Technical Highlights

The stock had experienced multiple attempts to break out of the consolidation pattern for the past months, but none of them were successful as the stock continued to trend downward. In mid-August, the stock experienced a significant market correction as buying interest faded. However, after reaching its 52-week low, renewed trading momentum drove the stock higher, enabling it to break through the neckline of a double-bottom pattern at RM2.19. This double-bottom breakout, backed by rising trading interest, signals the start of a trend reversal, suggesting further upside potential.

Momentum indicators support this trend reversal. The RSI indicator is gaining momentum and heading toward its overbought territory, indicating sustained buying interest. Additionally, the upward-trending MACD and the stock trading above its 20- day EMA suggest that a bullish trend is underway.

A range between RM2.17 and RM2.22 would be a good entry point. Should the stock maintain strong upward momentum, it may test its first resistance at RM2.43, with RM2.65 as the next target upon a successful breakout. Conversely, a drop below the recent support at RM2.10 would signal a possible false breakout, potentially resuming the consolidation phase.

Entry – RM2.17 – RM2.22

Stop Loss – RM2.00

Target Price – RM2.43 – RM2.65

Source: Mercury Securities Research - 29 Oct 2024