3/2016 - Follow-up on Tek Seng Holding Berhad

I am writing this because an incident happened earlier this morning and I think it is worth writing down for my future reference.

On past Saturday, 9-Jan-2016, I posted an article about my thoughts on Tek Seng Holding Berhad (7200) and here is a follow-up of on same topic.

Earlier this morning, my sister/mentor texted me out of sudden and advised me to sell Tek Seng because she thought the recent activities of this counter has been abnormal and speculated a downtrend may be coming. After reading the message, I sold the counter without a second thought and then just continued with my work. Several hours later, just as what was speculated, the counter price dropped several cents and it closed at RM1.21, a 3.2% dropped in total. I must say I am thankful for having a good mentor and I followed my gut.

Now, let's view the incident in a technical point of view.

The chart above refers to Tek Seng's stock price and I have marked the bar with a star which I first talked about it on 9-Jan-16, last Saturday. Today, as you can see from the chart, there is a black candle stick at the end of the line. This sudden change of pattern reminds me of a chart pattern that I studied few years back and I would like to share it here to validate if the information I found before correct. Here's an explanation on "Three Inside Down".

Three Inside Down candlestick formation is found at the top of an uptrend. It means that the uptrend is possibly over and that a new downtrend has started. A three inside down candle stick formation needs have the following characteristics:

1. The first candle should be found at the top of an uptrend and is characterized by a long bullish candlestick.
2. The second candle should make it up all the way down the midpoint of the first candle.
3. The third candle is an unknown at the moment but the expected pattern should be "The third candle needs to close below the first candle's low to confirm that sellers have overpowered the strength of the uptrend". The result will be reviewed tomorrow.

Now, the chart pattern suggests it is the beginning of a downtrend but the MACD result still indicate it is an uptrend. So, will the price keep dropping like what is expected from the chart pattern? Or the price will rebound and rally tomorrow?

PS: This is just a sharing on thought, not a tip on stock trading. Please do your homework before making any decision.