MALAYAN FLOUR MILLS BERHAD (Technical Buy)

• Malayan Flour Mills Berhad (MFLOUR) closed at RM0.540 yesterday, gaining 1.89%, as the stock signals early recovery from oversold levels. The price action indicates a stabilisation phase near its immediate support at RM0.530, forming a base for a potential rebound. Although the stock remains within a consolidation range of RM0.530-RM0.550, the increasing traded volume suggests improving momentum, which could drive a breakout if buying interest persists.
• From a technical perspective, the stochastic oscillator at 2.47 is deeply oversold, pointing to the likelihood of a technical rebound as selling pressure eases. The Tom Demark Pressure Ratio (TDPR) at 20.38 reflects reduced selling intensity, creating a favourable environment for recovery. Additionally, the RSI at 24.90 is oversold, with a bullish divergence emerging as the RSI trends higher despite subdued price movement, reinforcing the case for a potential turnaround.
• Immediate resistance is located at RM0.545, aligned with the 5-day SMA. A breakout above this level could propel the stock towards RM0.590 and RM0.655, representing the 13-day and 50-day SMA levels, respectively. On the downside, immediate support is firm at RM0.530, with an additional safety buffer at RM0.515, offering strong protection against deeper pullbacks.
• For traders looking to leverage MFLOUR's recovery potential, accumulating the stock between RM0.535-RM0.540 could provide an advantageous entry point. A take-profit target at RM0.585 offers an upside potential of approximately 8.3%, while a stop-loss at RM0.500 limits downside risk to around 7.4%. This setup presents a balanced risk-reward profile, making it appealing to traders anticipating a rebound in MFLOUR's price trajectory.

Source: Kenanga Research - 5 Dec 2024