Malaysia Marine and Heavy Engineering Holdings Bhd (code: 5186) picked up past the 200-day simple moving average (SMA) yesterday, indicating potential for further gains over the near term.
Based on the daily price chart, the stock has been held in consolidation mode after retreating from a recent peak of 72 sen.
The recent uptick in momentum, however, lends the possibility that the share price will mount a challenge to this recent high and resume an uptrend.
Looking at the longer-term formation on the price chart, the counter has been on a descent since hitting a year’s high of 98 sen on Jan 8, 2018. While the share price recently moved above the descending trend line in early January this year, it remained at risk of a break down.
Last Wednesday’s dip to an intra-day low of 61.5 sen and below the 100-day SMA served as evidence that investor sentiment on the counter remained shaky, although the share price put in a positive performance close by day’s end.
The improved positive momentum seen yesterday helps to reduce breakdown fears even as the momentum indicators suggest further upsides in the immediate term.
However, the immediate resistance of 72 sen remains a stiff hurdle that will hold fast short of sustained buying interest.
A breach of the hurdle would see the share price rise towards the next resistance at 76.5 sen and retrace to late July 2018 levels.
The 64-sen mark serves as a support for the counter, being the lower end of the trading range in recent weeks. The 50-day SMA line at 61 sen serves as further support, with a breach below this level signalling a deeper negative retracement.
The technical indicators are looking more positive for now. The slow-stochastic momentum index has reached overbought territory at 85 points, and looks to extend itself further.
The 14-day relative strength index is also gaining momentum at 69 points.
The daily moving average convergence/divergence line remains below the signal line, suggesting that a positive trend has not yet taken root.
The comments above do not represent a recommendation to buy or sell.