Technical analysis

technical analysis

Gulf News

Du is one of the strongest looking stocks in the UAE markets on a technical basis. It is at a three-year high, is above its prior 2012 high of Dh3.63, and has traded above its 200 daily exponential moving average for most of the past two years. Most other stocks don’t match the above bullish factors.

In addition, the stock broke higher out (above Dh3.36) of an 18-month basing pattern – a long-term relatively sideways price range which follows an uptrend – in early-August. A breakout of a long base such as this increases the chance the stock can keep going as similar patterns many times lead to a new sustained trend.

The next bullish confirmation will be given on a daily close above Dh4.12 (triggers breakout of long-term double bottom trend reversal pattern). That price level is the high of a potential resistance zone starting from Dh4.01 (resistance from February 2009). The Dh4.12 price level completes a 38.2 per cent Fibonacci retracement of the downtrend begun from the December 2007 high of Dh8.06.

Once clearing the Dh4.12 level Du will be targeting the 50 per cent retracement at Dh4.87. Some temporary resistance could be seen prior to reaching that level, around Dh4.40 to Dh4.62, which was support in 2006/07.

Important support is at Dh3.36. Du should stay above that price level if the above bullish scenario is to remain intact. Retracements down towards that support level should provide new opportunities to accumulate the stock.