Eye on Stock: Ahmad Zaki Resources

  • Stocks Analysis
  • Saturday, 02 Nov 2019

AHMAD ZAKI RESOURCES BHD (code: 7078) gapped up in yesterday trade to mount a challenge to the 200-day simple moving average (SMA) in a show of bullish momentum.

Rising trading volume suggested that investors were reacting to a positive buying lead.

The strong performance marked a third consecutive day of gains for the stock as it resumed a recovery pose that was initiated following a rebound from a low of 32.5 sen on Oct 2.

However, the share price faces downward pressure from the 200-day SMA, which remained intact as at yesterday’s closing. A nearby resistance of 42.5 sen could serve as a hurdle to a further advance, and could stem the rally to trigger a consolidation phase.

Sustained buying interest is needed to keep the rally going and should the stock cross this hurdle, it would be trading above the key SMAs for the first time in over six months.

In the event of consolidation setting in, there is support at the 39-sen mark, which represents the lower end of the share price gap left behind yesterday.

Below that, the 37-sen mark, which is seeing a convergence of the 14-, 21- and 50-day SMAs, represents firmer support.

Looking over the longer term on the daily price chart, the dominant trend remains bearish with the short-term SMAs remaining at lower values than the long-term SMAs. A sustained push would be required to set up a stronger price trend and reverse the negative outlook.

For the time being, the ongoing rally has kept the technical indicators positive with no signs of subsiding.

The slow-stochastic momentum index is close to entering overbought territory at 79 points but remains growing at a steady pace.

This momentum growth is also reflected in the 14-day relative strength index, which is currently overbought at 77 points.

The daily moving average convergence/divergence line has pushed higher off the signal line and crossed the zero line to indicate a bullish trend.

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

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