Tencent Holdings Likely to Crater Even More

 | Dec 06, 2017 | 3:20 PM EST
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Tencent Holdings (TCEHY) is one of China's largest tech firms and a review of its charts is long overdue.

Prices have corrected lower in the past two weeks and with support below the market around $45 likely to be tested in the short-term, a full review could be worthwhile.

In this daily bar chart of TCEHY, below, we can see the steady rise the past year with sideways corrections. Prices rallied sharply in early November and they have retraced most of the rally. TCEHY is testing the rising 50-day moving average line and below that is a potential support area around $45 where prices stalled in September and October. The daily On-Balance-Volume (OBV) line has turned down after a long rise. A declining OBV line tells us that sellers have become more aggressive. The Moving Average Convergence Divergence (MACD) oscillator has signaled a take profits sell.

In this weekly chart of TCEHY going back three years, below, we can see that prices have hit a triple from their 2015 lows. Prices are above the rising 40-week moving average line. The weekly OBV line has peaked and the Moving Average Convergence Divergence (MACD) is ready to cross to the downside for a take profits sell signal.

This point and figure chart of TCEHY, below, shows a possible downside price target of $41.73. Good support should be anticipated around that level.

Bottom line -- TCEHY is correcting and the key question is how far down can this pullback/correction can carry.

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