Genting Singapore Plc, operator of one of two casino resorts in the city-state, may fall as a bearish candlestick pattern emerged after the stock surged to a record, according to OCBC Investment Research.

“Judging from the candlestick that emerged, the rally could have peaked,” Philip Teo, a technical analyst at OCBC Investment, said in an interview. “A strong correction could kick in over the next couple of days.”

Genting soared to a record close on Aug 13, a day after the company reported it returned to profitability in the second quarter on positive contributions from its casino resort in Singapore and as analysts upgraded their stocks ratings.

The stock climbed as much as 31% from the Aug 12 close through a record intra-day high of $1.68 on Aug 17 before it started falling, according to Bloomberg data. That decline helped create a long black candlestick with long upper shadow, indicating a potential reversal of the recent rally, Teo said.

“This will likely lead to a sharp correction,” Teo said. “The stock could retrace back to $1.30.” That was the previous record high set in December.

Genting Singapore rose 2% to $1.55 yesterday. That helped form a so-called harami reversal pattern, Teo said.

Candlestick charts show information on opening and closing prices and the trend within each trading period. If the closing price is above the open, the candlestick is clear, or white, indicating a bullish trend. If the stock closes lower than it opened, the candlestick is black, or bearish, according to StockCharts.com.

Harami Origins
A harami pattern is formed if the range between a security’s opening and closing prices falls within the equivalent range from the preceding day. The name, which is derived from the Japanese word for pregnancy, comes about because the body of the second day’s candle would fit within that created the day before.

Technical analysts observe price charts to forecast resistance levels, or ceilings restricting further price increases, and support levels, or floors limiting declines. They use trading patterns and prices to predict changes in a security, commodity, currency or index.