Testing Resistance of
RM2.00
Deleum is enjoying a new lease of life lately as its trading
volume has surged. The consistent volume has led to the stock breaching its
3-year resistance level of RM2.00. A close above RM2.20 should confirm the
change in trend and when this happens, expect the stock to scale even higher. Deleum
has been trading sideways for about 3 years now, probably due to the lack of
interest. RM2.00 is clearly the resistance level as it had acted as a ceiling
for the stock since mid-2008. Support is pegged at RM1.45, which is the low of the
past 3 years. However, the sideways
trend may end as trading interest has
picked up in the past couple of weeks, as seen from the consistently and
relatively high transaction volumes for the stock.
The rally since the low of Sept 2011 has now brought the
stock back at the resistance level of
RM2.00. The possibility of breaking this resistance has increased significantly
as the price is now trading at a 2-year
high. It also formed the “Three White Soldiers” candle pattern in the weekly
chart, a continuation pattern that bodes well for the progress of the uptrend. Thus,
the stock is expected to climb further.
The close above the RM2.00 resistance level last Friday
should confirm the continuation of the positive trend. Positions can be
initiated as long as the stock closes above RM2.00 on a weekly basis. A more
conservative trade may wait until the stock closes above RM2.20, the intraday
high of early 2010. The gap of 23 Feb at
RM1.80 can be employed as a stop loss. A measured move based on the 3-year
sideways trend could see the price trading at RM2.55 and a strong move could
even see the test of the late-2007 low of RM2.90. Further resistance is at
RM3.40, RM3.70 and the psychological RM4.00.
A false breakout may happen if the price closes back below RM2.00 and a
close below RM1.80 should provide the confirmation.
The upward bias will be nullified if
this happens and the stock should
likely return to its sideways move. Expect strong support at RM1.45 and
the all-time psychological low of RM1.00.
Source: OSK188
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