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TheStar Tue, Jan 21, 2020 08:00am - 2 months ago

AWC Bhd continued its rally on Monday following a consolidation phase, and looks set for more gains over the immediate term.

With the advance, the share price has risen above a convergence of moving averages and there is a possibility of a sustained recovery towards August 2019 levels of trading.

Although the stock faces downward pressure from the 200-day simple moving average (SMA), the last of the key moving averages that remains intact overhead, there is positive momentum building towards this resistance.

The significant increase in trading volumes over the recent two trading sessions also suggests the return of investor interest in the stock, which bodes well for future buying.

Following Monday's performance, the daily moving average convergence/divergence line met the zero line to indicate a looming return to a positive trend. A convincing cross of this point would lend evidence towards the sustainability of the share price's growth trajectory,

Also looking bullish are other technical indicators including the slow-stochastic momentum index, which has risen to the centre line at 50 points.

The 14-day relative strength index is gaining momentum. It has risen to overbought territory at 71 points but remains at a rising trajectory.

Based on the daily price chart, the share price may encounter resistance at the 65.5 sen mark, which serves as the stock's highest point in nearly five months.

However, a crossing of the 200-day SMA at 67 sen would mark a more significant breakthrough for the stock, setting the bulls free to roam towards the higher price target of 69 sen.

Support for the share price can be found at 61 sen, falling through which it would return to a consolidation phase. Further support is pegged to 59 sen.

The comments above do not represents a recommendation to buy or sell.

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