Esso- still consolidating.

Esso is a short-term downtrend, with lower 'high' and lower 'low' (see the series of H-H1-H2-H3 & L-L1-L2-L3). If the current rebound can surpass the H3 at RM5.23, the short-term downtrend may have found a bottom. Until then, the short-term downtrend set the price direction for this stock, with horizontal support seen at RM4.90, RM4.70, RM4.50 & RM4.30.


Chart 1: Esso's daily chart as at June 7, 2011_3.30pm (Source: Quickcharts)

From the monthly chart below, we can see that Esso broke above its long-term downtrend line (RR) at RM3.20-3.30 in February this year. The stock raced until it hit the line connecting the peaks since 1998 until to date (R1-R1) and consolidated for one month. last month, it broke above the R1-R1 line & entered into the horizontal resistance clustered zone of RM6.00-6.30.


Chart 2: Esso's monthly chart as at June 1, 2011_plotted on log scale (Source: Tradesignum)

Based on the two charts, I believe that it is too early to call an end to the current price consolidation. However, I expect the stock to have strong support at around RM4.30-4.50 level (coinciding with the R1-R1 line).