Straits Times Index Technical Analysis
We begin our focus on the hourly chart. There are two signs suggesting the index may need a pause before deciding to advance further or to reverse from here. The two signs are RSI divergence and ADX over-extending as shown in the chart below. In the event if the index heed these two signs and spark off profit taking, 2.860 and 2,790 are key supports.
On the daily chart, the bulls have reclaimed 50% of its loss ground since the successive draw-down began on Aug 1. The next key barrier is 2,960, which is Fibonacci 61.8% retracement. A sustained violation of this level will likely generate the first trend following buy signal in the mechanical chart below (after several months) and head toward 3,080. Failure to surpass 2,960 calls for a deeper pull back or possibly a reversal.
Many people have warned that the rally from Oct 5 is a bull trap ( they said it many weeks ago ). However, I am unable to find evidence supporting this suggestion. Based on calendar effect, November / December are generally good months. I am cautiously optimistic that the odds favor the bulls.
Labels: Market Direction
posted by Market Wizards @ October 29, 2011
Comments: 0
