Eye on stock: Felda Global Ventures

FELDA Global Ventures Holdings Bhd (FGV) shares touched an all-time low of RM1.18 on Aug 26 amid extended selling pressure.

Thereafter, prices turned sideways briefly on consolidation before the bulls embarked on a recovery journey in the wake of fresh bargain hunting interest, which witnessed this stock hitting a high of RM2.04 during intra-day session, the best since May.

Based on the daily chart, FGV has been trending up nicely the past couple of months, with the rising 21-day simple moving average (SMA) line supporting the trend.

However, more significantly, prices had penetrated the uppermost 200-day SMA on Thursday, also the first time in 17 months and more importantly, the breakthrough was accompanied by a bigger trading turnover.

Theoretically, they suggest a bullish reversal. Going forward, prices are expected to sustain the upward thrust amid follow-through interest and should there be a pullback due to an overbought condition, it is viewed as a temporary process to avoid overheating, meaning investors can consider accumulating more on weakness, if there is any.

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Elsewhere, the oscillator per cent K and the oscillator per cent D of the daily slow-stochastic momentum index were fast reaching the top, but they show no sign of weakness just yet. A short-term buy signal was triggered late last month.

Mirroring the upward momentum, the 14-day relative strength index firmed from a reading of 52 on Oct 28 to settle at the 85-point level yesterday. In addition, the daily moving average convergence/divergence histogram expanded steadily in tandem with the daily trigger line to keep the bullish note. It has flashed a buy on Tuesday.

Technically, chart development appears pretty promising. Combined with the positive landscape on the indicators, FGV shares are poised to advance in the short term. Initial resistance is envisaged at the RM2.20-RM2.25 area. A breach of the RM2.50-RM2.55 band hurdle may clear the path for the bulls to challenge the heavy upper barrier of RM2.97-RM3 range. The recent breakout point of RM1.88 will now act as the immediate support and concrete floor is pegged at the 21-day SMA of RM1.76.

• The comments above do not represent a recommendation to buy or sell.