Technical Highlights

The stock had been trending downwards after reaching its 52-week high. The consolidation appears to have stopped as the stock recently started to rise from its 52-week low at RM0.31. We think there are strong signs of recovery, with a pattern of higher highs and higher lows, and has almost recouped the major losses from the recent sell-off. Additionally, a W pattern has formed, indicating renewed buying interest. Notably, the stock surged yesterday and closed with a large green candle, nearing a breakthrough of the key resistance at RM0.375, which was established from the recent pennant pattern breakout. Based on these positive technical indicators, we foresee significant upside potential for the stock moving ahead.

Strong momentum is expected as portrayed by the recent golden cross in the MACD reading. Similarly, short-term bullishness is ascertained by the growing RSI indicator and the stock trading above the short-term 50-EMA line.

If the stock convincingly breaches the RM0.375 key resistance level, we believe this will provide the strength for the stock to subsequently test the next RM0.470 resistance. Conversely, consolidation occurs if the share price dips below its RM0.340 support, which is set based on the recent low.

Entry – RM0.345 – RM0.365

Stop Loss – RM0.310

Target Price – RM0.375 – RM0.470

Source: Mercury Securities Research - 29 Aug 2024