IOI Corporation ("IOI Corp") has been trading
within a downward sloping trend channel since mid-July. Having already
completed three down cycles within the channel, we believe the share price is
in the midst of forming the forth cycle. After briefly retesting the channel
support last week, IOI Corp's share price sank 9 sen on Thursday to form a
bearish "Long Black" candlestick. The move confirmed the bearish
situation and further convictions on this can be drawn from the 14-day
Stochastics and RSI indicators, which have both dipped downwards. In view of
the weaker technical picture, the share price is likely to continue its
downward move towards the channel support at RM4.92.
On the weekly chart, IOI Corp's downtrend is seen extending
as far back as January 2011 while on the flipside, strong support levels appear
to have also developed in the past year. The 20-week SMA is now firmly below
the 50- and 100-week SMA and with the indicators mostly negative, the share
price is likely to inch lower towards the support line at RM4.92/90. This level
of support has in the past proven to be quite resilient and we would hence not
be overly surprised if the share price were to rebound after retesting this
RM4.90 level. Also, the Stochastics indicator
is already in oversold territory, hence an eventual rebound towards the RM5.30
is probable.
Source: Kenanga
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