MSM MALAYSIA HOLDINGS BERHAD (Technical Buy)

• MSM Malaysia Holdings Berhad (MSM) closed at RM1.34 last Friday, recording a 3.88% gain as it demonstrated early signs of stabilisation after a period of downtrends. This price action suggests a consolidation phase around critical support levels, potentially forming a foundation for a trend reversal if buying interest persists. The convergence of the 5-day SMA at RM1.30 and the 13-day SMA at RM1.29 highlights MSM's proximity to a pivotal point, signalling potential for directional movement if a breakout materialises.
• On the technical side, the stochastic oscillator sits at 35.27, indicating a shift away from oversold conditions, which could attract further buying interest if the upward trend continues. The Tom Demark Pressure Ratio (TDPR) stands at 47.47, showing reduced selling pressure and supporting a rebound environment. Additionally, the RSI has climbed to 52.83, moving past the neutral 50-level, suggesting strengthening momentum, which could maintain a bullish bias if sustained. The bullish divergence in the RSI further bolsters the potential for a positive shift, as the indicator rises while the price stabilises.
• Immediate resistance is at RM1.36, coinciding with the 200-week SMA, followed by RM1.38 at the 78.6% Fibonacci retracement level. A successful breakout above these levels could lead to further gains, with targets at RM1.47 and RM1.65, corresponding to the 13-week SMA, if bullish momentum continues. Conversely, initial support lies at RM1.29, with additional support around RM1.23, providing a safety net against potential pullbacks.
• For traders interested in capturing a potential reversal, entering between RM1.30-RM1.34 may offer an advantageous position. With a take-profit target set at RM1.47, there is an upside potential of approximately 10.0%, while a stop-loss at RM1.22 limits downside risk to around 9.0%. This setup provides a balanced risk-reward profile, suitable for traders looking to capitalise on a possible bullish shift in MSM's price action.

Source: Kenanga Research - 11 Nov 2024