Tuesday, August 31, 2010

Singtel : bullish reversal or technical rebound ?

Singtel's price hit a low of 2.92 on 16-17 Aug and has since rebounded somewhat to 3.05. Is it a bullish reversal or merely a technical rebound?

I bought Singtel at 2.93 on 23 Aug. Some reasons for buying-

-Prices have been tagging the lower bollinger band for several days. Better than average odds of reversal.
- Prices were nearing long-term support of 2.86-2.90
-RSI is bordering on oversold, around 30
-Presence of candlesticks with long lower wicks from 17 Aug to 23 Aug. Although the price traded as low as 2.92, prices never closed lower than 2.94. This suggests strong support in the 2.92-2.93 region and that the selling pressure was easing.
-Spinning top candle on 19 Aug, suggests indecision and possible change of trend.

As of now, prices have rebounded to the 3.05 region, right in the middle of the bollinger bands. Prices are in a slight uptrend, as you can see from the chart, but are probably in consolidation mode. A bullish MACD crossover was also observed on 30 Aug. Prices are also just above the 200DMA(3.04) but slightly below the 50DMA(3.06). There is some pretty strong resistance at 3.10, which is the high of 10Aug before prices dropped to 2.92, while 3.00 should prove to be strong psychological support.

I would be bullish if 3.10 can be broken with high volume, however I feel that any upside will be limited to 3.10-3.12. For now, I am still holding.

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