RCE CAPITAL BERHAD (Technical Buy)

• RCE Capital Berhad (RCECAP) closed at RM1.63 yesterday, declining by 1.21%, as the stock retraced from recent highs but remains above its critical support level at RM1.59. The price action indicates a healthy consolidation phase, supported by the alignment of the 200-day SMA at RM1.52 and the 50-day SMA at RM1.63, which reinforce its medium-term bullish outlook. The stock's resilience at current levels suggests potential for a rebound if buying interest re-emerges.
• From a technical perspective, the stochastic oscillator stands at 16.05, hovering in oversold territory, which signals the possibility of a technical rebound. The Tom Demark Pressure Ratio (TDPR) at 64.52 reflects diminishing selling pressure, creating a favourable setup for recovery. Meanwhile, the RSI is at 53.52, positioned above the neutral 50-mark, indicating stabilising momentum and supporting a constructive outlook.
• Immediate resistance is located at RM1.66, aligned with the 13-day SMA, with a breakout above this level potentially propelling the stock toward RM1.74 and RM1.77, marking significant resistance zones. On the downside, immediate support is observed at RM1.59, with a stronger cushion at RM1.52, coinciding with its 200-day SMA, offering robust protection against further declines.
• For traders looking to capture the bullish setup, accumulating the stock between RM1.61-RM1.63 could offer an optimal entry point. A take-profit target at RM1.74 provides an upside potential of approximately 6.7%, while a stop-loss at RM1.52 limits downside risk to around 6.7%. This setup presents a balanced risk-reward profile, appealing to traders anticipating a continuation of RCECAP's recovery momentum.

Source: Kenanga Research - 3 Dec 2024