E&O’s share price may continue going higher after closing the highest in almost three months. The stock rebounded strongly after the false breakdown below RM1.30 in late November. It then spent two months consolidating the sideways trend, with the RM1.36 low correcting 50% of the late-November rally. The shallow retracement carries a positive bias based on Fibonacci analysis. The bias was confirmed yesterday after the strong close above the 2½-year high of RM1.46 on a “Long White” candle. The breakout occurs on high volume, the highest since October, and this suggests firm buying interest. Thus, higher prices can be expected and purchase can be made at the current level or if possible on retracement towards the stop-loss level of RM1.36. The price target is the 2011-high of RM1.78, although resistance is also expected at the October-high of RM1.54, which regains 50% of the Sept-Nov decline. A close below RM1.36 will invalidate the trade and weakness will only be confirmed on close below RM1.30. Further support is expected at around last year’s low of RM1.06 and psychological RM1.00.
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