EVERSENDAI CORPORATION BERHAD (Technical Buy)

• Eversendai Corporation Berhad (EVERSEN) closed unchanged at RM0.470 yesterday. The stock is currently consolidating around the 50% Fibonacci retracement level at RM0.465, after a decline from its recent peak. The consolidation suggests that the stock is attempting to form a base, and with key moving averages (13, 50-day SMAs) converging, a potential breakout could be on the horizon.
• From a technical perspective, the stochastic oscillator remains low at 9.23, signalling that the stock is still in oversold territory but with potential for recovery. The Tom Demark Pressure Ratio (TDPR) stands at 51.58, reflecting stable market conditions with limited selling pressure. Additionally, the RSI is trending upwards from 41.26, indicating that the stock may be gaining positive momentum.
• Immediate resistance is seen at RM0.485, aligned with the 5-day SMA. A successful breakout above this level could push the stock higher toward RM0.510 and RM0.540 next, where the next resistances aligns. On the downside, strong support is located at RM0.465 (50% Fibonacci retracement) and RM0.415 (200-day SMA), which should act as a cushion against potential declines.
• For traders looking to capitalize on a potential reversal, accumulating the stock near the RM0.465 level might offer a strategic entry point. A take-profit target at RM0.535 provides an upside potential of approximately 15%, while setting a stop-loss at RM0.410 limits downside risk to around 11.8%. This setup presents a favorable risk-reward ratio for those seeking to ride EVERSEN's potential rebound.

Source: Kenanga Research - 16 Oct 2024