Technical Highlights

The stock has been consolidating since it reached its 52-week high in October 2023. There were no signs of a trend reversal until a large green candle emerged after the stock surged yesterday. This candle not only pushed the stock to trade above its 50- EMA but also broke through a 7-month pennant pattern with increasing momentum (as indicated by the RSI indicator) and significant trading volume (1.2 times higher than its average 90-day trading volume). These positive signals indicate that there is potential for further upside.

The stock's momentum was bolstered by a golden cross in its MACD yesterday. Additionally, the short-term bullishness is confirmed by upward-pointing 20-EMA and RSI lines.

In reference to the pattern break-out with growing momentum, we think the stock could potentially test the resistance at RM0.300 first and thereafter at RM0.350. Conversely, a dip below RM0.250 could signify the start of a correction phase.

Entry – RM-0.270 – RM0.280

Stop Loss – RM0.230

Target Price – RM0.300 – RM0.350

Source: Mercury Securities Research - 14 Aug 2024