Elliott Wave Analysis of Yangzijiang (BS6) – Approaching an Important Support

Yangzijiang is involved in the business of ship building mainly in China and is listed on the Singapore Stock Exchange. The price of Yangzijiang has taken a beating recently together with the rest of the ship building sector. Below is a long term chart of Yangzijiang dating back to 2007. As can be seen in the chart, the hey days of Yangzijiang seems to be behind us and the charts are sending alarm signals as the price is approaching a long term support line.

YangZiJiang Long Term Elliott Wave Chart - 24 May 2012

The count that I have labelled in this chart starts from the peak of Oct 2007. From here, the Intermediate degree waves of Primary wave [A] can be clearly counted. The Primary wave [B] is a standard zig-zag. Primary wave [C] that is panning out now appears to be in a Expanding Triangle and each of legs of the Expanding Triangle do have Fibonacci relationship with the prior legs.

As can be seen in this chart, there are two support lines (in red) that stretches back to Oct 2008 and Apr 2008. The first line that the price  is approaching now will be hit around 87.5 cents. Breaking this would be the first confirmation of further downside. The second line is a horizontal line and it is at 75 cents and breaking this would definitely confirm that the further price slide below 50 cents level is highly likely.  Breaking these two support lines would confirm that the shipping sector is facing some major challenges going and it is unlikely to recover any time soon.

Yangzijiang’s fundamentals seems to be in good order and it a sought after stock due to its shareholder friendly dividend policy. It remains to be seen whether the dividend policy would remain in place as the turbulent times lies ahead for the shipping industry.