Technical Analysis Of Press Metal Berhad

After being added into the KLCI index, this stock has been in the radar of many investors. 

March 9 2018 (Monday)

Wow...just looking at the past analysis, its quite a big drop for Press Metal. We were anticipating a breakout of an ascending triangle but there was no follow through on it as it did not even break higher.

Subsequently the stock dropped below its daily 50 MA and that in itself will have warned my regular readers that something was wrong with the stock.

Let's start today's analysis with the weekly chart.

As you can see, the stock suffered a nasty drop but it managed to bounce up a bit today as it hit a support area. I have colored it in green color so you can see it clearly.

This support area will be important because if Press Metal drops below this area, then it might encounter more selling in the future. Therefore, we want to see the support hold. We want to see the stock form some kind of bullish pattern by the end of this week's trading.

Perhaps it might form a weekly bullish harami?

Sometimes stocks can bounce up nicely from the rising weekly 50 MA and therefore our eyes have to fixate on what Press Metal does by the end of the week.

The daily chart above shows us a zoom in view of what is happening. 

Just like many other stocks around the world, it has been affected by the falling Dow Jones. Albeit a bit late but eventually it succumbed to selling pressure.

Those who are my regular readers will know that its very bad for a stock to fall below its rising 50 day moving average. I do not have the time to go through all stocks and this is where you will need to do your homework a bit as nobody cares about your investments more than you.

The stock is bouncing up a bit today along with the KLCI. Notice that if it closes higher today, it might form what we call a Bullish One White Soldier. I did not know the exact name but I finally got it when I had a look at Candlesticker's Bullish Candle Page. You can check it out yourself for the definition.

In the event that Press Metal can have a few days bounce up you have to take note of the resistance overhead. Perhaps it might drop once it reaches there.

For a more ideal and sustainable rise, the stock needs to trade back above the 20 MA, the 50 MA and perhaps form some kind of bullish chart pattern like a double bottom.

February 26 2018 (Monday)

February 22 2018

In my past analysis of Press Metal, I highlighted that this stock was breaking out of a daily ascending triangle. This is a bullish continuation pattern and will usually send the stock higher. Currently, the stock is still in the process of reaching its initial target.

I believe that big stocks especially if just added to the KLCI tends to move a bit slower compared to other breakouts in smaller cap stocks. The reason is this "Its easier to move a rat...it takes more rocket power to move an elephant".

Anyway, Press Metal still looks healthy from a technical point of view in the daily chart.

It is above its rising 20 MA and 50 MA and 200 MA. This is a strong healthy technical picture. If you look at the Dow Jones Industrial Average, the reason it has been rising and rising and rising is because it is also above the rising 20 MA, 50 MA and 200 MA most of the time.

That's a technical point of view.

Longer term investors should look at the area of the ascending triangle. Now that it has broken out, the area will now act as support area to watch. As long as the stock stays above the area, your investment is secure. Don't worry too much about the daily gyrations.

Let's take a look at the 60 min chart for the short term trader.

With so much volume even in the 60 min chart, this stock is very nice for swing trades and short term trades. I have highlighted a few trading opportunities.

True to a stock that is in an uptrend, you can make money in them by:

  • Buying breakouts
  • Buying dips (break downtrend line)

The 60 min chart offers this kind of opportunities for sharp eyed traders.

At this moment, Press Metal's share price is declining to an area of support. As a short term trader, I would look to see if it can stay above the support or break above the downtrend line.

The rising 60 min 200 MA (yellow line) is still trending up and this usually hints that a short term uptrend is still intact.

Now let's move back to the land of long term investors.

You should be looking at the weekly chart often. As you can see, the stock is in a nice weekly uptrend. It is staying above the rising 20 MA and 50 MA the majority of the time. This hints to more upward movement. 

As I said earlier, the ascending triangle area is an area for you to take note of. As long as the stock stays above here, then we can say the path of least resistance will be up.

Technical Analysis Of Press Metal (Jan 8 2018)

Press Metal is another very hot Malaysian stock at the moment. One of the reasons is because it is being added to the FBM KLCI index. The other stocks that is being added to the KLCI index is Nestle.

In the US, whenever a stock is added to the S&P 500, it is a huge event for the stock. Funds will gobble up the stock and many investors and traders will focus on the stock. Therefore, the price will jump up tremendously.

It is no different in Malaysia.

Whenever a stock is added to the main KLCI index, it is like an upgrade from Economy Class to First Class seat.

That makes the stock more valuable.

The chart above is the Daily Chart of Press Metal.

Here is the summary of the technical analysis of this stock:

  • The stock has broken out of 2 nice ascending triangles in the past
  • It is currently trying to break out of another ascending triangle
  • The stock is in a strong uptrend (staying above its rising 20 MA, 50 MA and 200 MA)

With such a strong technical picture and a possible ascending triangle breakout, we can be bullish bias on this stock. If the breakout is successful, the initial price target for this stock (using the ascending triangle target) will be around RM 6.50.

Since the stock is in a nice uptrend, the RM 6.50 is just a target. From my experience, stocks that make ascending triangle breakouts in an uptrend tend to be able to shoot up higher.

The chart above is the weekly chart of Press Metal.

This stock is really in a very strong uptrend. Notice that the stock is above its rising weekly 20 MA, 50 MA and 200 MA. The stock also stayed above its rising weekly 20 MA most of the time. Never falling below it at all since mid 2016.

This is a sign of strength and longer term investors should be bullish on this stock as long as it stays above the rising weekly 20 MA.

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