PRESS METAL ALUMINIUM HOLDINGS BERHAD (Technical Buy)

• Press Metal Aluminium Holdings Berhad (PMETAL) closed at RM4.68 last Friday, advancing by 0.86% as the stock continued its recovery from multi-week lows. The price action demonstrates stabilising momentum, with the stock holding above the critical support level of RM4.63, indicating a potential breakout above its descending trend-line. The near convergence of the 5-day and 13-day SMAs at RM4.63 and RM4.68, respectively, further reinforces the likelihood of upward continuation, supported by improving technical indicators.
• From a technical perspective, the stochastic oscillator has climbed to 55.07, signalling strengthening upward momentum as the stock transitions from neutral territory. The Tom Demark Pressure Ratio (TDPR) at 25.15 reflects declining selling pressure, creating a supportive environment for a rally. Additionally, the RSI has advanced to 49.52, nearing the neutral 50- mark, which highlights improving momentum and bolsters the case for further gains. The bullish divergence in RSI adds to the optimistic outlook, with momentum building even as prices consolidate.
• Immediate resistance is noted at RM4.79, corresponding to the 50-day SMA. A breakout above this level could drive the stock higher towards RM5.00 and RM5.08, representing key resistance levels aligned with the 200-day SMA. On the downside, immediate support lies at RM4.63, with a stronger buffer at RM4.36, providing stability against potential pullbacks.
• For traders looking to leverage the bullish momentum, accumulating the stock between RM4.64-RM4.68 may present an optimal entry point. Setting a take-profit target at RM5.05 offers an upside potential of approximately 8.0%, while a stop-loss at RM4.35 limits downside risk to around 7.0%. This setup presents a favourable risk-reward ratio, catering to traders anticipating a breakout in PMETAL's price trajectory.

Source: Kenanga Research - 25 Nov 2024