Supportline by FONG MIN YUAN

TEO Seng Capital Bhd’s rally is gaining momentum as it advanced for a second straight day on Wednesday along an ascending trading channel. The positive trendline stretches back for two months in a gradual ascent that see the stock heading for the July high of RM1.27. Based on the daily price chart, the stock’s bullishness is set to continue as it continues moving ahead of all the key simple moving averages (SMA) with rising 14- and 21-day SMAS reflecting the current short-term trend. At Wednesday’s trading high of RM1.22, the share price has some way left to grow before hitting the RM1.27 resistance. Given the overbought levels on the technical indicators, this may mean a halt in the ongoing rally while consolidation takes over. While trading volume on Wednesday remained at levels comparable to that of previous days, a spike in investor interest could be a sign that this resistance is ready to give way. Nevertheless, the horns are clearly showing in the technical outlook with the daily moving average convergence/divergence line angling higher away from the signal line. The bullish trend is shown growing in strength, suggesting that any pullback at the resistance may be a temporary pause. The slow-stochastic momentum index is coming closer to overbought levels at 67 points, but shows no signs of subsiding as yet. The 14-day relative strength index also overbought at 80 points and continues to rise in extended overbought mode. In the potential breach of the resistance, the share price may rise to the next target of RM1.34. Support can be found at the recent low point of RM1.16. Next support is pegged to RM1.11, which comes near a convergence between the 100- and 200-day SMAS.

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

Note: This article first appeared in Starbiz Premium yesterday.