Haio tested its uptrend line

A few readers have asked whether Haio is a BUY during its recent correction. Let's use technical analysis to determine what would be a good entry level. Since this stock has moved from a low of less than RM1.50 in May last year (or RM0.30 in 2005) to a high of nearly RM5.00, the appropriate chart scale to use is log scale. Based on the daily chart (Chart 1), we can see that Haio tested its immediate uptrend line support is at RM3.80 on May 7, before rebounding. Haio continued to recover yesterday as well as early part of this morning. This recovery is fairly convincing. For those who like to accumulate this stock, you may do so now.


Chart 1: Haio's daily chart as at May 10, 2010 (Source: Tradesignum)

From the weekly chart (Chart 2), we can see that Haio's fantastic rise occurred after it has broken above its triangle ('ABC') at RM0.50 at the end of 2006. A long-term uptrend line ('SS') can be drawn, but a better guide would be the 20-week SMA line (which is equivalent to the 100-day SMA line). The 20-week SMA line provide support at RM4.05. The indicators reading is mildly negative, with bearish MACD cross-under; still positive RSI reading of 58; and potentially negative reading on ADX as the rising -ve DMI crossed the declining +ve DMI.


Chart 2: Haio's weekly chart as at May 10, 2010 (Source: Tradesignum)

For a more comprehensive look at Haio, go here.