Technical Highlights

The stock appeared to be consolidating as it traded in a pattern of lower highs and lower lows after reaching its 52-week high of RM1.85. We believe the trend reversal became apparent when the closing price surged yesterday and formed a large green candle, breaking through the bullish pennant pattern with increasing momentum. The promising signal of the trend reversal was further supported by the closing price trading above its 20-EMA line.

MACD reading finally showed a golden cross after multiple months of hovering around the oversold territory, signalling momentum is positive in the short term. Similarly, the upward-pointing RSI line and 20-EMA line confirm the short-term bullishness going forward.

If the buying momentum continues to grow after the pattern break-out, we think this shall give the stock the strength to test its first resistance at RM1.74. If the stock continues its climb, it may test the next resistance at RM1.85, which is just not far away. However, if it falls below RM1.58 (based on the recent low), it could signal the beginning of a correction phase.

Entry – RM1.63 – RM1.67

Stop Loss – RM1.48

Target Price – RM1.74 – RM1.85

Source: Mercury Securities Research - 18 Sep 2024