After announcing a 93% drop in H2 net profit during pre-market yesterday, $SINGTEL(Z74.SI)$ gapped down from previous day's closing at 2.46 to open at 2.41, which was right at its uptrend channel's bottom support level.
During the first 10 minutes of trading, Singtel's share price continued to trend downwards to a low of 2.38 and momentarily fell out of the uptrend channel.
After the first 10 minutes, its share price managed to recover off the early low and for most of the trading day, Singtel was trading between 2.40 and 2.42.
During the last hour of trading, some bullish price-action was observed. Singtel's share price climbed to as high as 2.47 on heavy buying volume. It closed the day at 2.45, which was just 1 cent lower than the previous day.
There are several bullish observations based on yesterday's price action:
1) Despite a weak earnings announcement, the sell-down was only during the initial first 10 minutes and thereafter, Singtel's share price manage to recover strongly from the initial weakness. This is a bullish signal that investors are looking beyond the weak earnings and towards a recovery and value creation from its restructuring exercises.
2) The recovery in Singtel's share price yesterday was accompanied with strong trading volume and closed near the day's high.
3) A long tail was observed in yesterday's candlestick. Selling was well-absorbed. Buyers overpowered sellers and keep Singtel within the uptrend channel.
Yesterday's price action was bullish, and we will have to observe if the strength follows through today. Immediate resistance would be 2.47, which is the high for the last 3 trading days. Subsequent resistance levels are at 2.55 and 2.65 (channel top resistance).
What could change my bullish view? If a bearish engulfing candle happens today.
Trade with care and DYODD.
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