MAJUPERAK Holdings Bhd broke out of the uppermost 200-day simple moving average (SMA) that was exerting negative pressure on the share price on Monday.
The counter has been seeing an increase in positive momentum over the last two months.
The share price had been in decline since July 2017, taking it from a high of 60.5 sen to a low of 24 sen in July.
The downtrend resulted in negative crossing in the SMA lines, suggesting the formation of a long-term bear market.
Nevertheless, the recovery on the daily price chart over the last two months saw the stock moving to a session high of 37 sen on Monday, which comes within arm’s length of the 38.2% Fibonacci retracement ratio at 38 sen.
There is resistance pegged to the 40 sen mark, which the stock would have to breach before it moves in position to retrace to the 50% level at 42 sen.
To the lower end of the chart, the 200-day SMA is a resistance-turned-support at 33 sen while the 50- and 100-day SMAs offer further solace at the 30 sen mark.
Looking at the technical indicators, the slow-stochastic momentum index is below overbought territory at 73 points and has curved downwards in retreat.
Nevertheless, it remains at a healthy level and is short of giving a ”sell” signal.
The 14-day relative strength index remains below overbought territory at 62 points.
Meanwhile, the daily moving average convergence/divergence line has crossed the signal line to issue a “buy” signal.
This suggests a continuation of the current rally.
Investor interest in the counter also picked up on Monday.
But sustained buying is required to see the stock take out the stiff resistance ahead.
The comments above do not represent a recommendation to buy or sell.
Note: This article first appeared in StarBiz Premium yesterday.