Technical Analysis Of Tenaga Nasional Berhad  : Why You Should Buy This Stock

The strong performance of Tenaga Nasional's share price has been a blessing to many of its investors. The stock made an all time high and is currently in a very strong long term uptrend. The path of least resistance for this stock is still up.

Just for your information, this is a stock that you should put your money in for the long term and then go to sleep. Don't go trading this stock in and out. Some stocks are meant to be invested and some are meant to be traded.

Tenaga Nasional is a stock that you should invest in rather than trade.

I'm going to show you why with the charts below.

March 30 2018

Before I start today's analysis...

The headline about "why you should buy this stock" was written back in February 2018. You can check out the previous analysis below.

I will tell you the reason why I think this is a good stock for you and your grandchildren.

I seldom recommend buy and hold stocks but now and then you will come across one or two in a year and you just want to share it with your friends.

The chart above is the daily chart of Tenaga.

As you can see, the stock experienced a period of consolidation where it traded sideways for a period of time. A period of consolidation is often good because it gives the stock a period of rest before shooting higher.

Once Tenaga broke out of the consolidation box, it shot up higher. This in turn attracted a lot of media attention and social attention.

At this moment, we can perhaps take the previous move up as a measured move target by projecting it from the breakout to get a target. This is just a possible target and we will need to look at the 60 min chart to see whether it is able to do so.

The chart above is the 60 min chart of Tenaga Nasional. As you can see, it broke out of a 60 min ascending triangle. Everything was perfect for a breakout higher. 

  1. The stock was consolidating in the daily chart
  2. There is a presence of a 60 min ascending triangle
  3. Stock was above 60 min 20 MA, 50 MA and 200 MA when it broke out

This is the recipe for a breakout stock and it will be good if you memorize it.

The stock has more than met its 60 min ascending triangle target. In fact it has given very good risk reward for traders who bought the breakout.

It also formed a mini 60 min ascending triangle and has broken out of it.

The question now is....is this a good trade at the moment?

Well, usually I would advise you to look for continuation patterns. One of them will be my favorite one, the ascending triangle in the smaller time frames such as the 60 min or 15 min chart. If you can find them you can trade them.

The recent area around the mini ascending triangle will be an area of support. And if Tenaga can stay above this area then it is very likely to meet the daily measured move target.

You should continue to be bullish on it short term as long as the support holds and as long as it stays above the rising 20 MA.

That is usually how I would gauge the short term trend of the stock.

Now that we have covered the daily chart and the 60 min chart, let us move to the monthly chart of the stock. In my past analysis which you can read below, I mentioned that it has broken out of a monthly ascending triangle.

My friends...this is a very powerful phenomenon and tells us that the stock wants to go higher.

Like I say, I seldom recommend long term buy and hold stocks but Tenaga Nasional is one of them.

Here are the reasons:

  1. This company will continue to serve the Malaysian public for years and years to come. Probably up to your grand kids children are born and they call you great grandfather or great grandmother.
  2. They have a monopoly over the power industry in Malaysia. What we call a moat that defends its core business from any competitor. The government won't simply give out contracts to other companies to supply and generate power to Malaysians because of National Security issues. Whoever wins the next election will still be behind this company's best interest because TNB has been serving the nation for so many years. So, no political risks.
  3. The population of Malaysians will grow. When your kids grow up they don't want to sit in a hot kopitiam anymore. They want to go to places that have air con....Sounds familiar? All these luxuries will need electricity to power it. The more the population of Malaysians grow, the bigger the energy consumption and... the bigger the energy consumption, the bigger the bills that you need to pay. And this will increase TNB's bottom line.
  4. This company gives a nice dividend yield. Recently it announced a record RM 3.5 billion dividend payout. You can find the link below in the previous analysis. What this means is you will kill two birds with one stone. You get a possible growth in stock price as well as a regular dividend income.

Sometimes when you combine common sense with some reading of long term charts, its pretty clear that this will be a big winner for the average Malaysian for the years to come. 

When you look at the monthly chart of Tenaga, there is ample support below. A very strong support around 15.00. So as long as the stock stays at the top of the monthly ascending triangle pattern, you will have a solid winning stock.

This is a stock that I think you should invest in rather than trade. Sometimes its good to make some fast money but sometimes its also good to learn to have a golden goose that will continue to lay golden eggs for you and your grandchildren for years to come.

And I believe that Tenaga Nasional is your golden goose.

February 7 2018

Why you should buy Tenaga Nasional as a long term investment

The chart above is the monthly chart of Tenaga Nasional's share price. The stock recently broke out of a long term resistance area around 14.90. As you know, a resistance once broken will now act as support. Therefore, this area will be a powerful long term support for the stock.

Investors who are in the stock for the long term should be aware of this support area. As long as this support area hold, then there is not much danger for the stock to collapse. In fact, any dips that are above this area are good times to buy the stock so that you can accumulate more.

One of the reasons why you should accumulate this stock instead of trading it is because it is a blue chip company and a component of the KLCI 30. It is unlikely that this company will ever get into a big trouble because whichever political party comes into power will always support Tenaga Nasional.

Almost every household and business in this country is a customer of this company and as long as the population of this country grows, there is opportunity for its share price to go higher and higher in the long term.

But what is attractive about this blue chip is the relatively generous dividend yield that it gives. It gives a dividend yield of 3.87% which I got from Malaysiastock.biz. You can treat is another kind of FD.

While 3.87% is not much, for those who are blessed with extra cash, you can get a nice return every 6 months when it gives out the dividend. Since the stock is in a long term uptrend, you might even see your share price go up even more. Things are looking good for it as it recently gave a record dividend payout. TNB announces record dividend payout of RM3.5bil (The Star News).

technical analysis of tenaga nasional

The chart above is the weekly chart of Tenaga Nasional. 

Tenaga is in a strong weekly uptrend and usually every dip is a good time to buy. One should remain bullish on this stock in the weekly chart as long as it stays above the weekly 20 MA.

The uptrend in the weekly chart has not changed yet. As mentioned earlier, there is a strong long term support at 14.90. So it won't be easy for the bears to claw in.

The recent surge in Tenaga's share price has also brought it to the attention of short term traders and the public keen on looking for a fast profit. The behavior of this stock is typical of a big blue chip making an uptrend. As you can see in the daily chart above, it goes up and then down and then up and then down and up again. Needless to say, it is harder for an elephant to climb up.

Therefore, swing traders can profit from this by buying the short term oversold situation or the dips. For short term traders, you might want to look at the uptrend line and the 50 MA to gauge the health of this stock. As long as the stock stays above the uptrendline and the 50 MA then it is still healthy in the short to mid term. Be cautious if it starts to drop below the uptrend line and the 50 MA.

Hope this helps.

Happy trading and investing!

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