NATIONGATE HOLDING BERHAD (Technical Buy)

• NationGate Holdings Berhad (NATGATE) closed at RM1.82 yesterday, gaining 0.55%. The stock is trading close to its 13-day Simple Moving Average (SMA) of RM1.81, with improving traded volume. After pulling back to near its 200-day SMA, NATGATE has consolidated within the RM1.65-RM1.77 range over the past two weeks, forming a solid base for potential upward movement.

• From a technical perspective, the stochastic oscillator is recovering from oversold levels, indicating renewed buying momentum. The Tom Demark Pressure Ratio (TDRP) remains stable at 50, suggesting balanced buying and selling pressure. The RSI has also moved above its 14-day SMA, further reinforcing the growing bullish sentiment. The weekly chart confirms this bullish outlook, with indicators suggesting a possible continuation of the stock’s upward trend.

• Key levels to monitor include immediate resistance at RM1.94, which aligns with the 50-day SMA. A break above this level could drive the stock towards RM2.06, filling the gap formed on 1 August. On the downside, strong support levels are at RM1.77 (5-day SMA) and RM1.69, providing a cushion against further declines.

• Given these positive technical indicators, we recommend entering around RM1.82. A take-profit target of RM1.97, coincident to its 38.2% Fibonacci retracement level, offers an upside potential of around 8.2%. To manage risk, placing a stop-loss at RM1.69 limits potential downside to approximately 7.1%. This setup offers a favorable risk-to-reward ratio, making NATGATE an attractive short-term investment opportunity.

Source: Kenanga Research - 24 Sept 2024