Technical Highlights

The stock had undergone a series of upswings before arriving at its 52-week high. Subsequently, consolidation occurred and led the stock to trade below its 50-EMA line before stabilising at the RM0.52 support. The stock continued to trade at a pattern of higher high and higher low until it surged and formed a large green candle at closing yesterday. The green candle formation not only broke through the 2-week-long pennant pattern with increasing momentum (as indicated by the rising RSI reading), but also pushed the stock to trade above the 50-EMA line for the first time in 3 months. With these positive technical indicators, we think an uptrend for the stock is underway.".

The golden cross exhibited by the MACD indicator yesterday ascertains the growing momentum in the stock. Likewise, the upward-pointing RSI line confirms the short- term bullish trend going forward.

Based on the above-mentioned positive indicators, we think the stock could potentially test the first resistance at RM0.590 and subsequently at RM0.655. Conversely, consolidation commences if the share price descent below the RM0.520 support.

Entry – RM0.545 – RM0.575

Stop Loss – RM0.470

Target Price – RM0.590 – RM0.655

Source: Mercury Securities Research - 28 Aug 2024