REDTONE DIGITAL BERHAD (Technical Buy)

• Redtone Digital Berhad (REDTONE) closed at RM0.940 yesterday, gaining 2.73%, as the stock demonstrated a strong rebound from its immediate support level of RM0.900. The recent price action highlights potential accumulation at lower levels, with improving technical indicators suggesting a favourable setup for continued recovery. The alignment of the 13-day SMA at RM0.940 and the 50-day SMA at RM0.970 positions the stock at a critical pivot zone, reinforcing its near-term bullish prospects.
• From a technical perspective, the stochastic oscillator at 5.37 has risen from oversold territory, signalling an opportunity for further upside. The Tom Demark Pressure Ratio (TDPR) at 42.07 reflects easing selling pressure, creating a supportive environment for buyers to regain control. Additionally, the RSI at 41.99, accompanied by a bullish divergence, points to strengthening momentum as the stock builds a base for a potential rally.
• Immediate resistance is seen at RM0.970, coinciding with the 50-day SMA, and a breakout above this level could drive the stock higher toward RM1.00 and RM1.04, which mark significant resistance zones. On the downside, immediate support is firm at RM0.900, with an additional buffer at RM0.890, providing solid protection against further declines.
• For traders aiming to ride REDTONE's recovery momentum, accumulating the stock between RM0.930-RM0.940 presents an attractive entry point. A take-profit target at RM0.995 offers an upside potential of approximately 5.9%, while a stop-loss at RM0.890 caps downside risk to about 5.3%. This setup provides a balanced risk-reward profile, appealing to traders seeking to capitalise on REDTONE's upward trajectory.

Source: Kenanga Research - 3 Dec 2024