omarzd
Long

Saudi Telecom stock bullish signs

TADAWUL:7010   SAUDI TELECOM CO

Support and Resistance lines:
  • Fibonacci Retracement: When drawn from the highs of 2006 at 180 SAR to the lows of late 2011 at 30 SAR , the 0.382 line falls at 90 SAR and the 0.618 falls at 125 SAR .
  • 90 SAR is a strong line for three major historical resistance/support regions, late 2005, late 2007, and late 2018.
  • 100 SAR is also a weaker level .

On the monthly time scale:
1. TD sequential is showing a green 2 trading above a green 1. That is a bullish sign.
2. Price has already passed and closed above the 90 line where also the .382 Fibonacci line falls.

On the weekly time scale:
We are on a green 8 on TD sequential. So we expect a pull back on this candle or the next for one to four weeks.

I expect resistance at 100 SAR and support at 90 SAR .
Comment: I forgot to add a few more points:

1. Consensio, the triple simple moving average (15-day, 50-day, 200-day) is full on bullish by the fact that all three MAs are above each other in order from shortest to longest and that they're all directed upwards.

2. Dividends will be given out probably on 30 January. That usually signals a pullback. The stock almost always falls before dividends an amount equal to the dividend. But with other factors, this may well start a momentum downwards towards the aforementioned support level at 90 SAR.

3. Combined with point 2, on 29 January, TD sequential will have reached a green 9 count (if price continues obeying the TD green count rule), and that will form a 9-13-9 combo, which signals a reversal.

The reversal will take the price down to 90 SAR where not only that level acts as support but also the 50-day moving average will be around that area and will strongly support.

Comment:
Just like I mentioned in point 3 of the last comment, dividends will coincide with the TD sequential green 9 candle. Unfortunately, the price flipped into a red 1. I hoped for a 9-13-9 combo with a perfected 9 at the end, but alas.

The red candle was beautifully supported as expected by the 100 SAR level. Now it looks like a pin bar, but it's not. At least I don't consider it so because the head is larger that 1/3 of the candle. I suspect the next candle to be red as well because dividends should be paid out tomorrow. Since the dividend will be 3 SAR per stock, I expect the price to fall around 3 SAR more, to reach the vicinity of 98 SAR.

If it does so and closes below 100 SAR, then we need a close above 100 to confirm a bullish move, otherwise, we exit any long positions until it bounces off of lower support shown in the original chart at 90 SAR which might also coincide with the 30 week moving average at 1 April 2019.
Comment: A red candle closes today as expected, but is still above 100. Dividends are not paid out yet so we will wait.
Comment: As you see in the daily attached chart, we need the price to close below the prior low (98.80 SAR) in order to confirm a bearish move. We're meeting the 50-day moving average at around 98 SAR, which is not likely to hold anyway since it has rarely held before.


On the weekly chart, we see that we're close to the top of the parallel channel which has been established in 2016 and held well until now. I'm still looking for a respectable pull back to the 0.382 Fibonacci level which should coincide with the whole Saudi market dropping in response to oil dropping. Check my oil ideas. I find it unlikely to reach new highs before dropping near the bottom of the channel.

Comment:
Price has been going sideways for six weeks now unable to break above the 100 SAR level. This asserts the strength of this level. We see a minor death cross coming of the 15-day and 50-day moving averages. But I just realised that these MAs hold no significance, so I can't rely on that death cross to bring the price down. However, what seems obvious to me is that we need to fall down in order to gain enough buying power momentum to break above the 100 level.

I also see a descending triangle unfolding with its head lying on 20 March, so I expect a breakdown on that date or before it.

I will study which simple moving averages are best fitting.

Comments

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