Eye on stock

  • Business
  • Saturday, 20 Apr 2013

AFTER peaking out temporarily at a three-year high of 45 sen in mid-January, Redtone International Bhd retreated owing to an apparent profit-taking activity, dragging the shares to a low of 37 sen on Feb 6.

Thereafter, fresh bargain hunting activity emerged, leading prices to a gradual rebound.

This stock finished up half a sen at 42 sen yesterday.

Based on the daily bar chart, REDtone appears on a new leg of uptrend, albeit on a gradual pace. A breach of the recent peak of 45 sen, followed by the 48-sen barrier would see the prevailing trend becoming more bullish, enroute to the 60 sen-61 sen band. Heavy resistance is resting at the 73 sen-75 sen range.

Apparently, the oscillator per cent K and the oscillator per cent D of the daily slow-stochastic momentum index were on the rise. It had triggered a short-term buy at the neutral area yesterday.

Mirroring the trend, the 14-day relative strength index improved slightly from a reading of 45 on Tuesday to end the week at the 58 points level yesterday.

Meanwhile, the daily moving average convergence/divergence histogram had indicated a tentative convergence pictogram. It is expected to trigger a buy signal should prices continue to advance over the next several days.

Technically, indicators are changing for the better rapidly, implying prices are likely to climb in the short-term. Perhaps, investors can consider taking up a position at current levels.

Initial support is envisaged at the 100-day simple moving average (SMA) of 40.5 sen. An additional floor is pegged at the 50-day SMA of 40 sen, also acting as a stop-loss exit door.

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

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