SNS NETWORK TECHNOLOGY BERHAD (Technical Buy)

• SNS Network Technology Berhad (SNS) closed at RM0.530 yesterday, holding steady as the stock consolidates near its critical resistance zone. The price action reflects signs of improving momentum, with the stock trading above its 5-day SMA at RM0.525 and nearing its 50-day and 200-day SMA at RM0.565, which reinforces the potential for a bullish breakout. The stock's recovery from its recent lows suggests growing buying interest, supported by encouraging technical signals.
• From a technical perspective, the stochastic oscillator stands at 40.33, climbing from oversold territory and indicating a build- up of upward momentum. The Tom Demark Pressure Ratio (TDRP) at 57.70 reflects easing selling pressure, fostering a conducive environment for further recovery. Additionally, the RSI has risen to 47.65, nearing the neutral 50-mark and highlighting improving sentiment. The earlier bullish divergence observed in the RSI adds to the optimism for a potential breakout as momentum continues to strengthen.
• Immediate resistance lies at RM0.565, corresponding to the 50-day and 200-day SMAs. A breakout above this level could propel the stock toward RM0.595 and further to RM0.680, representing significant resistance zones based on Fibonacci retracement levels. On the downside, immediate support is observed at RM0.505, with a stronger cushion at RM0.475, offering robust protection against deeper pullbacks.
• For traders seeking to capitalise on SNS's positive setup, accumulating the stock between RM0.525-RM0.530 may provide an optimal entry point. A take-profit target at RM0.565 offers an upside potential of approximately 6.6%, while a stop-loss at RM0.50 limits downside risk to around 5.6%. This setup presents a favourable risk-reward profile, catering to traders anticipating a bullish continuation in SNS's price trajectory.

Source: Kenanga Research - 3 Dec 2024