The chart for Hi-P shows the stock may be forming a near-term bottom, with increasing volume possibly signaling a turn higher, Phillip Securities said in a note on Friday.
The stock price broke the S$1.79 critical support area on April 26 and the selloff accelerated, sending the relative strength index (RSI) into “extreme oversold condition” at 23, which suggests a mean reversion higher soon, Phillip Securities said. It noted RSI, a momentum measure, represents overbought conditions when it is over 70 and oversold conditions when it falls below 30.
While the sharp selloff on May 3 set a new eight-month low at S$1.45, buyers appeared set to defend the S$1.50 psychological round number, the note said.
“At the end of the day [Thursday], price closed at the daily high at S$1.57 resulting in the formation of a bullish candlestick pattern, hammer with increasing volume signals a possible reversal higher,” the note said. “With the current hammer rejection off the S$1.50 psychological round number and oversold RSI, a near-term bottom at S$1.45 might be forming as the bulls target the S$1.79 resistance area next followed by S$1.86.”
It tipped an entry price at S$1.58, a stop loss at S$1.43 and take profit at S$1.86. The next support is at S$1.315, it said.
Hi-P shares ended Friday down 7.01 percent at S$1.46.