Pestech International Bhd's strong advance in Wednesday trading seemed to have fizzled by market close as the share price returned to its consolidation channel.
In intra-day trade, the share price crossed above the 100-day simple moving average (SMA) in a bullish turn for the stock. There was a sudden surge in buying interest as a fresh buying lead entered the market.
Trading volume in the counter spiked to its highest since January 2018.
The share price revved up to a Wednesday intra-day high of RM1.15, en route to a recovery to its pre-correction level of RM1.29, last seen in February this year.
Following the correction, the share price became submerged under the 100-day SMA in a consolidation phase, with Wednesday's intra-day breach being the strongest crossing thus far.
Wednesday's rally serves as a possible indicator for the stock's recovery although profit-taking took it to a lower advance of RM1.05, near the 50-day SMA, by market close. A positive performance over the coming sessions will indicate if there is any sustained interest.
Should there be a follow-up in buying, the stock faces its next resistance at RM1.18. Overhead, the 200-day SMA, which has remained intact since May 2018 continues to fall and exert downwards pressure near RM1.21.
The technical indicators are mixed. While the 14-day relative strength index shows improving momentum at 54 points, the slow-stochastic remains weak at 32 points.
A session of follow-up buying could turn the slow-stochastic to a positive trajectory, signaling the start of a possible rally.
The daily moving average convergence/divergence line has crossed into a “buy” signal and continues to rise, indicating that a positive trend has taken root.
Over the immediate term, the stock is seeing some support near a convergence of moving averages at RM1.04. Lower still is the share price's recent low of RM1.
The comments above do not represent a recommendation to buy or sell.
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