Eye On Stock

MALAYSIA Marine and Heavy Engineering Bhd (code: 5186) tested the immediate resistance represented by its recent share price peak of 89.5 sen yesterday.

The stock could be seen struggling to pass even as it briefly breached the resistance by hitting an intra-session high of 90.5 sen. As at yesterday’s close, the hurdle remains intact.

Friday’s advance represented a fourth day of gains and a second consecutive day of rapidly rising momentum for the stock.

The share price gapped higher at the opening bell and proceeded to chalk up gains that affirmed the start of a rally, which could be extended over the immediate time period.

Based on the daily price chart, the stock is trading at a bullish clip above the key simple moving averages (SMAS).

The short-term SMAS are also on the rise, with the 14-day SMA returning to a positive trajectory past the 50-day SMA.

Apart from the current challenge to the resistance, it appears the bulls will have the opportunity to charge ahead toward the stock’s 2019 high point of 97 sen.

There is a risk that the technical indicators are showing overbought conditions. However, the daily moving average convergence/divergence line displays a sharp return to bullish momentum in positive territory, which support the view that the positive trend is here to stay.

The slow-stochastic momentum index has risen to 86 points and could travel higher in extended overbought mode. This is also reflected in the 14-day relative strength index, which has crossed into overbought conditions at 80 points.

Any signs of these indicators neutralising from overbought conditions would result in a consolidation phase, although a brief halt in the rally would be healthy for the stock before it resumes its uptrend.

A new support line has emerged at the 86-sen level, which represents the bottom limit of the gap left behind yesterday.

The convergence of SMA lines at the 83-84 sen mark also serves as a buffer while the support line is drawn just under at 82.5 sen.

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