EYE ON STOCK
TELEKOM Malaysia Bhd (code: 4863), whose share price has been on a descent for the greater part of this year, has been flirting dangerously close to the support of RM3.
Last Thursday, the counter reached a bottom of RM3.10 and looked set to return to the recent low of RM3, representing an eightyear low for the stock. However, a technical rebound yesterday managed to steady the stock for the time being, giving it a reprieve from further decline.
The long-term outlook for the stock is overwhelmingly negative, with bearish crossings in all the key simple moving averages. Indeed, the counter has been in a “death cross” situation since October 2017, when the 50-day SMA slipped beneath the 200-day SMA.
For the immediate term, however, yesterday’s nine sen push to a session high of RM3.20 suggests that there may be near-term upsides for the stock as it returns from on oversold situation.
The slow-stochastic momentum index is on the verge of a positive crossing with the 20-point line, indicating a return to neutral territory. The 14-day relative strength index is in a similar situation, sitting below the 30-point line at 26 points.
The daily moving average convergence/ divergence line reflects the current downtrend, sliding lower into negative territory below the signal line.
Should the technical indicators improve further, there will be opportunity for this rebound to continue. However, the immediate upsides will be capped by stiff resistance overhead.
Resistance is pegged to the 50-day SMA at RM3.58, although a more convincing breach would lie at the RM3.62 mark, representing the 23.6% Fibonacci retracement ratio from a low of RM3 to the April high of RM5.66.
Above that, a further stiff resistance rests at the 100-day SMA, which meets the 38.2% Fibonacci resistance ratio at RM4.
In the event that the stock succumbs to the negative sentiment, a breach of the RM3 mark may take it to a following support at RM2.85, last hit in June 2010.
The comments above do not represent a recommendation to buy or sell.