Technical Highlights

After hitting its 52-week high in early April, the stock slipped into a consolidation phase. It reached a 52-week low in early September before renewed buying interest sparked a sharp recovery. This upward trend led to a recent breakout from the pennant pattern. However, until recently, the reversal signal remained uncertain as the stock hovered below its 50-day EMA line. Last Friday's significant upward close, which pushed the stock above the medium-term EMA, has now confirmed the trend reversal.

Momentum indicators are supportive of the trend reversal. The RSI is climbing sharply toward the overbought zone, signalling strong buying interest. Additionally, the MACD displayed a golden cross last Friday, reinforcing the build-up of bullish momentum.

Waiting for the stock to fall back to the range between RM0.440 and RM0.485 would present a good entry opportunity. If momentum continues, the stock could challenge its first resistance at RM0.505. A breakout above this level could set the stage for a test of the next resistance at RM0.570. On the flipside, a dip below RM0.440, the recent support level, could suggest a false reversal and the start of another consolidation phase.

Entry – RM0.440 – RM0.485

Stop Loss – RM0.390

Target Price – RM0.505 – RM0.570

Source: Mercury Securities Research - 4 Nov 2024