Straits Times Index bullish momentum is to continue.

Straits Times Index bullish momentum is to continue.
Straits Times Index bullish momentum is to continue.

It is another bullish week for Straits Times Index as the market is buoyant by strong economic figures. The start of the week was plague by profit taking pressures as market participants were cautious ahead of announcement of Singapore’s GDP figures on Friday. Selling pressure was seen for the first 3 days of the week as the index was pushed to as low as 3272 level. Early economic data on Thursday had helped STI to regain its bullish traction; reversing early week losses to gains. Further gains were made on Friday as the economic figures were seen higher than expected. Therefore, Straits Times Index was able to close the week with 27.82pts higher. Ending at 3319.11 level.

STI is now experiencing a 2nd week of bullish movement. Will 3rd bullish week happen this week?

Let’s read the chart for assurance.

Trend: Uptrend formation looking compromised, 20 wma turning up, MacD above 0.

Support: 3270 (20 week MA), 3190, 3100 (50 & 200 week MA)

Resistance: 3355, 3450, 3530

Observations:

Candlestick – Short white candle with longer lower shadow.

Histogram – 2 Gs. Bullish signal confirmed. MacD staying above 0. Bearish divergence still intact.

RSI – At 61.7%. Bearish divergence still intact. Staying above 50% line.

Stochastic – At 74%. No bearish crossover yet.

Bollinger Band – Near upper band. Band cexpanding.

Conclusion:

Further bullish movements last week have further affirmed the bullish rebound’s momentum. Furthermore, the short-term retracement towards 3270 level also affirms that the support level at 3270. With this kind of setup by the market last week, it is clear that the market will be able to sustain its bullish streak. Target resistance level of 3355 level will now be more achievable as it will be tested soon. The key now will be whether the bullish momentum is strong enough to push STI beyond 3355 level.

 

The mid-term indicators’ momentum is clearly showing bullish momentum as the market closed positively last week. RSI is now sustaining above the 50% line and this shows the risk of downtrend momentum is low now. MacD line is now getting close together which can trigger a possible bullish crossover. Overall, this should help STI to maintain its bullishness. Shorter-term indicators continued their bullish streak and were not showing any bearish signs currently. Stochastic have yet to enter the overbought region and this will give further upside room for STI. Therefore, bullish momentum will likely to continue this week.

 

With certainty in the bullishness of STI, it is very likely for STI to test 3355 resistance level this week. This resistance level is the resistance that is created by the recent high in the previous uptrend momentum. Many will be watching this resistance level as breaking this resistance level will indicate formation of new uptrend; Thus, ending the probability of sideways movement in the market. Therefore, if STI is able to break this resistance level, it will bring STI to a new high. The next resistance level that STI can approach is 3450 level. This will be another significant movement for STI.

 

Despite the positiveness that the market is experiencing now, one should also be prepared for any unforeseen circumstances. There are also chances that STI is not being able to break 3355 resistance level. Failure to break will retain the possibility of sideways movement in STI. This will undermine the probability of STI forming an uptrend. When this happens, however, STI will still have good chances of forming uptrend. As long as STI is able to hold above 3270 support level, uptrend can still be formed. Personally, a retracement to 3270 level will be a good level for me to build up my portfolio instead of chasing prices.

 

In conclusion, the Straits Times Index is now in a good momentum for further upside movement. 3355 resistance level will likely to be tested this week as the momentum is still going well. 3355 resistance level will be a key resistance level which will determine whether STI will have further upside. If this resistance level is broken, STI will be heading towards its next resistance at 3450 level. However, if it fails to break this resistance level, STI might be heading downwards. The key support level for STI currently will be 3270 level. Holding above this support level will help to sustain its possibility of uptrend formation.

 

What to watch out for this week:

1)      Testing of 3355 resistance level.

2)      Testing of 3270 support level.

3)      Breaking of 3255 resistance level.

 Trading strategy to adapt right now:

-        Long traders can position for long trades with partial profit taking at resistance level.

-        Shortists should avoid having short trades.

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*Disclaimer:

This analysis is provided to you for general information only and does not constitute a recommendation, an offer or solicitation to purchase or sell the product mentioned. It does not have any regard to your specific investment objectives, financial situation and any of your particular needs. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of you acting based on this information. Investments are subject to investment risks.

Please consult your respective advisers.