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Fan Yang

YY Inc. (YY) Pulling Back to Test Price Bottom; Monitor $70-$75 for Support

After YY Inc. $YY completed a rounded price bottom, I suggested upside towards the $95 level, although I noted that the resistance zone is really between $90 and $100. Price indeed found resistance right under $90 and formed a small double top. After this week's price action, I think there is going to be some further pullback to test the price bottom.

YY Daily Chart

(click to enlarge)

- On the daily chart we can see the rounded price bottom.
- We can also see that price has pushed above the moving averages as well as a falling trendline resistance.
- The RSi has been able to tag 70 and has held above 40, which represents continuation of the 2019 bullish momentum.
- However, after the double top and after price retreated from $85 this week, I think there will be a pullback towards the $75 area.
- I suspect there will be strong support in the $70-$75 area with the 200-day simple moving average (SMA) right around $75.
- The RSI might dip below 40 or even fall to 30.
- We might see some further sideways action as well after the dip. 
- But if price does hold above this area, we can have more confidence that YY has bottomed.
- A break below $70 on the other hand would suggest a failed bullish reversal attempt.
- This might be a scenario that leads to further bearish correction, and the pressure will be on the 2018 lows around $57. 

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