Deleum is enjoying a new lease of life lately as its tradingvolume has surged. The consistent volume has led to the stock breaching its3-year resistance level of RM2.00. A close above RM2.20 should confirm thechange in trend and when this happens, expect the stock to scale even higher. Deleumhas been trading sideways for about 3 years now, probably due to the lack ofinterest. RM2.00 is clearly the resistance level as it had acted as a ceilingfor the stock since mid-2008. Support is pegged at RM1.45, which is the low of thepast 3 years. However,  the sidewaystrend may end as  trading interest haspicked up in the past couple of weeks, as seen from the consistently andrelatively high transaction volumes for the stock.

The rally since the low of Sept 2011 has now brought thestock back  at the resistance level ofRM2.00. The possibility of breaking this resistance has increased significantlyas  the price is now trading at a 2-yearhigh. It also formed the 'Three White Soldiers' candle pattern in the weeklychart, a continuation pattern that bodes well for the progress of the uptrend. Thus,the stock is expected to climb further.

The close above the RM2.00 resistance level last Fridayshould confirm the continuation of the positive trend. Positions can beinitiated as long as the stock closes above RM2.00 on a weekly basis. A moreconservative trade may wait until the stock closes above RM2.20, the intradayhigh  of early 2010. The gap of 23 Feb atRM1.80 can be employed as a stop loss. A measured move based on the 3-yearsideways trend could see the price trading at RM2.55 and a strong move couldeven see the test of the late-2007 low of RM2.90. Further resistance is atRM3.40, RM3.70 and the psychological RM4.00.

A false breakout may happen if  the price closes back below RM2.00 and aclose below RM1.80 should  provide the confirmation.The upward bias will be nullified if this happens and the stock should likely return to its sideways move. Expect strong support at RM1.45 andthe all-time psychological low of RM1.00.

Source: OSK188