SUPPORTLINE

CARIMIN Petroleum Bhd hit an intra-day high of 34 sen on Wednesday, which comes close to the recent high of 35.5 sen achieved on Oct 2.

At current levels of trading, the share price has risen above the key simple moving average (SMA) to indicate a growing bullishness. The SMAs, meanwhile, look on course to unwind themselves from negative crossings seen in March and April of this year as the stock was in the midst of a steep decline.

The 50- and 100-day SMAs are rising to meet the 200-day SMA, a positive crossing of which would see the daily price chart return to a bullish formation.

While the stock is presently challenging the near-term target of 35.5 sen, a positive breach of the resistance would see the share price tackling a higher resistance of 38 sen, which was last hit in April this year.

The technical indicators are heading towards the overbought conditions, which suggest this rally may be halted for the time being while the indexes neutralise.

Nevertheless, a positive catalyst could take the indicators deeper into the extreme overbought conditions before turning back.

Investor interest in the stock is healthy, with Wednesday’s turnover returning to October levels.

The slow-stochastic momentum index is at 73 points and remains on a rise. The 14-day relative strength index is already moving in overbought territory at 78 points but is also pointed northwards.

The daily moving average convergence/divergence line suggests a continuing uptrend as it moves ahead of the signal.

There is good support for the counter in the event of a pullback. The convergence of moving averages at the 26 to 27 sen mark suggests a safe haven for the stock in the event of profit-taking. A negative catalyst may take the share price further back to the recent low of 22 sen.

The comments above do not represent a recommendation to buy or sell. Note: This article first appeared in StarBiz Premium yesterday.