INDIVIDUAL ASSIGNMENT 2

HONG LEONG BANK STOCK

TECHNICAL ANALYSIS
Prepared by
MOHD ZULFAZLIE BIN MOHD JUH@MADJUH
(2021xxxx)
Prepared for
AHMAD FAUZE ABDUL HAMIT

Submission date
28TH JANUARY 2023
Table Of
Content
2.1 Introduction to the stock

2.1.1 Company Stock Summary

2.1.2 Historical Stock Price Charts (Short term – 1 year)

2.2 Technical Analysis

2.2.1 Price and Volume Patterns

1. Trendline

2. Volume

3 Candlestick

4 Support

5 Resistance

2.2.2 Technical Indicators

2.2.1 Moving Averages: Short-Term and Long Term

2.2.2 Envelopes

2.2.3 Bollinger Bands

2.2.3 Momentum Indicators

2.3.1 Rate of Change (ROC)

2.3.2 Relative Strength Index (RSI)

2.3.3 Moving Average Convergence Divergence (MACD)

2.3.4 Stochastic

2.3 Price Forecast (short term perspective)

2.1 INTRODUCTION
Hong Leong Bank is a prominent
financial institution in Malaysia, offering
a wide range of banking services.
Established in 1905, it has grown to
become one of the largest banking
groups in the country. The bank is
known for its customer-centric
approach, technological innovation, and
commitment to social responsibility. It
provides comprehensive banking
solutions, including personal, business,
corporate, and Islamic banking, and
offers online and mobile banking
platforms for convenience. With a strong
branch network and strategic
partnerships, Hong Leong Bank is a
trusted and reputable institution in
Malaysia.

1
2.1.1 Company Stock Summary
Stock Data

Company Name Hong Leong Bank Berhad

Company Website https://www.hlb.com.my

Sector Banking Service

Industry Financial

Price on (07/01/2023) RM 18.90

Exchange KLSE

Stock Code 5819.KL

1 Year Target 22.75

High/Low (Today) 18.84 - 18.96

High/Low (52 Weeks) 18.46 - 21.60

Share Volume 800.200

Previous Close 18.90

Market Cap 39.562B

Earning Per Share RM 1.88

P/E Ratio 10.06

BETA 0.75
2.1.2 Historical Stock Price Charts
(Short term – 1 year)

Year-to-date (YTD)

1 Year ( 5 June 2022 - 5 June 2023)

The price has ranged from a high of RM 21.88 to a low of RM 18.46
during the course of a year. The highest price was reported on 7 June
2022 meanwhile the lowest on 16 June 2023.
 2.2 Technical Analysis

3
2

2.2.1 PRICE AND VOLUME PATTERNS

1 2
Trendline
Based on the chart, we can see the price is
making an downtrend movement starting
from 30 May 2023. This is the phase of the
trading process in which market players are not
interested. The price continue downtrend until
16 June. On 19 June the price start to make a
reversal which is going uptrend until 22 June.
Volume
Volume acts as a liquidity indicator, and
the chart shows that Hong Leong's
liquidity is highly erratic. The volume
peaked on June 19 and reached its highest
point ever noted. Since rising markets
with increasing volume are frequently
perceived as healthy and powerful, the
volume may be a good sign of market
strength.

3 4
Candlestick
According to the chart above, there is a bullish
engulfing, in which the green candle
completely covers the red candlestick on the
left. The bullish engulfing is highlighted in
yellow. It appears after a decline and indicates
that the price is going to increase. When this
pattern appears, it is best to take a long
position.
Support
Based on the information provided, it appears
that there is a support line at RM19.40, which
indicates a price level where investors typically
purchase a stock as they anticipate a bounce
and subsequent increase in price. This support
level is crucial because it suggests the
presence of investors and buyers who are
waiting for the price to reach that level. Once
the price hits the support line, it is expected
that an uptrend will occur.
 5
Resistance
According to the provided chart, it indicates that there is a
resistance line at RM 19.76. This resistance level typically prompts
many investors to sell their stocks, as they anticipate a price
bounce and the start of a downtrend. The downtrend occurs due
to a high supply of stocks in the market. As a short position
trader, it would be advisable to set the stop level slightly above
the resistance level. This precaution is taken because there is a
possibility that the price might break through the resistance
level.

2.2.2 Technical Indicator

When utilizing the envelope indicator,
it is important to consider the current
price. This indicator assists investors in
determining whether the price is
overbought or oversold. If the price
moves below the envelope, it suggests
an oversold condition, indicating a
potential buying opportunity.
Conversely, if the price moves above
the envelope, it indicates an
overbought condition, suggesting a
potential selling opportunity. By
monitoring the price in relation to the
envelope, investors can make
informed decisions based on whether
the price is within or outside the
expected range.
Envelope

According to the information

provided, the Moving Average
(MA) is a technical analysis tool
used to confirm the beginning
of a trend. It calculates an
average price that is
continuously updated to
minimize price fluctuations. In
this case, the chart suggests
using a 10-day Moving Average
for short-term analysis and a
100-day Moving Average for
long-term analysis. By utilizing
these different timeframes,
traders can gain insights into
both short-term and long-term
trends in the stock price.

Moving average

Bolinger Bands
Rate of Change (ROC)
As long as the ROC remains positive, the price is
expected to increase. A lower price, on the other
hand, denotes a bearish market. As can be seen
from the graph, the ROC is positive at 0.30. A sale
signal is displayed when the ROC drops below
zero, and a buy signal is shown when it climbs
above zero. Overbought and oversold prices are
determined by crossing the upper and lower lines,
respectively.
Bollinger Bands consist of the
lower band, upper band, and a
middle line. It is important to
note that prices often have a
tendency to return to the
center of these bands, which is
commonly referred to as the
Bollinger Bounce. In the
provided chart, we can observe
that the price bounced from
the upper band on 22 June,
then retraced back to the
center and continued its
movement towards the lower
band.
Momentum Indicator
Rate of change
Relative strength
index
Relative strength index (RSI)
When the Relative Strength Index (RSI) falls below 30, it
indicates an oversold condition, while a reading above
70 suggests an overbought condition. To identify an
uptrend, it is preferable for the RSI to be above 50,
whereas a downtrend is indicated when the RSI is
below 50. However, in the current situation where the
price is fluctuating in the middle, it is difficult to
determine whether it is rising or falling. In such cases,
holding onto the current position is often the most
logical course of action until a clearer trend emerges.
 Moving Average Convergence Divergence (MACD)
Stochastic
Moving Average Convergence Divergence
(MACD)
When the Moving Average Convergence
Divergence (MACD) falls below the signal line, it
indicates a bearish signal, suggesting it is a
suitable time to sell. Conversely, when the MACD
crosses over the signal line, it indicates a bullish
signal, implying that the price of the asset is
expected to rise. To avoid being deceived by false
signals and entering a position prematurely, it is
important to wait for a confirmed crossover of
the MACD over the signal line before taking any
action.
Moving Average Convergence Divergence
(MACD)
The stochastic indicator analyzes the position of
an instrument's closing price relative to its high
band over a specified number of previous
periods, often using 14 periods. Based on the
provided chart, the indicators are currently in
motion, gradually decreasing from 83.09 to 50.52.
This suggests a downward trend in the price
movement.
2.3 Price Forecast (short term
perspective)

The study incorporated various technical indicators such as

support and resistance, moving averages, envelopes,
Bollinger Bands, rate of change (ROC), relative strength index
(RSI), moving average convergence divergence (MACD), and
stochastic. Several of these indicators exhibited similar price
movement results. Following a prolonged downward move, it
was suggested that the price may be initiating a positive
trend. Based on this analysis, a conclusion was drawn to
initiate a Short position at the current price, anticipating a
decrease in price. A stop loss order was placed at RM 19.14,
positioned above the resistance line, while the profit target
was set at RM 18.48.