Scientex' rally that started in 2009 is expected to continue after the stock broke the two-year resistance of RM3.00 in mid-October. The stock is on a clear long-term uptrend, where a series of higher lows charted since 2009 remain intact. The 100-week MAV line, which supported the stock prices for most part of the year, is upward sloping too.

The stock managed to stay above RM3.00 since its breakout on 15 October. The high volume that accompanied the breakout also reduces the possibility of a false breakout. Additionally, a breakout of the two-year resistance cannot be taken lightly as it should lead to sustained buying support. Thus, a position can be initiated above RM3.00, on expectation of a resumption of the rally. A conservative trader may wait until a close above the recent intraday high of RM3.11 before initiating a position. Obviously, a close below the psychological RM3.00 can be employed as a stop-loss.

The rally will likely resume should the stock maintain a close above the recent high of RM3.11. The price target is RM4.25, with selling expected at RM3.75. However, a close below RM3.00 will mark a false breakout and supports are anticipated at RM2.70, RM2.50 and RM2.15. It is best for the rally that any correction is limited above RM2.70, as a violation of all three levels will lead to strong selling pressure and may even jeopardise the rally.

Source: OSK