DBS rallies ahead of tomorrow's earnings report

DBS (SGX:D05)  
CityIndex Broker Updated   
The stock has been performing well ahead of its earnings reports, thanks to the news that DBS will be the bank to utilise MaxxDigital – a digital asset platform that provides risk and FX solutions for institutions. Whilst Singapore’s regulators continue to clamp down on crypto trading for retailers, Singapore wants to become a digital-asset hub within the financial sector – and this could be the first step of many which help them do just that.

DBS rose 3.6% on Friday following the announcement and has extended those gains to around 6% at the time of writing from Friday’s low.

According to Reuters, 13 analysts recommend DBS stock for a ‘buy’ (4 of which are a strong buy) with 4 holds and no sell recommendations. The stock currently trades at 34.58 and has a median price target of 39.11 (+13%).

DBS Daily Chart:
The daily chart shows that DBS performed a strong breakout (with high volume ) from its sideways range after prices found support at the 200-day and 50-day EMA’s. And that suggests it could be part of the bullish trend from the July low. However, there are a couple of warning signs that it may need to retrace a little before continuing higher.

A bearish pinbar formed on Monday with low volume , and yesterday’s price action struggling to convincingly push higher. Gap resistance, $35 and the monthly R1 pivot point are nearby and RSI (2) is overbought - which can indicate a near-term turning point. With that said, the RSI (14) is over 50 and trending higher with prices, which is another reason we suspect any move lower is part of a retracement before prices head for the high around 36.30.

Of course, earnings can be full of surprises and we may need to see DBS beat estimates for it to trade directly higher. Otherwise – assuming earnings is not too disappointing – it could help with a desired pullback, where we would seek bullish setups around the monthly pivot / prior breakout range.
The anticipated retracement is underway beneath the $35 resistance zone. From here we'd like to see prices hold above the monthly pivot point / prior sideways range high and form a swing low, ahead of its anticipated leg higher towards the $36.60 high.
DBS has reached the initial upside target zone around $35 and continues to show the potential for a move to $36.30. We may need to keep a loose stop to allow for the intra-week volatility and pullback from said resistance zone. For now, our stop is trailed to 33.95 - although a tighter stop at 34.40 could be used, just below the small consolidation ahead of its recent move higher.


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