ATA IMS BERHAD (Technical Buy)

• ATA IMS Berhad (ATAIMS) closed at RM0.300 last Friday, declining by 1.64%, following its recent breakout above the descending trendline and immediate resistance-turn-support at RM0.300. The pullback, despite higher trading volume, signals a healthy consolidation after recent gains. The stock is now trading at its key support at RM0.300, coinciding with the 13-day and 50-day SMAs, which reinforces the emerging bullish sentiment.
• From a technical perspective, the stochastic oscillator at 55.71 remains in an upward trajectory, suggesting strong momentum as the stock maintains its position above neutral levels. The Tom Demark Pressure Ratio (TDRP) at 67.77 highlights continued buying interest, creating an environment conducive to further upside. Meanwhile, the RSI at 53.59 is trending upwards and firmly above the neutral 50-mark, indicating improving sentiment and the potential for further gains. A bullish divergence in the RSI, coupled with the breakout above its trendline, lends additional support to a recovery scenario.
• Key levels to watch include immediate resistance at RM0.330, with a successful breakout potentially propelling the stock toward RM0.340 and further to RM0.390, representing the 61.8% Fibonacci retracement level. On the downside, immediate support is firm at RM0.300, with further cushioning at RM0.275, which serves as a strong buffer against extended pullbacks.
• Trading Strategy suggests accumulating the stock between RM0.295 and RM0.300 as an ideal entry point. A take-profit target at RM0.330 offers an upside potential of approximately 10%, while a stop-loss at RM0.270 limits downside risk to around 10%. This balanced risk-reward setup presents an opportunity for traders anticipating a continuation of ATAIMS's upward price trajectory following its technical breakout.

Source: Kenanga Research - 16 Dec 2024