CRESCENDO CORPORATION BHD (Technical Buy)

• Crescendo Corporation Bhd (CRESNDO) closed at RM1.50 yesterday, reflecting a modest gain of 1.35%. The stock has been consolidating near its 50-day SMA at RM1.47, which is acting as a key support level. Additionally, the price remains way above the 200-day SMA at RM1.16, reinforcing its broader upward trend. Notably, the formation of a 'doji' pattern on the daily chart indicates market indecision, signalling a potential reversal or breakout after the consolidation phase.
• From a technical perspective, the stochastic oscillator is currently at 22.58, indicating that the stock is emerging from oversold conditions, which could signal the end of the recent pullback. The Tom Demark Pressure Ratio (TDPR) at 39.85 also reflects reduced selling pressure, while the RSI remains at 53.12, indicating neutral-to-slightly bullish momentum. Additionally, the SmartMCDX indicator shows some accumulation of the banker chips, hinting at possible bullish momentum in the near term.
• Looking ahead, a breakout above the immediate resistance at RM1.52 (13-day SMA) would confirm a trend reversal, potentially propelling the stock towards RM1.73, which aligns with its recent high. On the downside, strong support lies at RM1.47 (50-day SMA), with the next key support level at RM1.42 if the stock declines further.
• Hence, we recommend entering the stock at RM1.50 with a take-profit target set at RM1.72, offering a potential upside of about 14.7%. To manage risk, we suggest setting a stop-loss at RM1.41, limiting potential losses to approximately 6.0%.

Source: Kenanga Research - 11 Oct 2024