The STI had started a recovery after hitting a multi-year low at 1,474 on October 28. At 1,934 it faced resistance and rebounded. The current leg down let prices fall to a low at 1,570 until November 21. A rebound of this intraday low occurred and prices formed a bullish engulfing in the daily candle chart, which paved the way for a retest of prior support and now resistance around 1,718. The index then failed at this hurdle and gapped lower in yesterday’s session. As long as prices remain above 1,570 odds favour a resumption of the short-term uptrend, especially if the index can take out the crucial 1,718 level. Key-resistance zone regarding the intermediate-term picture is seen at 2,178-2,297. A close below 1,570 would suggest a retest of key support at 1,474. Minor support is coming in at around 1,615.
Strategy: Aggressive traders may still prefer long-positions. Protective stops may be placed tight below 1,570 then. More risk-averse investors may look for a decisive close above next resistance at 1,736 before getting long.
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