INARI AMERTRON BERHAD (Technical Buy)

• Inari Amertron Berhad (INARI) closed at RM2.86 yesterday, recording a modest gain of 1.06%. The stock continues to recover from recent lows, and is currently testing the 61.8% Fibonacci retracement level at RM2.87, a key support that may signal further upside if it holds at this level.
• The stochastic oscillator is at 19.01 and trending upwards, indicating renewed buying interest. The Tom Demark Pressure Ratio (TDRP) stands at 28.35, reflecting waning selling pressure. Additionally, the RSI is gradually improving at 40.12, though it remains below the neutral 50 mark, implying that there is more room for the stock to recover. The chart pattern also reveals bullish reversal signals, including a bullish divergence on the RSI, where the indicator trends higher despite the stock recently hitting lower levels-a positive sign for further momentum.
• Immediate resistance lies at RM2.87, aligned with the 61.8% retracement level, followed by RM2.92, which coincides with the 13-day SMA. A clear breakout above these levels could propel the stock higher towards RM3.09, where the 50-day SMA offers resistance, and eventually to RM3.27, near the 200-day SMA. On the downside, initial support is seen at RM2.83, its 5-day SMA, followed by the crucial RM2.71 level, a key zone that aligns with recent lows and serves as solid support against further pullbacks.
• For traders looking to capture the recovery momentum, accumulating near the RM2.85-RM2.87 range offers strategic entry points. A take-profit target at RM3.07 provides an upside potential of about 7.3%, while setting a stop-loss at RM2.69 limits downside risk to around 5.9%. This setup presents a favourable risk-reward ratio for those anticipating continued strength in INARI's price.

Source: Kenanga Research - 22 Oct 2024