Tek Seng eye Tek Seng Holdings Bhd (code: 7200) has been rising out of a sideways channel over the last two trading sessions, indicating a return of buying interest in the stock. On Friday, the share price challenged the 50-day simple moving average (SMA) but was unable to convincingly break free of the hurdle. With Friday’s advance, the share price has risen past the short-term descending trend line, which stretches back to Nov 9. Nevertheless, short of breaching nearby barriers, a breakout is unconfirmed and the stock remains at risk of subsiding into the negative channel. Crucial to the continuation of the rally is a positive breach of the 50- and 100-day SMAs. In the event of a successful crossing, the share price can be seen hitting a target of 79 sen to approach the next resistance of 85 sen. A sustained advance would also see the short-term 14- and 21-day SMAs turn higher, reflecting a return of bullish sentiment to the price chart. Going by the technical indicators, there remains room for the rally to continue. While the 14-day relative strength index has eked into overbought territory above 70 points, the indicator looks poised to rise further into more extreme conditions. The slow-stochastic remains healthy as it paces higher at 68 points, suggesting strong momentum growth. The daily moving average convergence/divergence line is also perking up above the signal line and is aiming for a higher crossing of the zero line to signal a return to a positive trend. On the lower end of the chart, there is support for the stock at 65 sen, being the lower end of the recent sideways channel. The stock is also supported by the 200-day SMA, which hovers below at 62.5 sen, a negative breach of which would be a strong signal for selling. The comments above do not represent a recommendation to buy or sell.
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