Wilmar set a recent high of S$3.46 but the price action on that day also resulted in the formation of a bearish doji star ? a potential trend reversal signal, which was confirmed by the subsequent formation of two bearish candlesticks.
More importantly, the formation of the doji star came when the stock just managed to clear the important S$3.27 resistance (provided by the 38.2% Fibonacci retracement of the fall from S$5.71 to S$1.76).
The subsequent breach and failure to regain the S$3.27 level has bearish implications, which could see the stock heading back lower towards S$3.11 (centre line of the Bollinger Band).
Daily technical indicators have also turned negative ? the most obvious coming from the bearish divergence seen in the RSI indicator.
However, we think that the stronger support will probably be around S$3.00 (near 50-day moving average and the 5-month uptrend line).
But if that fails, then there is a good chance of it pulling back to S$2.60, which was the previous low made during the pullback in Jan (the other instance when Wilmar failed to stay above the 38.2% Fibonacci retracement level).
Near-term resistance remains at S$3.27 ahead of S$3.46. Key resistance is at S$3.74 (50% Fibonacci retracement level).
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