DBS - Bearish divergence suggest near term downside

With the emergence of a potential bearish harami and spinning top candlestick at the key resistance level of $9.13 (Jan ’09 downside gap zone and 4-month support-turned resistance line), buying interest in DBS seems to be waning, suggesting downside in the near term.

Indicators (RSI, MFI and MACD histogram) have at the same time indicated bearish divergence signals to the price action over the last 3 weeks, adding to the possibility of a correction in the days ahead.

Should the share price correct from here, we expect a pullback to the immediate support at around $8.78 (upside gap zone in early Apr ‘09), with the next support at $8.00 (upside gap zone, 50-day and 100-day MA).

Any upside from the current level will likely meet resistance at around $10.13 (downside gap zone in late Oct ’08 and 2009 high), followed by $11.04 (downside gap in mid Oct ‘08).

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