Technical Pulse: SingTel Ltd March 19, 2018 920

Technical Buy

Singtel Ltd – Weekly timeframe (Update from 30 August 2017)

19 mar

*Entry Price: 3.50         Stop loss : 3.29         Take profit : 3.76

Current Sentiment: Bullish

Support 1: 3.35                     Resistance 1: 3.56

Support 2: 3.30                     Resistance 2: 3.76

Price continued with the steep decline after the last update as it eventually broke below multiple key support area. More importantly, after price broke below the 3.56 support area in December 2017, the bearish momentum accelerated with price breaking new 52-weeks low consecutively for the three weeks in February 2018.

However, with the heavy selling in the recent weeks, the weekly Relative Strength Index (RSI) has also entered into the oversold territory suggesting for a near-term rebound soon. The RSI hit a low of 23 in February 2018 and have since then recovered.

Note that in the past 14 years, there were only two occasions when the RSI fell below the 30 oversold region. Both occasions saw price rebounding sharply after the RSI moved back above the 30 oversold region, confirming the mean reversion is taking place. In October 2008 and October 2015 was when we saw the mean reversion where price rallied 36% and 6% subsequently.

Hence, with the recent bullish breakout above the 3.43 range high in the week ended 16/03/18, we might be seeing a bottoming price action next. Moreover, the bullish break has also lifted the RSI back above the 30 oversold region confirming a mean reversion is taking place suggesting for a rebound higher. For this rebound, expect price to head higher to test the 3.56 resistance area followed by 3.76.

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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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