AUTOCOUNT DOTCOM BERHAD (Technical Buy)

• Autocount Dotcom Berhad (ADB) closed at RM0.960 last Friday, gaining 0.52%, as it consolidated around key support levels. The stock appears to be forming a potential base at its 200-day SMA, indicating a level of support that could foster a reversal if buying interest gains momentum. This consolidation phase, highlighted by the convergence of the 13, 50, and 200-day SMAs, suggests that a decisive movement could be on the horizon, as the price range narrows around these critical technical levels.
• On the technical front, the stochastic oscillator is currently at 11.18, signalling oversold conditions and suggesting the potential for a buying response if sentiment shifts. The Tom Demark Pressure Ratio (TDPR) reads at 29.51, reflecting diminished selling pressure, which could favour a rebound scenario if supported by volume. Additionally, the RSI has inched up to 46.84, showing early signs of improving momentum, with further upside potential if it can cross the neutral 50-level. The weekly chart supports this outlook, displaying a similar technical setup that reinforces the stock's bullish potential.
• The immediate resistance level to watch is RM0.975, in line with the 13-day SMA. A breakout above this level could pave the way for a move toward RM1.00 and RM1.06, corresponding to the 38.2% Fibonacci retracement level and marking a significant resistance area. On the downside, initial support is at RM0.945, followed by RM0.930, with additional support at RM0.895, providing a buffer against potential retracements.
• For traders looking to position for a reversal, accumulating between RM0.940 and RM0.960 could present a strategic entry point. Setting a take-profit target at RM1.04 offers an upside potential of approximately 8.3%, while a stop-loss at RM0.890 limits downside risk to around 7.3%. This setup presents a balanced risk-reward ratio, ideal for traders anticipating a bullish shift in ADB's price action.

Source: Kenanga Research - 11 Nov 2024