SUPPORTLINE by FONG MIN YUAN

WTK Holdings Bhd put in strong gains for a second consecutive day, which saw its share price rise above the 50-day simple moving average (SMA) and into more bullish territory. At Monday’s intra-day high of 54 sen, the stock had come within its immediate resistance of 55 sen, which meets the 100-day SMA. The two-day push serves as a 40% retracement of the value the stock had lost during the three-month decline between Aug 22 and Nov 22. Given the rapid gains in the share price, the stock looks destined to pause and enter consolidation mode while profit-taking ensues. However, there are indications of a possible breach of the resistance following should the buying interest resume, given the bullish momentum in the technical indicators. While the indicators have been lifted closer to overbought levels, there appears to be room yet to grow. The slow-stochastic momentum index rests at 66 points and remains at a rising angle, suggesting that there may be more gains to be made before it attempts to neutralise. The 14-day relative strength index has arrived at overbought conditions at 86 points and may be at risk of returning to neutral ground. The daily moving average convergence/divergence line, however, is looking bullish, outpacing the signal line. Trading volume on the counter has been elevated over the last two trading sessions. Should it continue over ensuing sessions, a positive breach of the 55-sen mark will see the counter rise towards the next resistance at 60.5 sen, where it will challenge the uppermost 200day SMA. A retreat, however, will see the share price return below the 50-day SMA and to the support at the 45-sen mark. The comments above do not represent a recommendation to buy or sell. Note: This article first appeared in StarBiz Premium yesterday.