DBS below key medium term range resistance ahead of earnings release

DBS, the largest market capitalisation float among the local Singapore banks (UOB & OCBC) and the highest weightage component stock of the benchmark FTSE Straits Time Index (STI) will be the first bank to report its Q4 2018 earnings on Mon, 18 Feb 2019 before the open.

Medium-term technical outlook (1-3 weeks) on DBS (SGX:D05)

Key elements

• The share price of DBS has started to stabilize after a plunge of 27% from its 02 May 2018 all-time high of 31.28 to hit a low of 22.65 on 21 Nov 2018. The recent down move was the worst since Feb 2016.
• From an Elliot Wave/fractal analysis perspective, DBS is likely to be evolving with a corrective sideways range configuration in place since its 21 Nov 2018 low of 22.65.
• Current price action is now hovering right below the sideways range resistance of 25.40 which is below the key medium-term pivotal resistance of 26.00 (38.2% Fibonacci retracement of the primary down move from 02 May 2018 high to 21 Nov 2018 low & the swing high area of 21/28 Sep 2018).
• The daily RSI oscillator has just tested and reacted off a significant resistance at the 65 level where it has formed since its bearish divergence signal that has materialised from its prior price action swing high of 26 Feb 2018 and the 02 May 2018 all-time high. It still has further room to manoeuvre to the downside before it reaches an extreme oversold level at 23.
• The significant medium-term range support rests at 23.25 (the lower boundary of the sideways range configuration & Fibonacci expansion cluster).

Key levels (1 to 3 weeks)

Intermediate resistance: 25.40

Pivot (key resistance): 26.00

Supports: 23.95 & 23.25

Next resistances: 26.95/27.30

Conclusion

The share price of DBS now faces the risk of undergoing a push down within its medium-term sideways range configuration to target the 23.95 swing low area of 29/31 Jan 2019 and a break below it sees a further potential slide towards the 23.25 key medium-term range support.

On the other hand, a clearance above the 26.00 key medium-term pivotal resistance put the bears on hold for an extension of the corrective rebound towards the next resistance at 26.95/27.30 (the swing high of 26 Jul 2018 & the 50% Fibonacci retracement of the primary down move from 02 May 2018 high to 21 Nov 2018 low).

Charts are from eSignal