KUALA LUMPUR (April 24): Rakuten Trade said NationGate Holdings Bhd may extend its upward trajectory after breaking out from its one-month rectangular pattern on Tuesday.

In a technical view note on Wednesday, the research house said that in view of the stock bouncing off the 20-day exponential moving average (EMA) with a second consecutive white candle, supported by positive technical reading in relative strength index, this bullish momentum appears to be picking up.

Rakuten said it expects the rising momentum to steer the stock higher and test the next level of resistance of RM1.77 (R1) followed by RM1.85 (R2) in the near term.

“On the downside, stop-loss is set at RM1.46, below the 50-day EMA.

“Fundamentally, we like NationGate due to its exposure to the fast-growing industrial and commercial products used within the networking and telecommunication sectors.

“The company's expertise in manufacturing optical transceivers will benefit from the increasing demand for high-speed data transmission, driven by AI applications.

“Furthermore, NationGate's recent venture as an OEM (original equipment manufacturer) for Nvidia-powered AI servers underscores its strategic alignment with emerging technological trends, enhancing its growth potential,” it said.