EYE On STOCK

AIRASIA Group Bhd (code: 5099) has sustained a rebound since hitting a low of RM2.30 on Oct 29.

The share price gains have retraced about 60% of the losses it experienced following a three-month decline from August to October.

During this retracement, the share price rose above the 50-day simple moving average (SMA) and on Friday, breached the 100day SMA as well. Buying interest picked up on Friday to a six-month high, suggesting that this rally has legs.

This puts the counter in more bullish territory although the outlook remains weak due to the negative crossings between the SMAs.

The 200-day SMA remains overhead to exert downwards pressure on the share price. At Friday’s intra-day high of RM3.18, it approached the immediate resistance of RM3.21. While this may be the cue for investors to start taking money off the table, there remains enough bullish momentum in the indicators to suggest further advances over the immediate term.

The slow-stochastic momentum index remains at an ascending angle at 52 points.

The 14-day relative strength index is also reaching higher at 63 points with room before it hits overbought conditions.

The daily moving average convergence/ divergence line remains afloat of the signal line in positive territory, suggesting that the current share price rally remains intact.

A breach of the immediate resistance of RM3.21 would see the share price target the 200-day SMA at RM3.41. On its approach, a rejection of the SMA hurdle would see the stock capped and entering consolidation mode. A positive crossing of the obstacle would be a very bullish development for the counter as it climbs towards July high of RM3.62.

But over the immediate term, profit-taking by investors would see the share price subside to the supporting level of RM2.92 with further support resting at RM2.83, which meets the 50-day SMA. A negative crossing of these supports would be a bearish development for the stock, suggesting a potential retreat to the RM2.57 mark.