Telus Corp. Marks Bottom

12/28/07 10:55:14 AM

by Gary Grosschadl

This Canadian stock is bouncing off a bottom hammer. How far will it go?

Security: T.TSX
Position: Buy

Telus Corp. trades on the Toronto Stock Exchange (T) and this weekly chart suggests a tradable bounce is occurring (Figure 1). After a significant downturn from a high of $66, the bottom hammer dipped to $42 recently on this two-year weekly chart. The bottom hammer was confirmed higher the following week with the close of $48.50.

The pattern illustrated was a double top, which found temporary support at the trendline late last summer as the stock brushed $52. The subsequent rally proved to be a bear rally failing at the overhead 50-day exponential moving average (EMA) line. This led to the eventual double-top breakdown as the trendline was violated to the downside.

The downside move fell short of the ideal measurement for this pattern being a move below the trendline equal to the peak above that same line. This potentially was a move 14 points below the trendline or down to $36 rather than the touch to $42.

FIGURE 1: TELUS, WEEKLY. This chart suggests a tradable bounce.

Graphic provided by: StockCharts.com.

The target here is $59–60, which represents previous levels of support and resistance, including the top of the large gap. The potential fly in the ointment is overhead resistance, offered by the 50-day exponential moving average (EMA), currently $52.50. This could represent another bear rally to that moving average line.

Several indicators are considered on this chart. The moving average convergence/divergence (MACD) shows a very oversold condition reflecting the bounce potential, while the relative strength index (RSI) hints at a bounce off a new low near the 30 level. The stochastic oscillator also shows a move off oversold levels with a double-bottom formation.

In summary, a bounce is in the making — how far will it go? A move near $60 would be a profitable one for aggressive short-term or midterm traders. One caveat is a bear rally that could die at overhead resistance at the 50-day EMA. Only time will tell.

Gary Grosschadl

Independent Canadian equities trader and technical analyst based in Peterborough
Ontario, Canada.


Website:	www.whatsonsale.ca/financial.html
E-mail address:	gwg7@sympatico.ca

Click here for more information about our publications!

PRINT THIS ARTICLE

Request Information From Our Sponsors

DEPARTMENTS: Advertising | Editorial | Circulation | Contact Us | BY PHONE: (206) 938-0570

Comments or Questions?	Article Usefulness
	5 (most useful) 4 3 2 1 (least useful)

CHART ANALYSIS

Telus Corp. Marks Bottom

SUBSCRIBE TO OUR FREE EMAIL NEWSLETTER!

SUBSCRIBE TO OUR FREE
EMAIL NEWSLETTER!