KELINGTON GROUP BERHAD (Technical Buy)

• Kelington Group Berhad (KGB) closed at RM3.41 yesterday, registering a modest gain of 0.59% as the stock maintained its upward trajectory following a recent strong breakout. The sustained buying momentum has lifted the stock above key moving averages, confirming its bullish continuation. Additionally, the formation of a bullish pennant candlestick pattern signals a potential continuation of the uptrend, further reinforcing its positive outlook.
• From a technical perspective, the stochastic oscillator is at 73.81, indicating strong upward momentum. The Tom Demark Pressure Ratio (TDPR) stands at 68.76, reflecting solid buying interest and underscoring bullish sentiment. Meanwhile, the RSI has climbed to 65.13, signalling robust momentum while staying below the extreme overbought threshold of 70. The recent bullish crossover in the RSI and the appearance of a bullish divergence on the daily chart strengthen the likelihood of continued upside movement.
• Immediate resistance is located at RM3.52, aligning with recent highs and a key Fibonacci retracement level. A breakout above this level could see the stock advancing towards RM3.62 and RM3.71, representing significant resistance zones. On the downside, immediate support is observed at RM3.29, followed by RM3.25 and RM3.18, providing stability against potential pullbacks and coinciding with critical Fibonacci levels.
• For traders aiming to leverage the ongoing bullish momentum, accumulating the stock within the range of RM3.35-RM3.41 could present an advantageous entry point. Setting a take-profit target at RM3.70 offers an upside potential of approximately 8.5%, while implementing a stop-loss at RM3.17 limits downside risk to around 7.0%. This setup offers a favourable risk-reward ratio, ideal for those seeking to capitalise on KGB's strengthening bullish trajectory.

Source: Kenanga Research - 19 Nov 2024