After MSC experienced heavy selling pressure yesterday, we
want to highlight that the stock is now approaching a critical support floor at
the RM3.99 level. As a violation of this
level could trigger a major breakdown,
we will be eyeing the RM3.75 level as the initial downside target, followed by
the RM3.49 level. In addition, a “Head and Shoulder” formation will also be
completed should the RM3.99 level be violated.
MSC had previously found meaningful support at the critical
RM3.99 horizontal floor in Nov and Dec 2011, and March this year. The
significance of this support level is obvious as the subsequent rebounds after
holding at the RM3.99 level were impressive.
From the above daily chart, we can see that
the stock has been in retracement mode after it failed to close down the
RM4.30-RM4.58 downside gap created in March this year. It is now retracing
towards the RM3.99 critical level and we would like to emphasize that if this
level is violated, a major breakdown will be triggered. In addition, the
violation of the RM3.99 level would also complete the “Head and Shoulder”
formation which began since Nov 2011.
We advise traders to sell MSC shares at below the RM3.99
level. The initial downside target would be the RM3.75 support level. The
RM3.49 level, which is a much stronger support, would be the next downside
target. To the upside, look for immediate
resistance at the RM4.16-RM4.22 area, followed by the RM4.37 level.
Source: OSK188
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