Technical Highlights

In May, there were double surges which propelled the stock to trade above all of its EMA lines, initiating an uptrend cycle. After that, the stock traded within a range until a substantial sell-off in early August. However, the stock quickly regained momentum and reversed all the losses from the sell-off. Yesterday, the stock experienced a surge and closed with a Marubozu candle. This Marubozu candle also broke through a pennant pattern that had been forming for about a month, accompanied by a decent trading volume (about 2.9 times higher than its average 90-day trading volume), indicating a positive uptrend.

Growing momentum can be observed via the upticking MACD line, which is just on the verge of initiating a golden cross. Likewise, the short-term bullish trend is indicated by both the upward-pointing 50-EMA and RSI lines.

Since the pattern break-out is supported by the abovementioned positive indicators, we think this warrants the stock to test its first resistance level at RM0.450, which is also its 52-week high. If the trading momentum sustains, the stock could potentially test the next new 52-week high resistance level at RM0.500. On the flip side, consolidation occurs if the share price dips below its RM0.400 support, which is derived from its recent low.

Entry – RM0.410 – RM0.425

Stop Loss – RM0.350

Target Price – RM0.450 – RM0.500

Source: Mercury Securities Research - 30 Aug 2024