MBSB BERHAD (Technical Buy)

• MBSB Berhad (MBSB) closed at RM0.725 yesterday, remaining unchanged as the stock consolidates near critical support at RM0.720. The price action suggests stabilisation following a prolonged downtrend, with the formation of a descending triangle hinting at a potential breakout if buying interest strengthens. The alignment of key support at RM0.720 and the oversold conditions in technical indicators add to the potential for a recovery in the near term.
• From a technical perspective, the stochastic oscillator is at 17.20, indicating the stock is deeply oversold and poised for a potential technical rebound. The Tom Demark Pressure Ratio (TDPR) at 27.08 reflects declining selling pressure, creating a more conducive environment for recovery. Meanwhile, the RSI is at 37.01, showing early signs of improvement and supporting the potential for a rebound. The RSI's bullish divergence further reinforces the possibility of upward movement as momentum builds while the stock consolidates.
• Immediate resistance is located at RM0.740, aligning with the 13-day SMA. A breakout above this level could push the stock towards RM0.760 and RM0.800, corresponding to the 50-day SMA and 200-day SMA, respectively. On the downside, support at RM0.720 provides a critical safety buffer, with additional support at RM0.700, offering stability against further pullbacks.
• For traders aiming to capture potential recovery, accumulating the stock between RM0.720-RM0.730 may offer an optimal entry point. Setting a take-profit target at RM0.770 provides an upside potential of approximately 6.2%, while a stop-loss at RM0.690 limits downside risk to around 4.8%. This setup presents a favourable risk-reward profile, catering to traders anticipating a technical rebound in MBSB's price trajectory.

Source: Kenanga Research - 27 Nov 2024