ECONFRAME BERHAD (Technical Buy)

• Econframe Bhd (EFRAME) closed at RM0.695 last Friday after consolidating and stabilizing around the RM0.68 zone over the past few trading days. The recent session featured a ‘Doji’ candlestick pattern, indicating indecisiveness and a possible trend reversal. The weekly chart mirrors this pattern, suggesting a potential bullish shift ahead.

• From a technical perspective, the Tom Demark Pressure Ratio (TDRP) at 15.75 suggests diminishing selling pressure. The daily RSI, in the oversold zone at 26.73, reinforces the likelihood of a bullish turn-around based on historical trends. The weekly chart also displays similar indicators, further supporting a potential bullish shift.

• A sustained move above the immediate resistance level of RM0.70 could signal a bullish trend, leading the stock to test higher resistance levels at RM0.725 and RM0.755. Conversely, a decline below the RM0.680 support level may indicate a continuation of the downtrend towards the next major support at RM0.66. The "Doji" pattern suggests market indecision, which, if followed by a bullish candle, could confirm a trend reversal.

• We recommend considering an entry position around the RM0.69 to RM0.70 range. Setting a take-profit target at RM0.755 provides an estimated upside potential of approximately 9.4%. For risk management, placing a stop-loss at RM0.655 limits potential downside to around 5.1%. This strategy offers a balanced risk-to-reward ratio, making it a viable trade setup for investors.

Source: Kenanga Research - 10 Jun 2024