• Pentamaster Corporation Berhad (PENTA) closed at RM3.68 last Friday, recording a 1.60% decline as the stock remains within a descending triangle formation. The price action reflects ongoing consolidation near critical support and resistance levels, suggesting that a decisive move may be imminent. The convergence of the 5-day and 13-day SMAs at RM3.73, along with the 50-day SMA at RM3.64, underscores the stock’s strategic positioning at a critical juncture.
• From a technical perspective, the stochastic oscillator has improved to 38.43, indicating early signs of recovery as the stock moves away from oversold territory. The Tom Demark Pressure Ratio (TDPR) stands at 62.00, signalling reduced selling pressure, which supports a more stable trading environment. Meanwhile, the RSI has advanced to 53.73, staying above the neutral 50-mark and indicating improving momentum. The presence of a bullish divergence in the RSI adds weight to the potential for an upward breakout, as the indicator trends higher despite price consolidation.
• Key resistance is located at RM3.73, with a breakout above this level likely to propel the stock toward RM4.00, the next significant resistance area. Further gains could see the stock reaching RM4.14 and RM4.31, in line with its 200-day SMA. On the downside, immediate support is observed at RM3.64, followed by RM3.59 and RM3.36, offering layered buffers against potential pullbacks.
• For traders looking to leverage a potential breakout, accumulating the stock between RM3.60 and RM3.68 may provide a strategic entry point. Setting a take-profit target at RM4.13 offers an upside potential of approximately 12.2%, while placing a stop-loss at RM3.35 limits downside risk to around 9.0%. This configuration offers an attractive risk-reward profile for traders anticipating a near-term recovery in PENTA’s price trajectory, contingent on the stock breaching resistance levels with sustained buying interest.

Source: Kenanga Research - 18 Nov 2024