SYSTECH BERHAD (Technical Buy)

• Since the start of November, SYSTECH has been consolidating and closed yesterday with a 3.96% gain at RM0.525. This closing price signifies a breakout above the top of its recent consolidation zone and placing it in a robust position above both the short and medium-term (5 & 13-day) Simple Moving Averages (SMAs). Moreover, the rebound from these SMA levels coinciding with the 38.2% Fibonacci retracement implies that it has established a strong foundation.

• From a technical perspective, the Stochastic Oscillator is displaying sign of recovery from oversold conditions, indicating the possibility of renewed buying interest on the horizon. The MCDX’s banker chip is trending upward, further indicating resurgence in buying interest. These indicators together increase the likelihood of the stock moving higher in the near term.

• A decisive breakthrough above the immediate resistance level at RM0.545 could potentially propel the stock to challenge the recent high of RM0.620. Conversely, a significant decline below the key support of RM0.500 might trigger a downward trend to RM0.460, coincident with its key longer-term (50-day) SMA.

• Our recommendation is to consider an entry at RM0.525, with a target take-profit at RM0.610, offering an upside potential of approximately 16%. To manage risk, setting a stop-loss at RM0.455, representing a potential downside of roughly 13% is advised.

Source: Kenanga Research - 15 Nov 2023