The Aussie telco stock, Telstra (TLS: ASX), after a long time in the wilderness, looks like it could be trying to carve out a base. There might not be much more to this move that a good dose of ‘what goes down must eventually come back up’ but I will be watching for further clues about any recovery effort.

TLS monthly: Price action is getting down to the 2010 Low and this is helping to shape up some support in a potential ‘Double Bottom’ effort. There is also a bullish-reversal descending wedge in play at the moment so watch for any break of trend line here as the last break of a decent bear trend line was rather profitable. Note how the last bullish rally paused at the 61.8% Fibonacci level!

TLS weekly: Watch trend lines here for any new breakout and, any bullish breakout, would bring the $5 S/R level into focus as this is also up near the 61.8% Fibonacci level of this last swing-low move:

The weekly chart is also shaping up with a bullish-reversal ‘Morning Star’ pattern so watch to see if this forms, and, if so whether it generates any bullish follow-through activity:

TLS weekly Cloud: Price action is currently well below the weekly Ichimoku Cloud though but any new close above this resistance would be bullish:

Summary: Telstra has been in a downtrend for the last three years but is starting to give some technical clues that it might be carving out a base.

• The weekly chart shows a bullish-reversal ‘Morning Star’ pattern forming up so watch to see if this evolves and generates any bullish follow-through.
• There is also a bullish-reversal descending wedge on the weekly chart giving traders trend lines to watch for any new breakout.
• The monthly chart has a potential ‘Double Bottom’ band of support that might kick in.