BT Shares Took Breather From Highs, Could Support Be Coming Back In?

BT shares (LON:BT.A) are consolidation above what could be a new support level above 200p, having pulled back from recent highs of 223.60p that came on July 25th.

After reaching that peak, the shares have gradually retreated, seeking support in the 205-207p range after a pullback of 7% on the week. This comes after a period of strong performance, with BT accelerating to the upside with gains of 41% since the turn of the year.

In technical analysis terms, a pullback to allow the RSI to cool off, and for some profit taking and consolidation to take place can be seen as a healthy sign, even in an upward channel. 

How the price reacts to these support levels, can be pivotal. The initial outlook based on this morning's open is that buyers are willing to step in, with BT's share price up 0.63% at 208.50p early on.

Despite the recent decline, BT's stock remains above its 50-day moving average of 187.72p  and its 200-day moving average of 167.02p, suggesting that the longer-term uptrend is still intact.

Intensifying competition in the UK broadband infrastructure market is one area that prompts questions. Sky's broadband deal with CityFibre impacts BT Openreach's wholesale business, potentially reducing BT's free cash flow. Furthermore, reports suggest that Virgin Media O2 is revisiting merger discussions with TalkTalk, BT Openreach's second-largest customer, which could erode BT's market share.

The recent court ruling, denying the right of appeal in the £1.3B lawsuit alleging overcharging, and ruling in BT's favour could also alleviate concerns about potential overhangs.

The share price remains in a longer-term uptrend, but markets are closely monitoring for a potential retest of the 200p support level, or a catalyst that could act as a driver of further bullish momentum.