Technical Analysis - Osaka Gas (JP:9532)

This post is a follow-up to the fundamental analysis of Osaka Gas, which can be found here:

http://undervaluedjapan.blogspot.de/2012/05/osaka-gas-jp9532.html


For 17 years Osaka Gas has been in a stubbon (long-term) range bound market between 300 yen and 440 yen, with brief periods of under- and overshooting.

Especially interesting is the false break-out to the downside in the year 2000 (height of the TMT mania), which ended in a very interesting japanese candle-stick pattern, the so called morning doji star, which is a major reversal pattern. The Doji candle is accompanied by an increase in volume and therefore increases the siginificance of the chart pattern.

Furthermore, since the morning doji star formed, volume increased siginificantly.

Since 2000 the stock is in a major speculation and accumulation phase.

(click chart to enlarge)

In the 5 year monthly chart it becomes quite apparent, that under 300 yen there is significant interest in the stock. Also interesting is the (long-term) bullish divergence between MACD/ RSI indicators and the Osaka Gas's price chart. Although the price chart is in a range bound market, MACD and RSI are rising.

Another hint that the stock is beeing accumulated by the smart money.

A positive for the stock (technically) is that it broke-out a 5 year of downward channel at the beginning of this year.

But between 310-350 yen there are quite bunch of strong long- (medium-) term horizontal resistances, which have to be overcome for any further significant appreciation of the stock.

(click chart to enlarge)

The two year chart is showing some of the horizontal resistances and a short- term uptrend (not very significant) within a (shorter term) range bound market

(click chart to enlarge)

The short-term daily chart is showing a falling wedge pattern (bullish reversal), which was first broken to the downside (unusual), generating a short-term sell signal. The break-out to the downside of the falling wedge didn't last very long. It stopped at a horizontal support at 305 yen. Stock price went back into the falling wedge, generating a false sell signal, just to break-out to the upside of the falling wedge at the blink of an eye .

(click chart to enlarge)

The false break-out to the downside of the falling wedge was followed by a rounding bottom (bullish formation) which was accomponied by bullish divergences in the indicators. With the break-out over 315 yen the (short-term) rounding bottom formation was completed. It is the base for the false (sell) signal, the reentry into the falling wedge, as well as the break-out of the falling wedge to the upside, which is occuring right now. 315 turned from (short-term) resistance into (short-term) support.

(click chart to enlarge)

Conclusion

Oska Gas is one of the most interesting stocks I've ever seen to analyse technically. The long-term range bound market is interspersed with bullish/ bearish short-term/medium-term chart patterns within chart patterns, generating false break-outs in a row and whipsawing within this huge long-term range. I reckon japanese trader love speculating in this stock, hence adding liquidity, what makes it easier for the big money to accumulate it.

A long-term trend will only be established with (significant) break-outs at 320,330,350 and finally 440 yen.

So a long and tough hike for Osaka Gas.