End of
Consolidation Phase
Prior to the 14% gain
made yesterday, Flonic was consolidating in the range of RM0.12-RM0.15. Yesterday’s
massive price action has ended the stock’s consolidation and triggered a
breakout. Traders are advised to accumulate its shares now or at above the RM0.15 level. Another strong
up-wave is expected to emerge should the
100-day MAV line be violated. We are eyeing RM0.20 as the immediate upside
target, followed by the RM0.235 level. Consider cutting losses should the share
price fall below the RM0.15 level.
After the strong rebound on 20 Jan 2012, Flonic had been
consolidating the gains between the RM0.12 and RM0.15 levels, until yesterday’s
price action that ended the consolidation phase by cracking above the RM0.15
level. The violation appears to be genuine, judging from the strong momentum
and accompanying high volume. The question now is whether Flonic could violate
the essential 100-day MAV line. As the
stock has just violated the consolidation phase in great fashion and the
100-day MAV line is situated right above the price now, we think it is likely
for the moving average line to be
violated too. Should the 100-day MAV
line be violated, another round of strong upward momentum is expected to
emerge. Importance of the moving average line to the stock in 2011 is
highlighted with circles in the above chart.
Hence, traders are advised to accumulate its shares now or
at above the RM0.15 level in anticipation of breakout gains. We are eyeing the
RM0.20 psychological mark as the immediate upside target. Nevertheless, a
strong resistance is located at RM0.235 and we do not rule out the possibility
that the anticipated breakout momentum would carry its share price to this level.
In addition, with Flonic’s daily RSI closing at the 63.7-pt level yesterday, it
is still far from the overbought territory and the peak of 88 pts recorded last
year.
We peg the cut-loss level at below the RM0.15 level which is also the immediate
strong support for the stock. The next strong
support is seen at the RM0.115/RM0.12 level. To the upside, the 100-day MAV
line which now lies at the RM0.17 level represents the immediate resistance.
Our upside targets of RM0.20 and RM0.235 are the next resistance levels.
Source: OSK188
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