TELEKOM Malaysia Bhd went through two rounds of correction recently due to profit-taking.
After finding support at the 8-month low of RM5.13 on Feb 20, this stock drifted sideways to slightly steadier on renewed bargain hunting interest, which saw prices mending to a high of RM5.57 during intra-day session yesterday.
For now, Telekom Malaysia is still in an adjustment mode despite the recent recovery. But given the compelling fact of the principal market hitting an all-time high level, suggesting funds was flowing back to the quality issues, this blue-chip counter, which has a 2.133% weighting on the FBM KLCI, appears to have a fairly good chance of ending the correction phase.
A breach of the short-term descending line, resting at the RM5.60 level, followed by a decisive penetration of the 200-day simple moving average (SMA) of RM5.70 would give investors the confirmation. So, check out on that.
Upon breaking out, target the RM6.05 barrier. The next objective would be to challenge the historical peak of RM6.40, established on Oct 5, last year. The oscillator per cent K and the oscillator percent D of the daily slow-stochastic momentum index were firming. It had issued a short-term buy at the mid-range in mid-week. Similarly, the daily moving average convergence/divergence histogram climbed steadily, in tandem with the daily signal line to keep the bullish note. A buy call was issued on Feb 26.
Meanwhile, the 14-day relative strength index improved sharply from a reading of 64 on Tuesday to settle at the 86 points level yesterday.Technically, indicators are pretty encouraging, implying a positive breakout may be on the cards. Initial support is pegged at the 50-day SMA of RM5.34. The lower floor of RM5.13 will now act as a base.
By K M Lee, thestar.com.my
● The comments above do not represent a recommendation to buy or sell.
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