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  • Wednesday, 16 Oct 2019

AirAsia 151019

AIRASIA Group Bhd extended its rebound for a third straight day after bouncing off a low of RM1.65 on Oct 10.

The rise saw a rapid increase in momentum and the share price challenging the 100-day simple moving average (SMA).

The moving average puts negative pressure on the share price and would be a crucial hurdle to overcome to sustain the rally.

Should the share price cross above this obstacle in the coming session, it faces a resistance of RM1.90, a breach of which would put it closer towards testing the uppermost 200-day SMA.

The 100- and 200-day SMAs overhead reflect the stock's losses over the July to October period. With a “death cross” appearing in early September following the 50-day SMA plunging below the 200-day SMA, the bear trend looks well established and would take a strong positive catalyst to unwind.

Looking at the technical indicators, they have hit overbought conditions, which suggests that the rally may be halted at the first resistance.

The slow-stochastic momentum index has risen to 90 points and remains bullish. The 14-day relative strength index has also grown to 71 points and remains ascending.

Meanwhile, the daily moving average convergence/divergence line has crossed higher than the signal line, suggesting a return to bullish momentum. The index has a ways to go before entering positive territory, which would signal the resumption of a positive trend.

In the event the stock fails to breach the immediate resistance, it would again enter a consolidation phase and gravitate towards RM1.71.

The following support rests at RM1.65, which represents the recent low that has held up on two other occasions this year in April and May, suggesting that it is a reliable buffer.

The comments above do not represent a recommendation to buy or sell.
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