OCK Group Bhd (code: 0172) is on an extended rally after bouncing off the lower limit of its consolidation channel.
It moved above the 200-day simple moving average (SMA) to breach the 63-sen resistance, and in crossing, broke out of the consolidation phase.
The share price gapped up at yesterday’s opening bell as buying momentum picked up and rose to an intra-day high of 64 sen, which put it within reach of the next target of 68 sen. However, at yesterday’s closing, the stock shaved gains to end at 61 sen.
The simple moving averages are also showing an improving price trend, as the 200-day SMA is descending below the short-term moving averages and looks on course to meet the rising 50-day SMA.
This suggests a growing bullishness in the daily price chart, and this technical breakout could be the start of a sustained advance.
With regards to the technical indicators, things are also looking more positive.
The slow-stochastic momentum Index has risen to 59 points, which is a bullish level and shows growing momentum.
The 14-day relative strength index has also risen to 73 points, which puts it into overbought territory. The crossing into overbought conditions, short of any turn back, suggests strong momentum.
The daily moving average convergence/divergence (MACD) line has met the signal line. Any further advances will trigger a “buy” signal and indicate the start of a positive trend.
It is worthwhile to note that during the stock’s previous challenge to the price resistance, the MACD line had met with the signal line but turned back, failing to give a “buy” signal. A positive crossing this time around in tandem with a share price breakout above 63 sen will lend strong confirmation of a continued uptrend.
Should the share price fail to surpass the obstacle, it may return to the resistance-turned-support at 54 sen. The nearby 50-day SMA at 53 sen serves as a crucial level, a crossing of which would be a highly negative development.
The comments above do not represent a recommendation to buy or sell.