Technical Highlights

Yesterday, the share price of Melewar Industrial surged, causing the stock to trade above its upward-pointing 20-EMA line. As a result, the trading day ended with a large green candle, and the stock broke through an approximately 5-week-long wedge pattern with growing momentum (as indicated by rising RSI). We believe that there may be more room for upside potential, especially considering the pattern break-out was accompanied by substantial trading volume, which was 12.2 times higher than its average 90-day trading volume.

The golden cross exhibited by the MACD today ascertained the growing momentum. Likewise, the upward-pointing 20-EMA line confirmed short-term bullishness.

With the share price breaking through the pattern with momentum, we think the stock could potentially test the resistance at RM0.335 first and subsequently at RM0.385. Conversely, a dip below RM0.280 could mark the commencement of a correction phase.

Entry – RM-0.315 – RM0.320

Stop Loss – RM0.275

Target Price – RM0.335 – RM0.385

Source: Mercury Securities Research - 25 Jul 2024