WCT HOLDINGS BERHAD (Technical Buy)

• WCT Holdings Berhad (WCT) closed at RM0.850 yesterday, rising by 0.59%, as the stock demonstrates signs of stabilisation after finding support near RM0.835, which aligns with the 61.8% Fibonacci retracement level. The stock's consolidation phase within a descending trend line suggests potential accumulation and positions it for a breakout if buying interest strengthens. The alignment of the 5-day SMA at RM0.860 and the 200-day SMA at RM0.810 reinforces its positioning at a key pivot zone, indicating a potential shift in momentum.
• From a technical perspective, the stochastic oscillator at 14.44 is emerging from oversold territory, indicating early signs of recovery and a possible short-term rally. The Tom Demark Pressure Ratio (TDPR) at 23.29 highlights easing selling pressure, creating a favourable environment for an upward move. Meanwhile, the RSI at 39.20 shows stabilising momentum, with a bullish divergence emerging, further supporting the potential for a reversal in price trajectory.
• Immediate resistance is located at RM0.860, coinciding with the 13-day SMA, with a breakout above this level potentially driving the stock toward RM0.890 and RM0.915, representing the 13-day SMA and 50.0% Fibonacci retracement levels, respectively. On the downside, immediate support is firm at RM0.835, with additional cushioning at RM0.810, providing strong buffers against pullbacks.
• For traders aiming to leverage WCT's recovery potential, accumulating the stock between RM0.840-RM0.850 may present an optimal entry point. Setting a take-profit target at RM0.910 offers an upside potential of approximately 7.1%, while a stop-loss at RM0.800 limits downside risk to around 5.9%. This setup presents a favourable risk-reward profile, appealing to traders anticipating a breakout in WCT's price trajectory.

Source: Kenanga Research - 5 Dec 2024