The share price of UOA development has been trending lower
since its debut in June 2011. However, the downward momentum has eased
recently, possibly due to accumulation at these low levels. This may lead to a
change in trend but more is still needed to confirm the end of the downward
trend.
We featured UOA Development late last year in anticipation
of a change in trend. An expected and apparent upward move did not happen but
the sideways move since the low in Dec 2011 still keeps this possibility alive.
To recap, accumulation is likely to have taken place during the bottom of Oct
2011, as seen from the heavy volume for the stock. Buying support is also seen
from the series of higher lows, at RM1.15, RM1.30 and RM1.40. The stock has
also responded well to the buying support at the latest bottom in early April,
as it had closed at the highest level in more than 3 months.
However, the upward bias seen in the past six months remains unconfirmed as the stock
has yet to make a higher high, despite
the rising trend of the broader market in the past four months. Thus, the stock
has to violate the RM1.60 resistance level – the high of Jan 2011 and also the
low of Aug 2011 – to affirm the upward bias. This will also see the 200-day MAV
line broken, which is usually interpreted as a longer-term positive indication.
Positions can be initiated if this happens with a stop loss on close below
RM1.40. An aggressive trader may even accumulate now in anticipation of a
successful breakout.
Firm resistance is expected at RM1.70, the high of Oct 2011,
and RM2.05 – the gap of early August. Both levels are coincidently the
Fibonacci levels of the June-Oct 2011 decline. A close above RM2.05 will
significantly increase its chances of reaching the price target of RM2.60,
which is coincidentally the IPO price. The trade will not work out should the
stop loss be triggered, after which we may see the stock returning to its
current sideways move. Strong support is expected at the September-low of
RM1.15, a violation of which will likely invite further selling.
Source: OSK188
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