EKOVEST BERHAD (Technical Buy)

• EKOVEST reached an intraday high of RM0.615 on 25 September but subsequently experienced a 25% correction. As of yesterday, with its closing price at RM0.460, the stock formed a Doji candlestick pattern on its daily chart with increasing volume, suggesting market indecision. However, if the stock price rises today, this Doji formation could signal a "morning star Doji" pattern, indicating a potential bullish reversal.

• On the technical side, the stochastic oscillator has entered the oversold territory, with both the %D and %K converging. This suggests the possibility of a trend reversal, making it a crucial point of interest for investors.

• Regarding price levels, a sustained close above yesterday's closing price of RM0.460 could serve as a catalyst for the stock to rally towards RM0.495 and potentially RM0.515 thereafter. Conversely, a breach below the immediate support level of RM0.445 could trigger a new downtrend, possibly touching RM0.415, in line with its 200-day SMA.

• Our recommendation is to consider initiating a position at the current price of RM0.460, with a take-profit target set at RM0.490. This strategy offers an estimated upside potential of approximately 6.5%. To manage downside risk, we suggest placing a stop-loss order at RM0.440, which corresponds to a downside risk of roughly 4.3%.

Source: Kenanga Research - 24 Oct 2023