JF TECHNOLOGY BERHAD (Technical Buy)

• After reaching a recent high of RM1.17 on 17 November, JFTECH experienced profit-taking, causing it to retrace to as low as RM0.915 before rebounding and closing 4.3% higher at RM0.975 last Friday. The closing price remained above its 5-day Simple Moving Average (SMA), suggesting a potential base has been established.

• From a technical standpoint, the stock's Stochastic Oscillator entered oversold territory and is displaying early signs of a rebound. The Tom Demark Pressure Ratio (TDRP) has also reached oversold territory, indicating a decrease in selling pressure. Additionally, the MCDX's banker chip is approaching the zero level, suggesting reduced selling momentum. These combined factors increase the likelihood of an upward trend for the stock.

• A decisive break above its immediate critical resistance level at RM0.985, which coincides with its 13-day SMA, could lead the stock to test higher resistance levels at RM1.04. Conversely, a drop below the critical support level of RM0.915 might trigger a downward trend, with the next substantial support at RM0.900, aligning with the 200-day SMA.

• We recommend entering the stock around RM0.975 with a target take-profit at RM1.04, offering approximately a 6.7% upside potential. For risk management, traders are advised to maintain a 1-to-1 risk and reward ratio with a stop-loss set at RM0.910, limiting potential losses to about 6.7%.

Source: Kenanga Research - 11 Dec 2023