RIMBUNAN Sawit Bhd (RSawit) went through a period of correction after establishing an all-time high on Feb 20, which saw its shares pulling back from the RM1.22-level to a two-month low of 99.5 sen in late-March.
Thereafter, bargain hunting activity emerged, lifting this Sarawak-based plantation stock to a high of RM1.10 during intra-day session yesterday.
Based on the daily bar chart, prices had carved out a short-term bullish ascending channel following recent recovery. With trading volumes growing gradually, indicating investors are making a return, and prices flirting above all the moving averages on our radar screen, it appears there are more upside potential.
Elsewhere, the daily slow-stochastic momentum index was firming. Its oscillator per cent K climbed over the oscillator per cent D at the 60% level to trigger a short-term buy yesterday.
Also on the rise, the 14-day relative strength index improved from an oversold reading on March 29 to the 65-point level yesterday.
Meanwhile, the daily moving average convergence/divergence histogram continued to expand positively against the daily signal line to stay bullish. It had issued a buy on Tuesday.
On the back of a pretty encouraging technical landscape, RSawit shares may strengthen on follow-through interest in the intermediate term. Initial resistance is expected at the RM1.12-RM1.15 band, followed by the historical peak of RM1.22, of which a clear breakout would signal a rally continuation, en route to the RM1.42-RM1.50 band.
Current support is seen at RM1.05. An additional floor is pegged at the recent lows of 99.5 sen, coincidentally, also the 100-day simple moving average.
By K.M. LEE
● The comments above do not represent a recommendation to buy or sell.
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