WCT HOLDINGS BERHAD (Technical Buy)

• WCT Holdings Berhad (WCT) closed at RM0.945 yesterday, experiencing a minor decline of 0.53%. The stock appears to be consolidating near a key support level, indicating a phase of consolidation which could serve as a potential base for a bullish reversal if buying interest emerges. The convergence of the 5, 13, and 50-day SMAs around the current price suggests that a decisive move could be imminent, potentially setting the stage for upward momentum if a breakout occurs.
• Technically, the stochastic oscillator is positioned at 66.26, just below overbought levels but showing sustained buying interest. This indicator's upward movement from mid-range levels suggests that buying momentum is gradually building. The Tom Demark Pressure Ratio (TDPR) stands at 54.22, indicating reduced selling pressure, supportive of a rebound scenario. Additionally, the RSI has ticked up to 51.55, moving above the neutral 50 level, signalling strengthening momentum that could support further upside. A bullish divergence on the RSI also hints at a potential trend reversal, as the indicator rises despite price consolidation.
• The immediate resistance lies at RM0.960, aligning with the 50-day SMA. A break above this resistance could lead to further gains, with the next key resistance at RM1.00 followed by RM1.03 (the 38.2% Fibonacci retracement level). On the downside, support is located at RM0.930, providing an initial cushion, with additional support around RM0.885 and RM0.83 for added stability.
• For traders aiming to capture a potential bullish reversal, entering between RM0.930 and RM0.945 may offer an advantageous entry point. A take-profit target at RM1.01 represents an upside potential of approximately 6.9%, while setting a stop-loss at RM0.880 limits downside risk to around 6.9%. This setup provides a balanced risk-reward ratio, positioning traders to benefit from a possible upward shift in WCT's price action.

Source: Kenanga Research - 8 Nov 2024