Technical Highlights

A 7-month-long reverse head and shoulder break-out is seen, backed by spike in volume (10.7x higher than the 90 days average volume) and breaking through the 9- month primary resistance at RM0.233 (the black line shown). This suggests reversal of primary downtrend and the start of primary uptrend. The primary reversal is further affirmative with the formation of a large green candle at the closing.

The MACD line has recently crossed above the signal line, which shows a strong bullish signal going forward. The 20-EMA pointing up also signifies a short-term bullish trend.

Based on the difference of RM0.095 between the high and low price of the head and shoulder, we think the stock could potentially test the resistance at RM0.340 and RM0.39 (52-week high) respectively. Conversely, a drop below RM0.205 support could signal the start of a correction phase.

Entry – RM-0.245 – RM0.255

Stop Loss – RM0.195

Target Price – RM0.34 – RM0.39

Source: Mercury Securities Research - 11 Jul 2024