Mitrajaya Holdings Bhd (code: 9571) has been gaining momentum of late, although it remains trapped within a sideways trading range.
Yesterday, the share price pushed off the immediate support of 37.5-38 sen, which represents the lower limit of a consolidation channel, and hit an intra-day high of 39.5 sen.
It seemed fitting that the share price should pause at this level as there is a convergence of simple moving averages (SMA) near 40 sen, a symptom of the ongoing consolidation.
However, a pick-up in buying interest should take the stock past this hurdle and towards the higher end of the consolidation range towards 45 sen. The upswing offers buying opportunities for investors, despite profits being capped at the immediate resistance.
Based on the daily price chart, the stock’s outlook is turning more bullish given the “golden crossing” between the 50-day and 200-day SMAs towards end-April, suggesting a positive bias.
Despite the improving long-term outlook, trading volume has kept relatively low to suggest that buying interest remains muted.
The momentum indicators remain weak despite gradually improving suggesting it may take some time before the stock breaks out of range-bound trading.
The slow-stochastic momentum index has travelled to 16 points en route to a crossing above the oversold line, suggesting a swing towards bullish momentum.
The 14-day relative strength index is also similarly growing and headed towards the mid-line at 40 points.
The daily moving average convergence/divergence (MACD) line remains below the signal line, which suggests an uptrend has not started. Further advances in the share price will swing the MACD around towards a positive crossing and a “buy” signal, which will trigger the start of a rally.
The 37.5-38.0 sen range remains a reliable support for the share price, and meets the 200-day SMA. A negative crossing of this point would mark the deterioration of sentiment in the stock. The next support is pegged to the the 100-day SMA below at 35 sen.
The comments above do not represent a recommendation to buy or sell.