The British Telecom (LON: BT.A) opened today with a downside breakaway gap, which is now leading the stock into negative territory for the day. But what’s more important is that the stock has now broken its medium-term upside support line, drawn from the low of the 8th of June. If the share price will end the day below that line, there is a good chance to see BT traveling further down in the near term.
For a better confirmation of the downside scenario, BT would have to, not only close a daily candle below the aforementioned upside line, but also below the 232.70 hurdle, marked by the low of the 31st of October. This way, the stock may clear the path for itself towards the next potential area of support at 226.90, which was the low of the 29th of October. Certainly, at some point we might see BT bouncing back up, but if it fails to get above that upside support line, the move higher could be classed as a correction. This is when we might see another leg of selling. If the share price drops below the 226.90-dollar price tag, this could lead to a bigger decline, where the next good possible support zone could be near the 216.70 level, marked by the low of the 31st of August.
Looking at our oscillators, the RSI and the MACD, both are in support of the above-discussed idea. The RSI is below 50 and pointing lower. The MACD is below zero and its trigger line, and also points to the downside.
Alternatively, if BT makes a strong move back above the previously-mentioned medium-term upside support line and breaks the 241.70 obstacle, this could be a positive sign for investors, as more of them could start buying again. Such activity might push the stock higher towards the next potential area of resistance at 250.00, a break of which could open the door to the 257.70 resistance, marked by the high of the 18th of December.
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