WASCO BERHAD (Technical Buy)

• Wasco Berhad (WASCO) closed at RM1.12 yesterday, gaining 4.67% as the stock seeks to stabilize following recent declines. The stock is consolidating at current levels, indicating a potential base-building phase that could pave the way for a bullish reversal if buying interest sustains.
• From a technical standpoint, the stochastic oscillator has risen to 37.19, signalling that the stock is moving out of oversold conditions and may attract further buying as it approaches mid-range levels. The Tom Demark Pressure Ratio (TDPR) stands at 68.99, suggesting that selling pressure is gradually diminishing, lending support to a positive outlook. Furthermore, the RSI is trending upward at 47.55, close to the neutral 50-mark, reflecting improving momentum with potential for continued gains. Notably, a bullish divergence on the RSI adds to the reversal outlook, as it trends higher despite price consolidation near recent lows.
• Immediate resistance is set at RM1.18, which aligns with the 38.2% Fibonacci retracement level and the 13-week SMA. A successful breakout above this level could propel the stock towards RM1.25, its 200-day SMA, with further resistance at RM1.34, coinciding with the 23.6% Fibonacci retracement. On the downside, key support is located at RM1.07, followed by RM1.05 and RM1.00, offering a buffer against potential pullbacks.
• For traders aiming to leverage this potential recovery, accumulating between RM1.10 and RM1.12 could provide a strategic entry. A take-profit target at RM1.20 offers an upside potential of about 7.1%, while setting a stop-loss at RM1.04 limits downside risk to around 7.1%. This setup provides a balanced risk-reward profile, suited for those looking to capitalize on a potential bullish reversal in WASCO's price action.

Source: Kenanga Research - 5 Nov 2024