BPI (Bank of the Philippine Islands)

Posted by Arnold Diaz
Monday, April 27, 2009 13:17
Posted in category PSE Stock Picks

About a week ago, I called a sell on BPI as per the AB=CD pattern (fig. 1). This stock recovered from a low of 31, pulling back to the 50% retracement at 33.5 then continuing its trend up to a high of 40 which is the 50% retracement (fig. 2) of the down swing from 48.5 to 31, actually the 150% extension of chart in fig. 1.

fig. 1, Daily Chart

Evidently from the chart in fig. 2 that BPI is still subject to selling pressure. As long as the price trades below that red line, I doubt that any rally will be sustained. The price may try to break through that line or it may not, who knows? All I know is BPI is still a sell unless it convincingly breaks that resistance line with good volume.

What if the resistance line is broken? What do we do? Well we don’t just buy immediately, as always we wait for a pullback then place our buy orders at support levels.

fig. 2, Weekly Chart

BPI will be added in our long-term buy stocks.

As you can see in our monthly chart below that BPI is trading just above the 61.8% retracement and notice that what appears to be a “morning star doji,” a reversal candle formation. If the price fails to trade above that resistance line it may go lower and that will open up a buying opportunity for us. I see a possible buying opportunity near the 78.6% level at 27 with an ambitious 4-year hold target of 73.

fig. 3, Monthly Chart

It may take several weeks or months before I call a buy on this one. I’ll keep you posted. There is, however, an opportunity for actively trading BPI. Buy at 32.5 anyone?

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