Hengyuan which is one of the most widely followed hot stocks in Malaysia has gone through some wild swings. It is not surprising to see this kind of behavior in a hot stock.
As so many trader's eye is on the stock, you can always expect volatility. Volatility is good because that is how traders can make money from the stock.
Hengyuan is still in a bad 60 min downtrend. It has broken below 2 60 min boxes and on the verge of breaking a 3rd one. If it cannot break above the 3rd box then it might break below the box and produce another selling wave.
The 60 min ascending triangle that we anticipate as a type of continuation pattern failed to do its job. Hence the stock had a nasty drops as the pattern failed and when oil prices start to decline in the shorter time frame as well. As I always tell my readers, no trading strategy is 100% full proof. You just have to let the risk reward ratio take its course in growing an account.
As you can see from the chart below, the 60 min ascending triangle pattern failed to make the stock move higher. Subsequently, the stock dropped below the 20 MA as well as the 50 MA in one single bar. This was a warning sign that the stock has failed to continue moving higher.
One should always be aware when a stock drops below its 20 MA and 50 MA. Even in the 60 min chart this hints to a possible change in trend.
For those of you who have read my article on The 4 Stock Market Stages Every Stock Will Go Through, you will realize that Hengyuan has gone through a 60 min stage 4 downtrend. Then it formed a stage 1 basing in the form of an ascending triangle bottom. This then help it to move higher short term and form a stage 2 uptrend.
The 60 min ascending triangle was suppose to be a continuation pattern in the Stage 2 uptrend but it failed. Some of you may know that when a continuation pattern fails, it will act to send the stock lower almost immediately. I guess this is what happens to Hengyuan's stock.
The stock topped out with a Stage 3 failed ascending triangle pattern.
At this moment, Hengyuan is in a Stage 4 60 min downtrend and it is dangerous to long this stock when it is trading below the 60 min 20 MA. You have to wait for it to stabilize, go back above the 60 min 20 MA and perhaps form some kind of reversal pattern in the 15 min chart or 60 min chart for a possible short term trade setup.
I have mentioned in the past that this stock is only suitable for "TRADING" not investing at this moment. A lot of skill is needed to navigate the world of trading and if you are not familiar with short term trading you should definitely stay away from such stocks because things can change in a matter of days.
Once again hope this helps.
Happy trading and investing.
Hengyuan attempted to breakout of another ascending triangle but it could not move higher significantly. If you look at the 60 min chart below, you will notice that the stock is still in the process of breaking out and forming the ascending triangle breakout.
A significant volume of 3M as the stock broke higher told us that there were many people who are aware of the ascending triangle pattern. So far, the pattern is still valid.
Perhaps if oil prices continue to move up, Hengyuan might break higher next week.
The stock is still trading above its 60 min 20 MA and 50 MA and this still bodes well for the stock. But do be careful if it drops below them.
Its almost a month since I wrote a piece on Hengyuan. But one thing is certain is that this is still a trader's world for the stock. I mentioned last time that it is not very good to long the stock till the trend changes. Until recently the stock's short term trend was down. At this moment, the short term trend is up.
We shall start off today's analysis with a look at the weekly chart of Hengyuan.
Weekly charts are often looked at by Professional traders as when a stock drops very fast, it can also bounce back up very very fast when it reaches support areas.
Those support areas are strong support areas and not the simple ones you see in the daily chart or 60 min chart. When the professional trader sees a stock getting oversold and hits support he or she will always be ready to pull the trigger to scoop up shares of the stock and hold it for a while.
As you can see from the chart above, Hengyuan sold off down to around 6.00. The last time I commented on the stock it was at 9.00. So you can see that it suffered a $3 sell off.
There is a strong area of support at the 6.00 which I have highlighted with green and this is where the pros will be looking to buy. I did not show the stochastics indicator but if you check it along with the MACD you will see that the old hands who probably use the stochastics and MACD was looking for an oversold bounce up in the weekly chart.
The stock formed a weekly bottoming tail. It is the pros that form the tail.
Looking at the weekly chart and the candlestick pattern, it is possible for Hengyuan to go a bit higher but I will still treat this stock as a trading candidate instead of the buy and hold because of the reasons I told you in the past and because it is below the trend line I have drawn above.
Let us now zoom into the daily chart and you will be able to understand a bit more how the pros think.
The stock was drifting lower until it drop to the support area of 6.00. There is something magical about support and round numbers and stocks can often bounce back up it it drops to a round number area. Notice how the stock formed a bullish harami in the daily chart.
At this moment, the stock formed the harami not because of buying by traders but because those who want to sell has probably sold. So there creates less selling pressure and the stock moves up. Maybe the professional investors may be scooping up shares at rock bottom but the hand of the well funded professional trader can be seen a bit later.
It is when you look at the 60 min chart that you begin to see the hands of the professionals at work. Most of you will know that I love the ascending triangle and I do trade them when I see them in different time frames.
Hengyuan broke above the ascending triangle and also above the 50 MA. Notice the heavy amount of volume as the stock broke above the ascending triangle?
Well, the ascending triangle has more than met its target.
The stock is currently trading sideways and may be forming another 60 min ascending triangle. The drying up of volume as the pattern forms is also encouraging.
We shall see in the next few days if there is follow through to the pattern.
Hope this helps.
Happy investing and trading!
It has been quite a long time since I wrote on Hengyuan. Other than one time I posted a chart in my Telegram Group, I have not been able to update this page for you. I know many people have an interest in Hengyuan as it is one of the most popular stock in Malaysia.
However, as I trade mainly US stocks, I do not have the luxury of time to visit Hengyuan everyday. Also I do this to help fellow Malaysian traders and investors to have a look at Hengyuan from a technical point of view. In the end you need to make your own decisions as nobody will really care deeply about your investments or trades but you yourself.
The chart above shows the 60 min chart of Hengyuan. In the past analysis I was expecting a 60 min ascending triangle breakout. But as you can see, there was no follow through at all to the pattern.
The stock did not even break above the highs of the pattern therefore in reality there was not setup at all. An experienced trader would not have initiated any position unless the stock breaks decisively above the highs of the pattern.
Instead of breaking higher, the stock gap down. There is a lot of bearish sentiment when a stock gaps down as a lot of people would have a big overnight loss. Therefore, the stock started to sell off and had its own 60 min downtrend.
Furthermore, the fact that big investors such as Koon Yew Yin does not hold a substantial amount of shares anymore has made a lot of people question the future of this stock. It is like Warren Buffett no longer interested in a stock anymore. Therefore, this reason coupled with bearish technicals help to send the stock lower.
At this moment, the stock is still in a downtrend in the 60 min chart and trading below the 60 min 50 MA and therefore it is advisable not to play this stock till the downtrend ends.
The chart above shows the daily chart of Hengyuan. As you can see, the stock not only gap down below the daily 20 MA and 50 MA. In fact it gap down below an uptrend line and this was extremely bearish. At this moment, the stock is hovering at price support and also at the rising 200 MA.
This help to keep the stock from dropping further. I actually got a question from one of my group members whether it is time to buy Hengyuan now when it is at this area. Well, if you are a trend follower, you will know that the nice uptrend in this stock is over.
The buy and hold and ride the trend up for this stock is over. Period.
If you are wondering what trend trading or trend following is, check out the guide below and you will have a deeper understanding of why Hengyuan top out and why it is no longer suitable as a trend following stock.
This stock is now a trader's world where they can buy the bounces and sell the rallies. I'm not sure if you can short Hengyuan or not but most local brokers will be able to advise you on that matter.
If you really want to see Hengyuan start a new uptrend again, you will have to see it break above the blue downtrend line I have drawn. Until then be cautious on this stock and think twice about bottom fishing this stock.
Hope this help...
Happy investing and trading!
Hengyuan is a really nice stock to swing trade if you ask me. Lots of people follow it and therefore lots of volatility and liquidity. For those who are extremely skilled in the art of short term trading, it gives a great opportunity to benefit from these factors.
As with most stocks, only 10% of people will make money on the stock while the other 90% will either enter too late or exited to late.
Using the 60 min chart, I can see some trading opportunities for short term trading. The most recent one is the 60 min triangle breakout which happened and more than met its target as it hit the resistance area I showed you in the last analysis. It overshot a bit but eventually this kind of run up usually corrects as traders take profit or some people recoup their losses as the stock goes back higher a bit.
The stock recently corrected to the 60 min 20 MA and it broke a short term downtrendline. Sometimes I do enter stocks in the US market for a short term trade when it breaks a 60 min downtrendline. No guarantees of success but a series of trades like this with good risk reward will help to grow your account.
If we take the measured move upwards, the current break of the downtrendline might send the stock higher to 17.00 if it continues to move up. That is where there is a lot of resistance.
What is good about this stock at the moment is it is forming a mini 60 min ascending triangle. As oil prices go down, Hengyuan is still able to form this pattern. So there might be some strength in this stock.
I'm not sure when earnings for this stock is so do pay attention to when it announces earnings. All technicals take a back seat when earnings are coming. Usually I do not trade a stock if it is going to report earnings in a few days time.
So we had a nice shoot up today. This was bound to happen because a quiet trading will usually be followed by range expansion.
So far, in the daily charts of Hengyuan, we can see that it broke above a downtrend line. This is usually the first sign of a lasting trend change. The other thing that I like is this stock has gone back above the 20 MA. We also want to see it go back above the 50 MA and then have a bullish cross to start a new daily uptrend.
If you look at the monthly long term chart of Hengyuan, you will realize that it is experiencing a short term weakness in long term strength. Which is why its a good idea to try and bottom fish this stock because the risk is low.
Well, if Hengyuan continues to stay above the downtrendline and the recent 60 min triangle, then it will be on course to start a new short term and perhaps daily uptrend.
The chart above is the 60 min chart of Hengyuan. I showed you a triangle last time. So this stock was ripe for some movement. It decided to break out higher, thanks to oil prices going up as well.
Hengyuan also went back above its 60 min 20 MA and 50 MA and had a bullish cross. So, the stock is now trying to start a new 60 min uptrend.
Those who were observant would have made some money buying the breakout. Stops can be put below the uptrendline depending on how aggressive you want to be.
At this moment, I think it has met a short term target as it hits the congestion area. I do not know whether it will correct or trade sideways now but it will be good to see it form a 60 min consolidation and breakout higher again. This will provide short term traders another opportunity to trade the stock.
All stocks go through the same process of boom bust and volatility and then a period of silence. You cannot avoid it. Just like the seasons that we have in the world, from winter, autumn, summer and fall, stocks in the markets will go through each phase.
At this moment, Hengyuan is going through a period of quietness after a period of boom and bust and volatility. This is very normal and should not take the informed investor or trader by surprise. If you study the 4 Stages That Every Stock Goes Through, you will gain lots of understanding into the nature of stocks.
The chart above is the daily chart of Hengyuan. There is not much change to the price in the last 2 weeks. What I want you to pay attention to is the stock's price in relation to the 20 MA. If you take a look at the history of the stock, you will notice that the stock does well when it is above its 20 MA and when it is below the 20 MA, it is a period of weakness for the stock.
So you might want to see if the stock can go back above the 20 MA. This will be a first hint whether the stock can go back up again.
The chart above is the 60 min chart of Hengyuan.
As you can see, the stock is just meandering sideways. One good thing is it is trying to form a higher low in the 60 min chart. But if you look closer, it is actually doing what we call a triangle pattern. This is typical of stocks that are deciding where it wants to go in the short term. Pay attention to which way the stock breaks out of.
Will the sell off in Hengyuan continue or would it find support and rise back to make new highs?
This stock has been on a very nice bull run since 2017. It started to act very choppy in early 2018 and soon there was a big drop in the stock. I have analyzed this stock on Jan 8 2018 and expressed that you should be concern on this stock if it drops below some technical points such as the 20 MA and also the price around 15.50 to 16.00.
I have attached the analysis below.
So, at this moment, what is Hengyuan going to do?
I'm beginning to see the benefits of putting a stock's analysis in a single page. As the days go by I can update it and see a chronological order to the analysis.
Alright, Hengyuan is still behaving as I expect in the daily chart. Since it is unable to break higher in the 60 min consolidation, then the next thing we want to look at is to see if it is able to form some kind of bottoming pattern in the daily chart.
In the past analysis I mentioned a double bottom.
Perhaps that may well be what it will form.
Whenever we anticipate a double bottom, we should check the bollinger bands, MACD Histogram and stochastics for bullish divergence. So far, they are pointing to a good setup.
Ideally I would like to see Hengyuan drop a bit more to flush out more people and to form the perfect double bottom. Then a break above a downtrend line will be most ideal.
If you look at the monthly chart, there is long term support nearby.
If Hengyuan manages to form a daily double bottom here, then it would be ideal.
I'm sure many are wondering what Hengyuan is doing these few days. It hasn't moved that much.
One of the principles of technical analysis is volatility is followed by contraction (inactivity) and then volatility. After a violent move down and a quick move back up to the 14-15 area, Hengyuan is now once again in a contraction (inactivity) period.
But it wont be long because the chart pattern below is telling us that something is about to happen.
The chart above is the 60 min chart of Hengyuan. I won't be looking at the daily chart as the stock is behaving as I anticipated but I will be using the 60 min chart to see what it will do.
The climactic sell off in Hengyuan actually provided a nice buy setup. Usually experienced traders might enter around the area I have marked. The entry is based on some 5 min chart trading strategy and 15 min chart trading strategy. Then they will sell 1/3 or 1/2 when the stock trades to the first resistance area around 15.
I'm not speaking for all traders of course. But that is what I would do if a stock in the US have a sell off like Hengyuan. Because the trader entered so early he or she is probably making a 1:2 risk to reward ratio at 15.00. Therefore, they will take 1/2 of the position off and put a stop loss at breakeven.
They keep the other 1/2 just in case Hengyuan decides to shoot up to 17.00. Which by the way will give them a massive risk to reward ratio.
Ok....now that you understand a little a bit about the psychology of climactic buy setups, let us move on to what is happening in the stock.
First of all I want to call out your attention to the bottoming tail that appeared. The long tail is a rejection of lower prices. Hengyuan is telling us it does not want to go down yet. But the sideways drifting these few days also tell us another thing. It does not want to go up yet.
But the whole construction of the events are shaping out to let the informed trader know what to expect. If you draw a downtrend line and a horizontal line at the support area, you can actually see a triangle developing. A triangle can be used as a timing tool.
Usually a stock will break out or break down as it reaches the apex area.
Right now we do not know which way it wants to break out of. If the stock breaks above the downtrend line then it is very likely to go up to the 17.00 area. If it reaches there, it will either consolidate or correct.
On the other hand, if the stock breaks below the support area of 13.50 then it is likely to go back down to the 11.50 area. In which case, we will see if it can form a double bottom in the daily charts.
There are so many ways to trade this stock. Each trader will have their own trading strategy but if I have traded this stock I would have bought at the areas I have marked. Then sell 1/2 at 15 and keep the other half raising my stop loss to my purchase price.
Next I will wait to see if it can break above 15. If it does, I might buy the 60 min box breakout and sell 1/2 of my entire position at 17.
Well that's the plan. In the next few days we will have more data to know what to do.
So, as expected, Hengyuan found support at the 50 MA and bounced up higher after the massive sell off. The question now is, will the bounce up help Hengyuan to go back to former highs or is it just a temporary relieve that will resume the sell off the next day?
For that, we will look at the charts.
Do note that we are entering the realm of professional traders. It is an art that requires extremely good skills. Most people will make money when the stock is trending up nicely. But to be able to make money in a volatile environment, it takes lots of experience and skill.
The chart above is the daily chart of Hengyuan.
Let me just deal with the long term prospects of Hengyuan.
First of all, just because Hengyuan hits the 50 MA it does not mean it will shoot straight back up to the former highs. In order for us to be certain that Hengyuan is able to rise back to the old highs, it needs to break the downtrendline I have drawn above.
Having said that, since Hengyuan is still in a weekly uptrend, it is possible for it to go back to its former glory.
At this moment, I do not know what it will do. We need to have a bar by bar analysis to see what it wants to do. But it needs to stay above the 10.50 to 11.00 area which is the support area in the daily chart. If the support area cannot hold, then Hengyuan will be in for more selling.
Perhaps Hengyuan might form a double bottom in the daily chart. Or it may form a cup and handle in the daily chart. We still do not know yet. But the trader will anticipate and take the necessary action when it appears.
The entire topping and selling and rebound in Hengyuan is a picture of human emotion. From greed to uncertainty to fear and to hopelessness, the charts capture these emotions very well.
Notice the heavy volume when Hengyuan touched the 50 MA?
Well, this is what we call a climactic buy setup for short term traders.
This is where many investors and traders throw in the towel at the last minute and where professional traders come in to scoop up the shares. Which is why there is such heavy trading in Hengyuan that day.
The chart above is the 60 min chart of Hengyuan.
You will notice that the selling stopped when the measured move target is met. This coincides with support area in the daily chart and where the stock meets the daily 50 MA. When this happens, talented traders will go in to buy the stock for a short term trade.
At this moment, there are 2 possibilities.
The stock may form a 60 min reverse head and shoulders. Or it may go down.
If it is able to to form a reverse head and shoulders, the stock will probably grind up higher making higher highs and higher lows as it absorbs the supply on the left. I have circled the resistance areas in the chart above. The more difficult resistance area to overcome will be the 17.00 area.
If it goes down, then it may sell off to the lows around 11.50. This is where you will need to look for a daily double bottom.
Let me just show you the 15 min chart of Hengyuan.
When you combine the fact that the stock is falling to the daily 50 MA and daily support with an analysis of the 15 min chart (or even 5 minute chart), you can often find nice short term trading opportunities. I explain this more in How To Spot Day Trading Stocks That Explode Higher Immediately. The 50 MA is one of the catalysts for a nice short term trade.
Some may be able to see a triangle in the 15 min charts while some may see an ascending triangle. Whichever one it was, it gave observant traders a great short term trade in Hengyuan. They would have taken some profits off the table as it shot up, while patiently waiting for more trading setups.
Remember, it takes skill and experience to trade volatility.
If you are new to the stock market, you might want to stand aside. Stick to nice trending stocks. They are easier and simpler to play for most people.
Whether this drop is a temporary correction or the start of a bigger drop remains to be seen. But one thing I notice is that the stock is correcting to its rising 50 MA.
The 50 day moving average (blue line) can often act as a support area to halt the drop.
As you can see in the chart above, Hengyuan has been running up a lot since 2017 and then in January it started to act wild and whippy. The stock slashed through the daily 20 MA and then dropped swiftly.
When a stock rises too quickly I am always worried of drops. Stocks do not go up forever. They need to rest as well. Sometimes they trade sideways and form a continuation pattern such as an ascending triangle or a bullish consolidation to breakout.
If a sideways trading kind of rest does not materialize, you can start to expect a decline type of correction. Which is what happened in Hengyuan.
The stochastics in this stock is getting oversold and as the stock reaches the 50 MA, I usually would like to see if I can enter for a swing trade. There must be some kind of bottoming process and setup in lower time frame charts before I will commit my money into these kind of trades.
In the event that the rising 50 MA cannot hold the stock from dropping, then Hengyuan is likely to fall to the next area of support which is around 10.00 to 11.00.
The chart above is the 60 min chart of Hengyuan.
As the whole 60 min chart progresses, you can see how the stock went from Stage 2 (uptrend) to Stage 3 (top) to Stage 4 (downtrend). If you are not sure about the 4 stages of the stock market, you can read about it to increase your trading knowledge.
During the 60 min uptrend, Hengyuan produced a nice 60 min ascending triangle.
As it starts to top, the stock begins to behave erratically. Most of you who are familiar with my work will know that I start to be cautious when a stock or index drops below the 60 min 20 MA.
When it drops below the 60 min 50 MA I'm even more cautious. You can see how Hengyuan declined below its 60 min 50 MA. It soon had a bearish cross and the 50 MA went on top of the 20 MA signalling a possible change of trend.
The stock drifted sideways for awhile and gap down below a 60 min uptrendline. This send the stock going lower.
At this moment, there is still no end yet to the 60 min downtrend. I would like to see some kind of bullish reversal chart pattern develop before we start to be bullish again.
For Hengyuan to be able to go back up and make another new highs, I would like to see it break back above a 60 min downtrendline. I have drawn it with blue color on the chart. As you can see, it might take some time (if at all) to go back up again.
Hope this analysis helps you out a bit. Remember to supplement your own analysis to what you have read.
Hengyuan is also another widely followed hot stock in Malaysia. Mostly because of the interest of Malaysian tycoon Koon Yew Yin who recommends the stock and also because of the massive price rise in 2017.
The stock has more than doubled from RM 8.00 to RM 17 plus since November 2017.
The chart above is the daily chart of Hengyuan.
As you can see, the ascending triangle chart pattern seems to work very well with this stock in 2017. Every time the stock breaks out of the pattern, the stock shoots up higher.
The run up from December 2017 to January 2018 can almost be said "parabolic".
Is a top happening in Hengyuan?
Trading has been very volatile in the past few days. This makes investors and traders wonder if a top is happening in Hengyuan. Well, after a nice run up, it is not unusual to see volatile trading in a stock.
Even in Bitcoin, we can see extremely volatile trading after a nice run up. All this is normal.
But for those who chased the stock and got in at RM 18.00 and above, it is still a pain for them.
Currently I do not see any weakness in the stock yet. It is still above its rising 20 MA and rising 50 MA. The other thing is, stocks that have a nice run up need some time to rest. As long as Hengyuan stays above the RM15.50 to RM 16.00 area, I'm not bearish on this stock.
What I would like to see is for the stock to form some kind of continuation pattern. Continuation patterns such as:
will help the stock to take a rest before breaking out higher.
On the other hand, if the stock starts to drop below the RM 16.00 area and below its rising 20 MA and rising 50 MA, you need to be extra careful. If that happens, the stock might drop back to the support area around RM 11.00
Jul 21, 21 10:37 AM
Take a look at the various charts of the stock market for the month of July. Interesting to note that the uptrend is still intact.
Mar 23, 21 08:25 AM
This week let us take a look at the SPX and TSLA. See what we can learn from their charts.
Mar 19, 21 05:24 AM
In this week we will have a look at Bitcoin, ETN and MAT, SPX and QQQ and see what we can learn from its chart.
Mar 09, 21 08:33 AM
In this week's lesson, let's take a look at bitcoin and makita.
Mar 03, 21 09:48 AM
In this week we will take a look at BRX and KIM and see what we can learn from the charts.