TSH RESOURCES BERHAD (Technical Buy)

• After peaking at RM1.03 in mid-October, TSH Resources experienced a 7% pullback, closing at RM0.960. The formation of a 'Dragonfly Doji' candlestick pattern indicates a potential reversal in the stock's trend.

• On the technical front, the stock's 5-day Simple Moving Average (SMA) is on a declining path and diverging from its 13-day SMA, casting doubt on the near-term outlook. However, the Stochastic Oscillator has moved into oversold territory, and the Tom Demark Pressure Ratio (TDRP) is diminishing, hinting at a possible resurgence in buying interest.

• A decisive breach above the critical resistance level of RM0.975 could set the stage for TSH to target subsequent resistance levels at RM0.990 and RM1.01. On the flip side, a significant drop below the recent low of RM0.945 may trigger a sell-off, with a downside target of RM0.915.

• We advocate initiating a trading position at the current price of RM0.960, with a take-profit objective set at RM0.990, offering an estimated upside of approximately 3.1%. To mitigate downside risk, we recommend a balanced 1:1 risk-to-reward ratio and suggest implementing a stop-loss at RM0.930, which corresponds to a potential downside of roughly 3.1%.

Source: Kenanga Research - 1 Nov 2023