Straits Times Index to trade in tight range

Straits Times Index to trade in tight range
Straits Times Index to trade in tight range

Last week was a week of tussle between the bulls and the bears. The Straits Times Index managed to trade above 3530 level by going beyond this level at the start of the week. Bullish efforts were quickly being countered by the selling pressure during mid week as market participants were unable to find new reasons to support the market. 3530 level was compromised on Thursday but bullish buyers supported the market again on Friday. The fight between the bullish and bearish players had ended at 3550.36 level. A total of 29.8pts were gain during the week.

With uncertainty sipping into the market currently, what should we expect the market to happen this week?

Let’s look into the chart.

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

Support: 3530, 3450, 3355 (20 week MA)

Resistance: 3630, 3700


Candlestick – Short white candle with shadows.

Histogram – 3 Gs. No bearish divergence. No bearish crossover.

RSI – At 76.1%. No Bearish divergence. Overbought.

Stochastic – At 92.2%. No bearish crossover yet.

Bollinger Band – Testing upper band. Band expanding.


As expected, the bullishness continued last week as the bullish momentum is still not showing any signs of weakness. The candlestick formed last week shows that the market is starting to show uncertainty in the market. However, this does not mean that the market will start to face bearish sentiment. Bullishness can still continue as traded volume last week is likely to help to sustain the breakout of 3530 resistance level. Clues from indicators are likely to give us further assurance of the direction for this week.


The mid-term indicators are not showing signs of fatigue currently. MacD is still continuing to trend higher while RSI maintains its position at the overbought zone. Shorter-term indicators are also bullish currently. Both Stochastic and Histogram are continuing its bullish streak and they will likely to continue. However, Stochastic is now in the overbought zone which will further increase the odds of retracement actions. But for now, bullish momentum will likely to continue further this week.


Bullish expectation will likely to continue this week. 3630 resistance level is expected to be the target for STI to reach. However, with overbought indications starting to appear, there is a possibility that STI might not be able to reach this resistance level. The likely possibility for this week is a consolidation movement to happen at the breakout level of 3530. Upside can also be capped at minor resistance at 3550 level. Therefore, sideways movements can be expected to happen between 3530 – 3550 levels this week. Upside will continue once STI is able to go beyond 3550 level.


Downside risk is still high right now as overbought readings are both seen in Stochastic and RSI. Therefore, it is important to prepare for downside risk too. If STI is unable to hold above 3530 level this week, it is subjected to further selling pressure. If this happens, it will be seeking its next support at 3450 level before it can start to conquer new highs.


In conclusion, the Straits Times Index might start to face consolidation movements this week. It can be trading between 3530 – 3550 levels this week before it attempts to head higher towards 3630 resistance level. However, there is also risk of further selling pressure. If STI is to break 3530 support level this week, it will be indicating a deeper retracement towards 3450 level. Hence, this week can be an important week for STI.


What to watch out for this week:

1)      Testing of 3530 support level.

2)      Breaking of 3530 support level.

3)      Testing of 3450 support level.

 Trading strategy to adapt right now:

-        Long traders can hold on to their long positions.

-        Shortists should wait for bearish signals at resistance level to be confirmed.

This market analysis is part of the premium services that is provided to Jay Chia’s clients. If you would like to find out on what other premium services Jay Chia provides, please visit You can also contact Jay Chia through the website.

Like Jay Chia’s Facebook page to receive more market opinions now!


The information contained in is provided to you for general information/circulation only and is not intended to nor will it create/induce the creation of any binding legal relations. The information or opinions provided do not constitute investment advice, a recommendation, an offer or solicitation to subscribe for, purchase or sell the investment product(s) mentioned herein. 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 any person or group of persons acting on this information. Investments are subject to investment risks including possible loss of the principal amount invested. The value of the product and the income from them may fall as well as rise.


You should seek advice from a financial adviser regarding the suitability of the investment products mentioned, taking into account your specific investment objectives, financial situation or particular needs, before making a commitment to purchase the investment product. In the event that you choose not to obtain advice from a financial adviser, you should assess and consider whether the investment product is suitable for you before proceeding to invest.


Any views, opinions, references or other statements or facts provided in this are personal views. No liability is accepted for any direct/indirect or any other damages of any kind arising from or in connection with your reliance on the information provided herein.