Eye On Stock

HANDAL Energy Bhd (code: 7253) remains on a short-term ascending trend line, which bodes well for further advances over the immediate horizon.

The stock put on a strong performance on Friday, negating fears that it would enter consolidation mode after a brief rally. Trading volume over the session was also the strongest over the week, and rose to a three-month high.

While the stock started the week below the 100-day simple moving average (SMA), gains over the ensuing days lifted it comfortably above the uppermost moving average.

Now trading above all the key SMAS, the counter looks poised for further growth.

Apart from forming a positive trendline, the ongoing rally has also turned the 14- and 21-day short-term SMAS higher, signalling growing bullishness. A positive crossing of the short-term SMAS over the 100-day SMA would further enforce the improving outlook on the daily price chart.

Should the positive momentum continue to grow, the share price could approach its next resistance at 48.5 sen. This would put it within striking distance of the stock’s multi-year high of 51 sen.

To the lower end of the price chart, the support rests at 37.5 sen, which currently coincides with the convergence of short-term SMAS. A fall below this level would be a bearish development for the counter as the share price runs the risk of slipping below the key SMAS. It would also signal a return to a consolidation channel. Lower support is pegged to 36 sen.

However, the technical indicators are looking increasingly bullish. The slow-stochastic momentum index is growing at 64 points, having crossed into a “buy” signal earlier in the week.

The 14-day relative strength index supports this bullishness, having crossed into overbought conditions at 73 points but on course for further gains.

The daily moving average convergence/ divergence line sits above the signal line and is moving higher in positive territory, signaling the growing strength of the ongoing rally.