SUPPORTLINE

EVERGREEN Fibreboard Bhd looks set to resume its rally following a brief loss of momentum early last week. However, the downtrend has halted for now, since the share price hit bottom at 41.5 sen in late April this year. The stock has attempted a recovery, only to be turned back by the stiff resistance at 57.5 sen and getting trapped in consolidation mode. Monday’s performance coupled with improving momentum indicators suggest that the stock is quickly making another challenge to the obstacle. A successful crossing of 57.5 sen would see the stock approach the next resistance at 63 sen, taking the share price back to January levels. A breach of 57.5 sen would also see the share price rise above the uppermost 200-day simple moving average (SMA), which at a downwards sloping trajectory, has remained intact since November 2016. At present, the technical indicators show a bullish outlook. The slow-stochastic momentum index has risen past the 40-point line, which suggests growing strength. The 14-day relative strength index remains above 60 points, and is pushing higher. Meanwhile, the daily moving average convergence/divergence line is intertwined with the signal line, but remains aloft in positive territory, suggesting that the stock’s uptrend remains intact. To the lower end of the chart, the short-term 14- and 21-day SMAs are rising, lending further evidence to a short-term uptrend. The immediate support lies at the 49 sen level, while a further support coincides with the 50-day SMA, pegged to 47 sen. The comments above do not represent a recommendation to buy or sell. Note: This article first appeared in StarBiz Premium yesterday.