United Microelectronics Corp. (UMC) is putting in a bottom pattern and has an attractive dividend. Is it worth a look for purchase?
Let's check it out.
In the daily bar chart of UMC, below, we can see that the shares made a double-top pattern around $13.50 in September/December. A decline plays out into late April and things get interesting in May. Prices are testing the declining 50-day moving average line and could soon close above it.
Trading volume declined into late April and suggests that selling pressure dried up. The improvement in the On-Balance-Volume (OBV) line from late April supports this theory. The Moving Average Convergence Divergence (MACD) oscillator is crossing back above the zero line for an outright buy signal.
In the weekly Japanese candlestick chart of UMC, below, we can see some positive clues. Prices are showing some rejection of weakness below $8. The trend is still down and prices trade below the lagging 40-week moving average line. But take notice of the strong up move recently in the weekly OBV line.
The MACD oscillator has narrowed and is ready for an upside crossover and cover shorts buy signal.
In this daily Point and Figure chart of UMC, below, we can see that the shares met a downside price target of $8.84.
In this second Point and Figure chart of UMC, below, we used weekly price data with a five-box reversal filter. This chart projects an upside price target in the $11 area.
Bottom-line strategy: Aggressive traders could go long UMC in the $8.50-$8.00 area risking to $7.50. The $11 area is our initial price target.
