EKOVEST: Consolidate and distributing

In May 2019, Ekovest dropped together with the mini bear market. The low volume indicated a lack of demand to absorb the supply. Although the green candle with higher volume on 14th May showed a possible spring event, the selling continued on the following days. The stock drop to RM0.72 and bounced to RM0.85 on 10th June. However, an upthrust candle with similar volume was traded on 11th June.

Upthrust means strong supply

Chartists wary the upthrust candle with high volume. It is a solid indicator of supply at a particular price, and chartists will draw a resistance line for the next price action analysis. In the course of my technical analysis study, the upthrust candle with high volume always follows with retest. If you buy at a high price, you may be suffering because the retest could be more than 10 percent. Furthermore, the stock might take a long time to increase back to your purchase price. It is wise to wait for the retest and stay monitor. 

The stock confirmed the upthrust resistance on 19th June. The higher volume showed the supply was huge and preventing the stock from advancing. Although the stock was testing the resistance on 1st July, the selling overcame buying and dropped 6.95% on 8th July. I won’t buy this stock because the selling might continue.

Consolidate and distributing

Here, the stock continued to consolidate at the trading range between RM0.87 and RM0.79. Although there was a gap up day on 16th July, an upthrust day happened on 29th July. I remember someone was saying the price will go above RM1.00 and I wonder how he justifies it. Throughout my analysis on Ekovest, the consolidation with upthrust candles looks like a distribution phase. Choose wisely for the trade you want, I reckon retailers should continue to monitor and don’t buy first. After all, that’s your hard-earned money. Protect capital must be prioritised. (Click here for the full picture)  

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Author: Gerald Koh