GUAN CHONG BHD enacted a strong rebound on Monday with a gap up at the opening bell suggesting a jump in positive momentum.
At Monday's intra-day high of RM3.56, the share price has made a move past the short-term simple moving averages (SMA), which suggests a growing positive trend.
A sustained recovery past the 100-day SMA will see the share price head towards the overhead resistance at RM3.78.
The stock has been moving in a consolidation pattern over the last two months after having undergone a correction period in May and the first half of June.
A break out of the resistance would see the stock resume an uptrend in an attempt to reclaim the recent multi-year peak of RM4.24.
Below the current trading level, the 200-day SMA continues to rise and offers support. A breach below this moving average, which has remained intact since August 2018, would be a negative development for the stock.
Support for the counter rests at the lowe end of the trading channel at RM3.32, a negative crossing of which would indicate a convincing breach of the 200-day SMA.
Looking at the technical indicators, the forecast remains weak although gradually improving.
The slow-stochastic momentum index has returned from under the oversold line at 27 points. A positive crossing between the percent K oscillator and percent D oscillator has occurred, resulting in a “buy” signal.
The 14-day relative strength index meanwhile has also returned to a northbound trajectory and growing stronger at 52 points.
The daily moving average convergence/divergence (MACD) line remains in negative territory below the signal line,. However, the descent appears to have halted for now as the MACD turned higher to approach the signal line.
The comments above do not represent a recommendation to buy or sell.
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