Featured Trade (SG Stock): DBS corrective rebound phase remains intact ahead of earnings | CityIndex Research
Medium-term technical outlook (1-3 weeks) on DBS (SGX:D05)
Key technical elements
- The share price of DBS has reached an all-time high of 31.28 on 02 May 2018 before it tumbled by 20.9% within a span of 2 months to print a low of 25.01 on 06 Jul 2018. The bearish reversal from the 31.28 high has coincided at the upper boundary/resistance of the long-term super cycle degree ascending channel in place since Aug 1998 low of 3.05 coupled with a bearish divergence seen from daily RSI oscillator since 19 Feb 2018. These observations suggest that the long-term cycle degree uptrend from Mar 2009 low of 6.42 is now at risk of shaping a significant correction of a higher magnitude of the recent 20.9% decline.
- Prices of financial assets (inclusive of share prices) do not move up and down in a straight-line fashion. These asset prices tend to move in “wave-like” forms as new information is being digested by market participants. From a medium-term perspective (1-3weeks), the share price of DBS has managed to stage a bullish breakout from its the downtrend channel from 02 May 2018 and reacted off the channel resistance now turns pull-back support at 26.40/30 with a “Bullish Engulfing” candlestick pattern. In addition, the 4 hour Stochastic oscillator shows further potential to manoeuvre to the upside before it reaches an extreme overbought level of 94 and the daily RSI oscillator has not reached its significant corresponding resistance at the 66 level. These observations suggest that DBS may shape a further corrective rebound to retrace its recent down move from 02 May 2018 high to 06 Jul 2018 low (see 4 hour chart).
- The next significant medium-term resistances to watch will be at 28.14 (50% Fibonacci retracement of the down move from 02 May 2018 high to 06 Jul 2018 low, former swing low area of 30 May 2018 & the upper boundary of the ascending channel from 06 Jul 2018 low) and 28.80 (61.8% Fibonacci retracement of the down move from 02 May 2018 high to 06 Jul 2018 low).
Key Levels (1 to 3 weeks)
Pivot (key support): 26.40/30
Resistances: 27.40, 28.14 & 28.80
Next support: 24.80
- Q2 2018 earnings release on Thurs, 02 Aug before market opens
- Q2 2018 Adjusted EPS (estimates) at 0.553 (+24.8% y/y) with previous Q1 2018 Adjusted EPS at 0.594. source: Reuters
Therefore as long as the 26.40/30 key medium-term pivotal support holds, DBS may see a continuation of its corrective rebound phase to target the next resistances at 27.40 follow by 28.14.
However, a break below 26.30 (daily close below it) invalidates the corrective rebound scenario for a continuation of the down move to retest 25.01 before target the next support at 24.80 (the pull-back of the long-term cycle degree former ascending channel resistance from Mar 2009 & the former major swing high area of Dec 1999).
Charts are from eSignal