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