MMC Corporation Berhad’s ("MMC") share price has
been on a downtrend for over half a year, declining from a high of RM3.06 in
Feb to RM2.26 last week. The share price, however, has rebounded sharply
thereafter to break above the RM2.49 resistance. With the decisive close above
this trigger line on Wednesday, MMC has successfully confirmed the
"DoubleBottom" reversal pattern. The rebound thus heralds the start of a new trend developing and is
seen supported by bullish technical indicators. The measurement objective is
estimated at RM2.70 and should the share price retreat back to the trigger
line, investors should look to buy into the stock close to the RM2.49
resistance-turned-support level.
On the weekly chart, MMC has been range-bound for two years,
trading between a clearly defined trend channel between R1 and S1. After
testing the support level at RM2.39 (S1), MMC subsequently confirmed the "Hammer" reversal
candlestick with a sharp rebound. The technical picture has turned bullish with
the move and we believe the share price may be at the start of the next leg up.
The oscillators are also firmly positive, with the Stochastics indicator and
the RSI both turning upwards, reflecting the start of the up-cycle and a
pick-up in relative strength. We reckon
that with momentum shifting from bearish to
bullish, the share price may extend its gains towards the channel
resistance at RM2.95.
Source: Kenanga
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