SUPPORTLINE

MUDAJAYA Group Bhd‘s 22.5% surge in share price on Wednesday saw the stock challenging the short-term descending trend line, en route to a break out. At the counter’s intra-day high of 36 sen, it challenged the negative trend but was unable to cross it before profit-taking pressure caused a retreat in the share price. Nevertheless, based on the sharp rise in positive momentum, a break out looks imminent after the rally takes a breather. The stock had been on a decline since the final week of July, falling from a height of 61 sen to bottom out at a low of 26.5 sen on OCt 25. Over the past week, however, the stock has been building momentum leading to Wednesday’s performance. The slow-stochastic momentum index has curved down short of overbought conditions at 69 points. The 14-day relative strength index has risen rapidly towards 36 points, indicating more room for growth. The daily moving average convergence/divergence line is at a positive position to the signal, having crossed it to give a “buy” signal. Investor interest in the counter has spiked, with trading volume rising to its highest since June 2017. In the event of continued buying interest in the stock, it looks set resume the rally and in crossing the 50-day simple moving average (SMA) at 41.5 sen, it would challenge the next obstacle at 45 sen. On a longer uptrend, the next resistance rests at 62 sen, which meets the uppermost 200-day simple moving average. The share’s recent bottom of 26.5 sen serves as the supporting level for the stock and a breach of this mark would confirm the resumption of a downtrend.

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

Note: This article first appeared in StarBiz Premium yesterday.