The local stock barometer is seen attempting to consolidate at a higher range this week after retesting the 7,200 mark on Friday.
Last week, the main-share Philippine Stock Exchange index (PSEi) gained 112.18 points or 1.6 percent to close at 7,215.73, boosted by the better-than-expected US economic growth data.
Luis Gerardo Limlingan, managing director at local stockbrokerage Regina Capital Development Corp., said the PSEi was continuing its advance toward the weekly resistance of 7,160, which he noted to be the critical 50-day moving average and one seen helping to reestablish the six-month upward channel.
“Critical for the week is not to fall back below that same 50-day moving average. If this happens, the next resistance to be tested will be 7,250,” he said. Assuming there would be no negative shocks in the week ahead, he said the PSEi might consolidate at this new range.
“Since the 7,160-7,200 is broken, the next phase is confirming the breach. If it holds until Tuesday, then we can start a more aggressive buying strategy. Until then, it’s still a hold,” Limlingan said.
In technical analysis, moving averages are typically used to identify the trend direction and to determine support and resistance levels. Doris C. Dumlao