RGB INTERNATIONAL BERHAD (Technical Buy)

• After reaching a recent high of RM0.340 in early November, RGB has entered a consolidation phase, fluctuating within the RM0.290-RM0.310 range over the last 10 days. This period of consolidation has led to a convergence of its short, medium, and long-term (5, 13, and 50-day) Simple Moving Averages (SMA), indicating potential heightened volatility ahead.

• From a technical perspective, the stock's Stochastic Oscillator has fallen into oversold territory and is showing signs of an early rebound. Additionally, the Tom Demark Pressure Ratio (TDRP) has declined below the 50-mark threshold, trading sideways, which implies reduced selling pressure. The MCDX's banker chip is also nearing the zero level, suggesting a decrease in selling momentum. Collectively, these factors enhance the likelihood of the stock trending upwards in the future.

• A decisive break above RGB's current consolidation ceiling of RM0.310 could lead the stock to target resistance levels at RM0.325 and then RM0.340. Conversely, a drop below the critical support of RM0.290 might trigger a downward trend, with the next substantial support at RM0.275, aligning with the 200-day SMA.

• We recommend entering the stock around RM0.305, near its 50-day SMA, and setting a take-profit at RM0.335, offering an approximate 9.8% upside. For risk management, a stop-loss at RM0.285 is advised, limiting potential losses to about 6.6%.

Source: Kenanga Research - 24 Nov 2023