Technical Highlights

The stock had been hovering below its 20-EMA line after consolidating from its 52- week high. However, we see this consolidation and trading pattern as temporary amid the recent rebound in its share price with growing momentum (indicated by the growing RSI indicator). The stock is on the verge of breaking through the 3-month- long pennant pattern. The green candle formed at the closing yesterday indicates that the buying interest may resume.

Growing momentum in the stock is shown by the golden cross in the MACD yesterday. Similarly, short-term bullishness is ascertained by the upward pointing RSI line.

If the share breaks out of the pennant pattern with growing momentum, we think the stock could potentially test the resistance at RM0.900 first and subsequently at RM1.03 (52-week high). Conversely, a dip below RM0.845 could indicate the commencement of a correction phase.

Entry – RM-0.875 – RM0.895

Stop Loss – RM0.825

Target Price – RM0.900 – RM1.03

Source: Mercury Securities Research - 9 Aug 2024