Technical Pulse: CityDev Ltd May 22, 2018 856

Technical Buy

CityDev Ltd – Daily timeframe

*Entry Price: 12.12     Stop loss : 10.99     Take profit : 13.50

*CityDev Ltd will be added to the Phillip 20 Portfolio once the trade is triggered

Current Sentiment: Bullish

Support 1: 11.78                   Resistance 1: 12.92

Support 2: 11.04                   Resistance 2: 13.53

Since hitting a high of 13.53 in January 2018, price failed to break above it resulting in the formation of a double top in March 2018. It was the double top formation that kick-started the current prolonged correction with price breaking below multiple support levels.

However, the 11.78 support area seemed to be holding price up for now after price broke below it on 18/05/18. The 11.78 area is an area of interest because it was acting as resistance back in September 2017 and then subsequently as support in November and December 2017 shown by the highlighted areas. In addition, the recent sharp selloff has also caused the Relative Strength Index (RSI) to fall below the oversold zone of 30. The most recent low in the RSI was at 27 on 21/05/18. RSI measures momentum. Any reading above 70 represents overbought condition while any ready above 30 represents oversold condition.

More importantly, the subsequent bullish rejection off the 11.78 support area on 21/05/18 lifted the RSI back above the 30 oversold region signals a mean reversion higher is happening.

Expect a reversal higher next into the uptrend for price to test the 12.92 resistance area followed by 13.53. The 11.78 support area should hold up in the near-term.


Note: Our current fundamental view on CityDev is an Accumulate rating with a fair value of $13.40.

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About the author

Profile photo of Jeremy Ng

Jeremy Ng
Research Analyst
Phillip Securities Research Pte Ltd

Jeremy specialises in Technical Analysis and has 10 years of experience in studying price action. His areas of expertise include intermarket analysis on the equities, currencies, commodities and bonds market.

He is also a regular columnist on The Business Times - every Monday ChartPoint column.

He graduated with a Bachelor of Science in Banking and Finance from University of London.

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