SHIN YANG GROUP BERHAD (Technical Buy)

• Shin Yang Group Berhad (SYGROUP) closed at RM0.875 yesterday, recording a 1.74% gain as the stock continues consolidating within a symmetrical triangle pattern. This pattern indicates that the stock may be preparing for a breakout as it approaches the apex, signalling a potential shift in trend.
• Technically, the stochastic oscillator remains elevated at 69.85, reflecting sustained buying pressure, though it is not yet in overbought territory. The Tom Demark Pressure Ratio (TDRP) remains stable at 63.36, indicating reduced selling pressure. The RSI is trending upwards at 50.41, approaching neutral territory, reinforcing the building momentum that could lead to further price gains.
• Immediate resistance is pegged at RM0.895, aligning with the upper boundary of the triangle and the 38.2% Fibonacci retracement level. A breakout above this level could push the stock towards RM0.92, with further resistance at RM0.965, aligning with the 23.6% Fibonacci retracement level. On the downside, key support stands at RM0.85, aligned with the 13-day SMA, with the stronger support at RM0.83, which coincides with the lower boundary of the triangle pattern.
• For traders looking to benefit from a potential breakout, accumulating the stock between RM0.87 and RM0.88 could provide strategic entry points. A take-profit target of RM0.960 offers an upside potential of approximately 9.7%, while setting a stop-loss at RM0.825 limits downside risk to around 5.7%. This configuration presents an attractive risk-reward ratio for traders aiming to ride on SYGROUP's possible breakout.

Source: Kenanga Research - 22 Oct 2024