The past few weeks has been chaotic for most of the Singapore banks, we have broken multi-year support levels and seems like it is still not stopping..
Wanted to do a quick cover of the banks and what are some of the key levels of support as of now..
US markets has been really volatile with Dow Jones selling down more than 1000 points a day which has now become common place..
Banks which are high beta and follow the market closely are affected with this sell down and can potentially turn to a downtrend..
In fact as I am typing, there are already some signs of downtrend playing out in the 3 banks…
Take a look at their charts below and the next levels of downside that prices can head to for DBS, OCBC and UOB..
Cautious for now, market is still weak and if you want to try to catch the bottom,
Please be nimble and save bullets along the way down…
What you want to do if you intend to hold for the long haul is to nibble some at good support level for any rebound rather then just buy at any prices now…
The worst may not be over yet with the number of confirmed cases almost doubling in a matter of days for the whole world..
So don’t be too quick to catch a falling knife unless there are some stability in the current global virus pandemic…
If you are looking to short and profit from the weakness, you can use CFD and enter at level where we see major resistance where sellers are out again….
Best to hold more shorts then long for now… Would want to reduce exposure for any long positions…
Let’s get down to the individual banks below!
DBS
DBS has been holding above the 22.00 psychological support since 2017 for more than 3 years but that just gave way about 3 weeks back as the virus situation escalated quickly..
Trend indicators are all pointing lower for now, in fact since the break down below 22.00 there are already signs of weakness and the trend turning down quickly.
We managed to see some support coming back near 17.00 over the past 2 weeks and then it rebounded in line with market on the hopes of the USD 2 trillion stimulus package being implemented last week.
Still looks bearish for now below the immediate 20.00 psychological resistance imo.
In fact, just a few days back, as we approached the 20.00, was expecting some selling to return and a potential trade back down…
See below chart on downside targets…
back to 17.00- 18.00 where some bargain hunting can come back again..
Cautious long positions… If you want to accumulate on dips for the long haul, be nimble… try average down slowly near 17 and maybe even near 15 (if the support at 17 breaks) and do not rush to buy all at once as you will use up all your bullets…
For us, looking more at CFD shorts near major SELLING ZONES to ride further downside until we see some stability in the markets…
OCBC
We have broken the 10.50 key support in early March that has held strongly since 2017..
this was not a good sign and this has also set off a wave of selling all the way to a low of near 7.50 over the past 2 weeks..
For now, we are seeing 7.50 level as the ULTIMATE CRITICAL support level. Why?
Well, this 7.50 support has been holding for more than 10 years since 2019, yes 10 YEARS!!
and here is where some good bargain hunting can return…
In fact, just last week as the market recovered, we saw the rebound from near 7.50… cementing this as a good support for now..
Nevertheless, if this level breaks, we can still more weakness towards 6.00 - 6.50 if pandemic continues to worsen.. Trend indicators are still pointing lower for now..
Those looking to accumulate on dips, you can try near 7.50, BUT SAME thing, please be cautious because we may see more weakness if support breaks… Nibble some along the way,
Don’t be quick to rush and get ALL IN to catch the bottom..
Over the past few days, as we were approaching the immediate 9.00 resistance, we were expecting some selling to come back and hence some downside targets were reiterated again, see below…
To where?
Well, towards the 7.50 – 8.00 support zone where we can see some short covering again… it has came down a little since… See chart below.
UOB
Broken the 23.50 key support level in early March and it was downhill from there same like the other banks and the market…
Has traded all the way down to a recent support at 17.00 before a rebound seen last week…
This 17.00 support will be key as it has been holding since 2012 so if you want to try to catch the bottom can try near there.
Same thing, be nimble..
Short term trend indicators are all still pointing lower for now and in fact,
when we approached the 20.00 immediate resistance few days back, some selling was expected too… same like the other banks,
some downside target was drawn and there can be a potential trade back down towards the 17 – 18.00 support zones as seen in chart below…
It has sold off a little since… See below what I mean..
Downtrend can still be intact below 20.00 for now unless we see any bullish reversal price actions..
There we have it, we have covered the 3 banks above, do take note of the key levels where you can expect prices to head to on more market weakness..
This current virus pandemic may take a while to be resolved and it could take months or maybe more than a year too as the SG government has mentioned…
The thing is, no one really knows..
But, it is indeed a fact that BANKS prices are way cheaper and much more attractive compared to just a few months back..
If you are looking to nibble some, it has never been a good time and this can be a once in a lifetime opportunity..
Essentially, you need to know WHERE to do it and HOW MUCH to get in and of course have a plan…
It is just a matter of time that we will all get through this current crisis like we always have and that is when you can see the recovery of prices..
Till then, Stay safe and healthy…
– Joey Choy.
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