Supportline

MAJUPERAK Holdings Bhd broke out of a bearish channel in Tuesday trade to advance past the 100-day simple moving average (SMA) and embark on a positive trend.

The share price has been trading below the short-term moving averages in recent days, trapped under a negative channel that saw it gravitating to a low of 20 sen.

However, some positive momentum was seen in the counter on Monday when the share price made a stronger closing above the 50-day SMA at the 22-sen mark.

This return to a bullish trend was confirmed on Tuesday when the stock gapped up at the opening bell and proceeded to rack up gains past the 100-day SMA at 24.5 sen, which represents a crucial resistance.

At Tuesday’s intra-day high, the stock was trading at 26 sen, within reach of the 200-day SMA overhead at 27 sen.

However by market close, the counter pared gains to return to 23.5 sen, once more below the 100-day SMA.

A buying lead has come into play to attract investor interest as trading volume surged on Tuesday to its highest since July 2017. However, it is left to be determined if profit-taking pressure, as seen in the late trading hours on Tuesday, will put a halt to the current advance.

In the event of a convincing push above the 100-day SMA, a further breakout of the 200-day SMA would help to remove the threat of the stock returning to a consolidation phase.

Failing to get past the 100-day SMA, the share price could subside further towards the 22-sen level. Going by the technical indicators, the rally is moving along on strong momentum.

The slow-stochastic momentum index has made an incline towards 52 points while the 14-day relative strength index also suggests growing momentum at 65 points.

The daily moving average convergence/divergence line marks the start of a positive trend, crossing the signal line and en route to moving above the zero line.

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

Note: This article first appeared in StarBiz Premium yesterday.