KELINGTON GROUP BERHAD (Technical Buy)

• Kelington Group Berhad (KGB) last closed at RM3.09, gaining 2.32% as the stock continued to exhibit signs of an upward trend, breaking out above its key 13- and 50-day SMA lines with rising volume. This recent movement, combined with strengthening technical indicators, suggests further upside potential if buying momentum persists. The weekly chart displays similar encouraging setups, further reinforcing the stock's bullish outlook.
• From a technical perspective, the stochastic oscillator has climbed to 50.85, signalling a rise in buying interest as the stock approaches mid-range levels while remaining comfortably below overbought territory. The Tom Demark Pressure Ratio (TDPR) sits at 43.55, reflecting a decrease in selling pressure, which aligns with the prospects of a continued upward trend. The RSI is trending upwards at 49.13, approaching the neutral 50-mark, signalling improving momentum and the likelihood of a trend continuation. Additionally, a bullish divergence in the RSI strengthens the bullish outlook, suggesting a potential trend reversal as the indicator rises, despite the price consolidating around current levels.
• Immediate resistance is at RM3.20, aligning with the 23.6% Fibonacci retracement level. A decisive move above this level could pave the way for further gains toward RM3.29, with a subsequent target of RM3.51, which represents a significant resistance area. On the downside, key support is positioned at RM3.02, near the 50-day SMA, followed by RM2.92 (the 200- day SMA), providing strong support against potential pullbacks.
• For traders looking to capitalise on the potential uptrend, accumulating between RM3.05 and RM3.09 could offer an attractive entry point. A take-profit target at RM3.28 provides an upside potential of approximately 6.1%, while a stop-loss at RM2.90 limits downside risk to about 6.1%. This setup presents a balanced risk-reward profile for traders aiming to benefit from a potential bullish continuation in KGB's price action.

Source: Kenanga Research - 1 Nov 2024