Cypark appears to have ended its downtrend last month after
closing above RM1.75, breaking the series of lower highs. Consolidation
naturally takes over at this
juncture and the broken resistance has
turned into support. Together with other positive indications, a continuation
of the uptrend is to be expected as long as the stock stays above RM1.75.
The stock’s downtrend since reaching its peak in April last
year may be over soon. The stock’s downward movement is clear from the series
of lower highs, where the 50-day MAV line acted as a dynamic resistance.
However, the technical picture has turned around and it is getting increasingly
bullish going into 2012. The downward momentum eased after the stock could not
convincingly break below the Oct
2011-low of RM1.36 in Dec 2011. This was followed by the successful violation
of the 50-day MAV line, with a high volume “Long White” candle, in late Jan
2012. Follow-through buying in February saw it breaking above both the Oct 2011 high and 200-day MAV line. This breakout should mark the end of the
9-month decline. The month-long rally saw the stock rise to its 6-month high by
hitting RM2.07, which is the high of Aug 2011 and low of May 2011. The positive
long-term indicator of a “Golden Cross”, where the 50-day MAV line crosses over
the 200-day MAV line, is about to occur too.
Finally, an upside bias is seen from the shallow sideways
consolidation to the Jan-Feb rally, correcting less than 50% of the rally.
Thus, buying support is expected to come above the 50% level at RM1.75, also
the level where the “Golden Cross” will likely occur. In view of the positive
indications, purchases can be made above RM1.75 with a price below as the stop
loss. A new high above RM2.07 will confirm the continuation of the rally and a
measured move target based on the Jan-Feb rally could see the stock at RM2.65.
Resistance is also expected at Fibonacci levels of the April-Dec 2011 decline
at RM2.30 and RM2.55, also the highs of July and June 2011 respectively.
However, note that the upside bias will be significantly reduced should the
RM1.75 level be violated, after which a sideways move will likely ensue.
Source: OSK188
No comments:
Post a Comment