MSM MALAYSIA HOLDINGS BERHAD (Technical Buy)

• MSM Malaysia Holdings Bhd (MSM) closed at RM2.21 yesterday, gaining 0.45%. The stock is showing signs of a potential rebound after consolidating at RM2.20, aligning with its 200-day SMA. The daily chart has formed an 'inside day' candlestick pattern, suggesting a potential trend reversal. Similarly, the monthly chart indicates a bullish setup as the stock retraced near the 50-week SMA.

• Technically, the daily stochastic oscillator is trending upwards from oversold territory, currently at 24.66, signalling renewed buying interest. The Tom Demark Pressure Ratio (TDRP) is stable at 50.75, and the RSI is rising from near-oversold levels at 40.90, indicating strengthening bullish momentum.

• Key levels to watch include immediate resistance at RM2.24, coinciding with the 50% Fibonacci retracement level. A break above this level could propel the stock towards the next resistances at RM2.27 and RM2.38, aligned with the 5 and 13-day SMA levels. On the downside, support levels are at RM2.20 and RM2.09, providing a solid foundation against further declines.

• Given these bullish indicators and the potential for a trend reversal, we recommend considering an entry around RM2.21. Setting a take-profit target at RM2.42 offers an attractive upside potential of approximately 9.5%. For risk management, placing a stop-loss at RM2.07 limits potential downside to around 6.3%. This strategy presents a favorable risk-to-reward ratio, making it an appealing opportunity for investors looking to capitalize on MSM’s potential upward momentum.

Source: Kenanga Research - 18 Jul 2024