TOP GLOVE CORPORATION BERHAD (Technical Buy)

• After achieving a recent peak of RM1.02 on January 8, 2024, TOPGLOV began to retract and has been consolidating within the RM0.885 to RM0.945 range for the past two weeks. Despite this sideways consolidation, the recent crossover of the 50- day SMA above the 200-day SMA indicates a potentially brighter outlook. The convergence of the shorter-term SMAs, specifically the 5-day and 13-day, hints at an impending increase in volatility.

• From an indicator perspective, the stock’s Stochastic Oscillator has recovered from its near-term oversold levels and is trending upwards. Concurrently, the MCDX’s banker chips have surpassed the 14-day average line, suggesting that there could be a resurgence of buying interest soon.

• A decisive climb above the immediate resistance level of RM0.945 could propel TOPGLOV towards the higher resistance level of RM1.02. On the flip side, a breach below the lower boundary of the recent consolidation at RM0.885 may indicate a shift towards a bearish trend.

• We recommend initiating positions at RM0.935, targeting a profit-taking level at RM0.995, which presents a potential upside of approximately 6.4%. For risk mitigation, a stop-loss should be placed at RM0.880, capping the potential loss at roughly 5.9%.

Source: Kenanga Research - 6 Feb 2024