GUAN CHONG Bhd has had a good year so far and there are indications it might see through the remainder of 2017 on a high note.
The stock has been on an uptrend since breaking out of a consolidation phase in April. Since April 12, it has risen nearly 120% to Tuesday’s intra-day high of RM2.03.
At present, the stock is hovering near its all-time high of RM2.11. The counter came close to that peak on Nov 14 when it touched the RM2.10 mark but the resistance proved stubborn and the counter pulled back.
The share price didn’t travel too far before it bounced off a support at RM1.89, triggering a technical rebound on Monday, further extended on Tuesday.
With the ascending trendline intact and the simple moving averages (SMA) rising at a steady clip, we look to the technical indicators to confirm a bullish bias.
From the slow-stochastic momentum index, we see upwards movement into positive territory.
The daily moving average convergence/divergence histogram has also picked up above the neutral line and is headed for a bullish crossing with the signal line, which would indicate a “buy” signal. A positive crossing over the next few days would help to confirm a new leg of uptrend.
The 14-day relative strength index has tapered out slightly at a healthy 65 points below the overbought line, but continues to rise northwards.
The upper barrier to the share price remains at the RM2.11 peak, a crossing of which will see the counter explore uncharted territory.
In the event of a correction, immediate support is pegged at RM1.88 where the 50-day SMA offers solace. A more concrete buffer rests at RM1.68, where the stock will meet the 100-day SMA.
The comments above do not represent a recommendation to buy or sell.
Note: This article first appeared in StarBiz Premium yesterday.