Geely Auto has retreated from its high, focus on the key support level at HKD 24.2

Last Friday (April 17), the stock price closed at HKD 24.72, rebounding from the low of HKD 14.96 and continuing to rise sharply; it had stabilized above multiple medium- and short-term moving averages that day, maintaining a strong short-term trend.

From the perspective of the automobile manufacturing sector, the market trend was mixed last Friday (April 17). $NIO-SW (09866.HK)$Up by 3.42%, but major stocks like Geely Auto, Li Auto, and BYD recorded slight declines or remained flat. Technical risks emerged simultaneously:Geely Auto's RSI reached 77 (extremely overbought), with the technical signal showing 'sell,' making it the stock with the most prominent overbought risk in the sector; $BYD COMPANY (01211.HK)$RSI 68 (overbought)、Nio's RSI reached 70 (extremely overbought), technical signals are predominantly bearish, indicating that the sector as a whole is facing profit-taking pressure. In contrast, $LI AUTO-W (02015.HK)$ is one of the few stocks in the sector receiving a 'buy' signal with relatively low overbought levels. This suggests that although Geely Auto maintains a bullish alignment, its short-term gains have significantly exceeded the reasonable range of its peers.The overall technical pullback pressure in the sector is exacerbating the risk of high volatility.The 'breakthrough' rally that investors are anticipating will first need to digest its own and the sector's overbought conditions before effectively breaking through the upper resistance.

Technically, $24.22 remains the most important short-term watershed. As long as the stock price stays above it, the overall strong uptrend remains intact. On the previous day (17th), the stock price was already noticeably higher than the middle line of the Bollinger Band at $22.19, and gradually approaching the upper band at $26.70, reflecting the continuation of the uptrend. However, this also indicates that the current price is in a relatively high zone. The Relative Strength Index (RSI) stands at 71.92, showing that short-term momentum is still very strong but has entered an overheated zone. This also explains why investors, while generally optimistic, are starting to be cautious about a possible short-term consolidation.

From investor commentary, it can be seen that the overall market sentiment is clearly leaning towards optimism. Many comments are beginning to anticipate a breakout to 30 yuan or even higher targets, while some believe that the recent fluctuations are just shaking out retail investors and that the strong trend remains unchanged. However, some voices are starting to worry about high-level volatility, believing that the rapid price increase would benefit from a healthy pullback if it occurs, and there are even concerns that once the trend reverses, a stampede-like sell-off might happen. This atmosphere of excitement chasing the rally while being cautious of shakeouts perfectly reflects that Geely Auto has reached a quite critical short-term position.

Based on the focus of investor comments, the market’s three main concerns at present are:

First, whether the stock price is just consolidating before moving higher;

Second, when can it return to the hometown price, or even challenge 30 yuan;

Third, whether one should wait for a pullback before entering in the short term.

Based on technical analysis, the current reasonable interpretation is that Geely Auto is still in a strong upward trend but has approached the resistance zone between 25.62 yuan and 26.7 yuan. If it fails to break through effectively, there is a higher chance of consolidation at high levels in the short term. If the stock price can stabilize above 24.22 yuan and further break through 25.62 yuan, it may test 26.7 yuan in the short term. However, if it falls below 24.22 yuan, attention should be paid as the strong uptrend might shift into consolidation, with the stock price possibly retesting the support at 22.19 yuan.

Overall, Geely Auto's current trend remains strong, but the upward movement has already lasted for a while. The risk-reward ratio of entering at the current level is starting to decrease. In the short term, it would be more suitable to wait for a breakout confirmation or a pullback to stabilize before making a move.

Reply to some investors' views:

@努力力爭上游 The 10-day line couldn't break through.

This observation is reasonable; whether the short-term strength can be maintained hinges on whether the support zone holds.

@Af-1A slight drop would actually be healthier.

If there is consolidation in the short term, it would be normal as long as the 24.224-yuan level does not break down, which might not necessarily harm the overall uptrend.

@花小邪 Short-term target at 30

30 yuan can serve as a further target, but in the short term, it needs to digest the resistance zone between 25.620 yuan and 26.698 yuan first.

Based on the above analysis, the strategies for deployment can be divided into the following main approaches:

$BIGEELY@EC2606A.C (20970.HK)$$UBGEELY@EC2606A.C (21015.HK)$

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Reminder: This article does not constitute any investment advice.

This article is for reference only and does not constitute any investment advice. The market data, opinions, and analysis contained herein may change at any time without prior notice. We are not responsible for any loss or damage caused by reliance on the information in this article. Technical analysis only shows whether certain technical conditions are met; a comprehensive assessment of asset performance should be conducted using additional data. Decisions to trade should not be based solely on this article. Please note that past performance is not indicative of future results.

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