ENCORP Bhd shares pulled back from a rally peak of RM1.28 on Sept 19, last year – the best level in 5½ years – to a low of 95.5 sen on Jan 27, on correction owing to an apparent profit-taking activity.
Thereafter, prices turned sideways briefly, followed by a small rebound on light bargain hunting interest before tripping into range-bound consolidation. Based on the daily chart, Encorp has penetrated the short-term descending line, implying the correction phase was over and the next likely move would be a new leg of uptrend.
Perhaps, investors can consider taking up a position at current levels while the shares consolidate, if one is optimistic of the trend ahead. Elsewhere, the oscillator per cent K and the oscillator per cent D of the daily slow-stochastic momentum index were on the slide. It had triggered a short-term sell near the overbought area in mid-week.
In stark contrast, the daily moving average convergence/divergence histogram retained the posture above the daily trigger line to keep the buy call. The week also saw the 14-day relative strength index retracing back to the mid-range on Thursday before ticking up marginally to settle at the 57 points level yesterday.
Besides the daily slow-stochastic momentum index, other indicators are positive, implying Encorp will likely be range-bound with a mild upward bias in the immediate term, until a breakout is detected.
A push above the RM1.14 barrier is likely to propel prices up to challenge the previous rally peak of RM1.28, of which a clear penetration would signal the resumption of an upward momentum, enroute to fill a minor gap at the RM1.38-RM1.40 band. The recent ebb of 95.5 sen will now act as the base for the bulls to launch the next upward wave. – By K.M. Lee, thestar.com.my
* The comments above do not represent a recommendation to buy or sell.