The Straits Times Index will likely to continue trade sideways within the 1711 and 1844 band with MACD and RSI indicators reading neutral. Notwithstanding, the STI’s performance is clearly exhibiting a classic symmetrical triangle formation: the signature trait of this chart pattern is extremely low trading activity that precedes either a decisive breakout or in the worst case scenario, a breakdown.
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Chartpoint by KELIVE
DBS’s $4 billion discount rights issue last week has had the effect of soaking up some liquidity in the market. While window dressing is still possible, we do not expect market activity to improve significantly as 2008 comes to a close, especially considering the shortened trading week.
The Straits Times Index will likely to continue trade sideways within the 1711 and 1844 band with MACD and RSI indicators reading neutral. Notwithstanding, the STI’s performance is clearly exhibiting a classic symmetrical triangle formation: the signature trait of this chart pattern is extremely low trading activity that precedes either a decisive breakout or in the worst case scenario, a breakdown.
Of paramount importance, chart practitioners will focus on the first trading week of 2009 to get some insight on the stock market’s direction in the medium term. If the breakout scenario pans out, the STI will dovetail nicely with a recovery rally in 2009. However, if the STI breaks below the triangle formation over the next 2 weeks, we are potentially facing another bear cycle that could lead to a retest of 2008 lows. As we watch the markets unfold with abated breadth, we wish to take this opportunity to thank our readers and clients for your continuous support of our column and wish all health, wealth and happiness for the New Year.
Ken Tai, CMT
Senior Technical Strategist
KELIVE RESEARCH
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