SPH – OCBC

Testing support

– SPH has corrected over the last 3 months from a peak at S$4.64. We observed that recently the price decline had been on the back of low volume, suggesting the downtrend could be losing momentum.

– While the price is currently testing the support at the short-term uptrend line (formed by the higher lows between Aug 07 and Jan 08), we do expect it to hold.

– We observed that the stochastic indicator is not only trading within the oversold region but is also displaying a positive divergence – this indicates a possibility of a rebound.

– A rebound from here would result in SPH facing immediate resistance at the moving average convergence region around S$4.38 – 4.42. Should SPH succeed in trading past this region, the next resistance level is at S$4.50.

– If the current support at the uptrend line fails to hold, subsequent support is around S$4.09 – 4.15.

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