Technical Highlights

The stock is showing signs of forming an inverse head and shoulders pattern, with the second shoulder currently taking shape and heading towards the neckline. Yesterday's 3.2% gain, marked by a strong bullish candle, added further confidence on this pattern. Additionally, the stock is trading above all three key EMAs, reinforcing the strength of its current bullish trend.

Momentum indicators are also showing positive signals. The RSI is climbing sharply, while the MACD is starting to turn upward after a long period of neutrality, suggesting fresh momentum is building up. Meanwhile, buying volume has also picked up this month, pointing to increasing interest.

Current entry points seem reasonable, with close attention being the first resistance level at RM2.36, aligning with the neckline of the pattern. Should the inverse head and shoulders complete its formation, the next target would be RM2.61, with the potential to reach a new 52-week high. On the downside, if the stock pulls back to the RM2.19 level (which is the shoulder), it may drop to RM 2.09, signaling the start of a correction phase.

Entry – RM2.25 – RM2.30

Stop Loss – RM2.09

Target Price – RM2.36 – RM2.61

Source: Mercury Securities Research - 13 Sep 2024