Boustead Plantations

  • Support Line Premium
  • Tuesday, 26 Nov 2019

BOUSTEAD Plantation Bhd continued its path to recovery on Monday after breaking above the 100-day simple moving average (SMA).

The positive crossing of the moving average signals improving sentiment in the counter and further confirms the upward momentum the stock has been experiencing since the start of November.

Trading volume over recent sessions has also been elevated, indicating that investors continue to take interest in the counter.

In the session prior, the stock came in danger of ending its recovery phase when the share price fell in a session of sharp profit-taking.

However, Monday's positive performance kept the rally alive although it hit a ceiling in the form of the overhead resistance of 72 sen.

The counter is expected to come under strong selling pressure at this point, given the proximity of the falling 200-day SMA overhead. As such, the stock could be seeing some consolidation forward below the resistance.

A breach of the 200-day SMA, which has remained intact over 14 months, would extend the recovery mode of the stock with an eye towards the higher resistance of 83.5 sen.

The share price is currently receiving support from the 50-day SMA and rising short-term 14- and 21-day SMAs near 63 sen. However, firm support for the counter can been seen at 61 sen, which has offered reliable bounce over the past three weeks.

Should this support fail, next support is found at 55.5 sen, which represents the stock's historical low. An approach of this level would put the counter in danger of falling further still to new record lows.

Looking at the technical indicators, there are signs of consolidation in the pipeline.

The slow-stochastic momentum index has curved lower to 66 points and triggered a "sell" signal. However, the daily moving average convergence/divergence line remains in positive territory above the signal line, reflecting the stocks' return to a short-term positive trend.

The 14-day relative strength index has risen into overbought territory at 88 points but remains at a growing trajectory.

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

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