EASTERN & ORIENTAL BHD (Technical Buy)

• Eastern & Oriental Berhad (E&O) closed at RM0.905 yesterday, marking a slight gain of 0.56%. The stock is currently stabilizing above its 50-day SMA of RM0.897, indicating that it may be attempting to form a base. The consolidation around the RM0.900 level suggests that E&O could be gearing up for a potential rebound, though it remains slightly below the 13-day and 5-day SMAs, hinting at some near-term resistance.
• From a technical standpoint, the stochastic oscillator is in a recovery mode, currently at 26.67, signalling that the stock may be emerging from oversold conditions. Additionally, the RSI stands at 53.12, indicating neutral-to-bullish momentum, and has moved above its midline, reinforcing the potential for further upside movement.
• Looking forward, a decisive cross above the immediate resistance level of RM0.92 (coincident with its 200-day SMA) would confirm the bullish setup and could propel the stock towards the next resistance level at 1.01. Conversely, a dip below its key support level at RM0.86 may suggest a renewed downward trend.
• We recommend entering the stock at RM0.905 with a take-profit target set at RM1.00, offering a potential upside of about 10.5%. To manage risk, we suggest setting a stop-loss at RM0.85, limiting potential losses to approximately 6.1%.

Source: Kenanga Research - 8 Oct 2024