SUPERLON HOLDINGS BERHAD (Technical Buy)

• Superlon Holdings Bhd (SUPERLN) closed at RM0.930 yesterday, marking a modest gain of 1.09%. The stock is attempting to stabilise near recent levels, with price action indicating a potential bottoming pattern as it consolidates around key moving averages. Encouraging technical indicators suggest that a rebound may be on the horizon if buying interest continues.
• The stochastic oscillator has risen slightly to 5.41, indicating that the stock is in deeply oversold territory and could attract renewed buying interest. The Tom Demark Pressure Ratio (TDPR) stands at 50.09, suggesting an easing of selling pressure, supportive of a potential reversal. The RSI is also showing gradual improvement at 45.75, moving closer to the neutral 50- mark, signalling improving momentum. Additionally, the RSI displays a bullish divergence, where it is trending higher while the price remains stable, hinting at the possibility of an upward shift.
• Immediate resistance is located at RM0.955, which aligns with the 13-day SMA, followed by a stronger resistance at RM1.01, at the 200-day SMA. A breakout above these levels could open the path toward RM1.10, providing further confirmation of a bullish reversal. On the downside, key support is identified at RM0.91, with further support around RM0.89, serving as a cushion against potential pullbacks.
• For traders looking to capture a potential recovery, accumulating between RM0.92 and RM0.93 may present a strategic entry point. A take-profit target at RM0.995 offers an upside potential of approximately 7.0%, while setting a stop-loss at RM0.885 limits downside risk to around 4.8%. This setup provides a favourable risk-reward ratio for traders aiming to capitalise on a potential bullish turnaround in SUPERLN's price action.

Source: Kenanga Research - 4 Nov 2024