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OCBC Bank - Upside momentum is losing strength ahead of earnings

Overseas-Chinese Banking Corporation (OCBC), one of the big 3 Singapore banks will release its Q3 earnings on Tues, 05 Nov before the market open. An earnings preview brief on the Singapore banks has been published earlier last week (click here for a recap).

Right now, let us look at OCBC from a technical analysis perspective based on its latest price action.

Medium-term technical outlook on OCBC Bank

click to enlarge charts

Key Levels (1 to 3 weeks)

Intermediate resistance: 11.20

Pivot (key resistance): 11.37

Support: 10.58

Resistance: 12.14

Directional Bias (1 to 3 weeks)

Bearish bias below 11.37 key medium-term pivotal resistance for a potential slide to retest the “Symmetrical Triangle” range support at 10.58.

On the other hand, a clearance with a daily close above 11.37 sees a further potential up move towards the major range resistance at 12.14 (swing high areas of 08 Aug 2018/29 Apr 2019).

Key elements

  • Since its 30 Oct 2018 low of 10.36, OCBC has been evolving within a “Symmetrical Triangle” range configuration with its upper limit acting as a resistance at 11.37.
  • The “Symmetrical Triangle” range resistance of 11.37 also confluences with a gapped down formed on 01/02 Aug 2019 and the 61.8% Fibonacci retracement of the recent slide from 25 Jul 2019 low to 29 Aug 2019 high.
  • The daily RSI oscillator is now hovering close to an extreme overbought level of 77 which indicates the risk of a mean reversion decline has increased.
  • The price action has formed a daily “Star” candlestick pattern at the end of today session, 04 Nov after a gapped up seen at the open. This observation suggests that the bulls are becoming indecisive to push prices higher due to a relative smaller price action range that has formed today in comparison with the previous 3 sessions. Thus, the recent push up from 23 Oct 2018 swing low of 10.63 may be losing upside momentum and at risk of shaping a downside reversal.  
  • Relative strength analysis as seen from the ratio chart has indicated underperformance of OCBC against the benchmark Straits Times Index (STI).

Charts are from eSignal 


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