Technical Highlights

In early June, the stock's momentum started to decline, leading to consolidation. It reached a low point of RM0.955, its 52-week low, before showing signs of recovery as trading momentum picked up recently. This recovery seems sustainable as the stock has been following a pattern of higher highs and higher lows. Yesterday, the stock surged and formed a large green candle at the closing, breaking through the RM1.04 neckline of the double-bottom pattern with significant trading volume (2.25 times higher than its average 90-day trading volume). Additionally, the spike also sent the stock to trade above all its EMA lines.

Momentum in the stock is increasing, as evidenced by the recent golden cross in the MACD. Similarly, the stock's short-term bullishness is confirmed by the upward- pointing 50-EMA line.

With the bullish signal from the pattern break-out accompanied by strong momentum, we think this shall provide support for the stock to test its not-far-away first resistance at RM1.08. If the stock manages to break through this, it may attempt to test the subsequent resistance at RM1.19. As for the stop loss, it can be placed at the recent low price of RM1.01.

Entry – RM1.03 – RM0.06

Stop Loss – RM0.960

Target Price – RM1.08 – RM1.19

Source: Mercury Securities Research - 6 Sep 2024