Technical Highlights

Consolidation was observed in the stock from its 52-week high over the past weeks. The significant selloff recently caused the stock to plunge below its 20-EMA and 50- EMA lines after breaking through the neckline of the 3-month long double top pattern at RM1.33. However, the share regained buying power and rallied yesterday with considerable trading volume (2.1x more than its average 90-day trading volume). The rally not only sent the stock crossing above the neckline of the double top pattern, but also reverted most of the loss experienced throughout the consolidation period. With these signals showing positive trajectory, we think the upswing potential may not just stop there.

Yesterday, the MACD exhibited a golden cross, which denotes strong momentum going forward. Additionally, the upward-pointing 20-EMA line confirms its short-term bullishness.

With the stock sustaining above the pattern break-out with growing momentum, we think the share could retest the 52-week high at RM1.40 resistance and subsequently at 1.50 resistance. Conversely, consolidation starts if the share price dips below the RM1.27 support.

Entry – RM-1.36 – RM1.39

Stop Loss – RM1.22

Target Price – RM1.40 – RM1.50

Source: Mercury Securities Research - 8 Aug 2024