OKA Corp Bhd (OKA) technical analysis January 2020

1. Trend 

OKA appears to be in a long term up trend. Although prices did fall below several potential supports, the new low of RM0.6 is higher than previous lows of around RM0.4

2. Pattern

The 3 year naked chart of OKA shows a potential cup in formation as can be seen in the chart above.

The low of the cup is around RM0.6 which is also a multi-year low which has served as support several times. RM1.3 area may be a potential long term peak and thus target price (TP) though there are several potential resistance areas before that. While a cup may reach the previous high before forming a handle, it need not necessarily do so. A false or failed cup and handle (CnH) is a worst case scenario and there is also the descending CnH. Only time will be able to tell.

A smaller CnH can be seen on the smaller one year chart. What does this indicate?

Since CnH is generally a bullish continuation pattern, stronger when occuring in the context of an uptrend, this may indicate that there is a bullish sentiment in both the longer and shorter time frames for OKA.

3. Pattern analysis

Potential support and resistance areas on weekly time frame, over the past 5 years.

Potential support and resistance areas on the daily chart over the past 1 year. A double bottom has been formed and the resistance-turned-support has been successfully tested. Double bottoms are usually bullish reversal signals, signalling a potential change in the trend from downtrend to an uptrend.

A double bottom and CnH analysis of potential target price (TP)

An even shorter term flag pattern breakout.

4. Conclusion

As a long term pattern trader and trend rider, I am hoping to ride OKA all the way to the potential RM1.3 target.

Can it really go to RM1.3?

No one knows.

Given the many bullish signals, and the fact that OKA has just entered into a new uptrend which can be seen in the crossing of the 50 period moving average (MA50) above the 200 period moving average (MA200), I am hoping that prices will continue on higher.

OKA has been paying out regular dividends which is a factor that I consider in potential longer term holds. The steep dividend cut last year isn’t such a good thing though.

Trading strategy

TP (partial): RM1.3. Minor sells at prior potential resistance levels as indicated by the above analyses.

Continue to hold if large CnH forms

Full sell if large CnH fails

Support: RM0.6

I will hold OKA as long as it maintains above RM0.6 and reinvest all dividends.

I will look to sell around 2/3 of my holding around RM1.3 or any potential  right cup lip should it form earlier.

If the large CnH succeeds, I will add more position around the new resistance-turned-support and ride the pattern on.

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