HUP SENG INDUSTRIES BHD (Technical Buy)

• Hup Seng Industries Bhd (HUPSENG) remained unchanged at RM1.14 yesterday. The stock is consolidating within a narrow range of RM1.09-RM1.15, holding above all key SMAs (5-, 13-, 50-, 200-day). This indicates that the stock may be forming a solid base as it moves toward higher levels, supported by its sustained levels above the crucial 200-day SMA at RM1.00.
• Technically, the stochastic oscillator at 47.65 is trending upward, signalling increasing buying momentum as it recovers from near oversold levels. The improving SmartMCDX banker chip further supports this positive momentum. Meanwhile, the RSI, stabilizing at 55.16, indicates neutral-to-bullish sentiment, reinforcing the potential for further gains.
• A clear breakout above the current consolidation ceiling of RM1.15 could lead the stock to target higher resistance levels at RM1.20 (coinciding with its recent high), followed by RM1.25. Conversely, a decline below the critical support level of RM1.10, aligning with its 50-day SMA, could trigger a downward trend.
• We recommend entering the stock around RM1.14 and setting a take-profit target at RM1.20, offering an upside potential of approximately 5.3%. To manage risk, a stop-loss should be placed at RM1.09, limiting potential losses to about 4.4%. This setup provides a balanced risk-reward profile for those looking to ride HUPSENG's potential upward momentum.

Source: Kenanga Research - 20 Nov 2024