V.S INDUSTRY BERHAD (Technical Buy)

• After manifesting a double top chart pattern, VS has seen a 15% retracement over the past month, closing at a pivotal 200- day Simple Moving Average (SMA) of RM0.890 yesterday.

• Technically, the stock's short-term 5-day SMA continues its downward trajectory and diverges from its longer-term 13-day SMA, signalling an uncertain technical outlook. However, the stochastic oscillator has entered oversold territory, and the Tom Demark Pressure Ratio (TDRP) is waning, suggesting that renewed buying interest may be forthcoming. The stock's rapid descent to its critical 200-day SMA also implies that a technical rebound could be imminent.

• A conclusive break above the key resistance level of RM0.915 could pave the way for the stock to challenge the next significant resistance levels at RM0.945. Conversely, a substantial decline below the recent low of RM0.880 could catalyze a sell-off, potentially reaching RM0.860 and RM0.810 subsequently.

• We recommend initiating a trading position at RM0.890, targeting a take-profit level of RM0.940. This approach provides an estimated upside potential of roughly 5.6%. To safeguard against downside risk, we advise implementing a stop-loss at RM0.860, corresponding to a potential downside of approximately 3.4%.

Source: Kenanga Research - 31 Oct 2023