buy it and put a tight stop loss at the recent lows.

How high it will go in each move I do not know.

As you can see sometimes it moves up a few days, sometimes it moves up for a few weeks. But some risk management technique and some support and resistance analysis will help you to make money in this stock. If you risk RM 10,000 and are making RM 15000 then consider selling some. Then move your stop loss at the breakeven point (your purchase price).

Just to inform you...

Not all break downtrend lines work all the time. That is trading. But at least you now know how to tackle this election counter.

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