Tien Wah’s long-term uptrend is likely to resume after it gapped above the broken resistance of the RM2.00 level. The subsequent three-month consolidation above the level shows that buying continues to support the share price. The continuation of the rally will be signalled by a sustained close above the resistance of RM2.20.
Tien Wah’s rally that started in 2006 is expected to continue as the stock consolidates above the broken three-year resistance of RM2.00. The stock is on a clear long-term uptrend, where the series of higher lows charted since 2006 remain intact. The 100-week MAV line is sloping upwards too. The uptrend was confirmed in August when the stock gapped above the three-year resistance of RM2.00.
The stock has since been consolidating above RM2.00, with the RM2.20 level capping its advance. The shallow correction to the previous rally, retracing 38% of Sept 2011–Feb 2012 rally, underlines the strength of the upward trend. Thus, a position can be initiated above RM2.00, on expectation of a resumption of the rally, or otherwise above RM2.20 on a conservative stance. A close below RM2.00, or preferably below the eight-month low of RM1.90, can be employed as a stop-loss.
The resumption of the rally will be confirmed should the stock maintain a close above RM2.20. The price target is RM2.60, with selling expected at RM2.30. However, a close below RM1.90 will mark another false breakout of the RM2.00 level, with strong support anticipated at RM1.60. It is best for the long-term uptrend that any correction is limited above RM1.60, as a violation of all three levels indicates strong selling pressure and could bring an end to the uptrend.
Source: OSK
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