SUPPORTLINE
JOHORE Tin Bhd peaked out of a 15-month uptrend on May 8 this year before entering correction mode. The short-term descending trend line over the last seven months has proved to be a strong resistance to the counter, whereby multiple attempts were made to cross it but to no avail. Most recently, an attempt to scale the hurdle on Nov 6 resulted in a minor breach, but upon turning back the stock fell even lower, accelerating the negative crossing between the 100-day and 200-day simple moving averages (SMAs). The negative postures of the SMAs are exertng tremendous downward pressure on the counter, making a breakout of the current bearish trend all the more difficult. The most recent pullback, however, has halted for now and we are seeing an attempt to return to higher ground. From the looks of the formations on the daily price chart, it would take crossings of the bearish SMAs and a breach of the negative trend line if the counter were to break out of its current predicament. The technical indicators are showing some upsides, which suggests a mounting challenge to the hurdles. The daily moving average convergence/divergence histogram is making an upward hook towards the signal line and this raises hopes of both a “buy” signal and a return to positive territory. Meanwhile, the slow-stochastic momentum index crossed into oversold territory and bounced upwards earlier last week, triggering a “buy signal”. This coincided with the share price hitting its support level, forecasting the reversal of the downtrend. The index is continuing upwards at 70 points, suggesting strength in the current trend. The 14-day relative strength index has turned bullish as well at 49 points, giving further confirmation of growing momentum. The descending trend line is pegged at RM1.45, whereby a breach would allow the stock to roam higher to the recent peak of RM1.76. Meanwhile, support rests at the RM1.16 level, while more concrete support sits at around the RM1 mark.
The comments above do not represent a recommendation to buy or sell.
Note: This article first appeared in StarBiz Premium yesterday.