Market View
I seldom have so many lines drawn on my chart. Let me explain what each of them are:
The vertical lines are Fibonacci time extension. It is used to project the major turning point of market top and bottom. As shown, the next major turning point is expected to be 22 days from today which is around end of August.
The shorter horizontal line shows that the STI has clearly breakout from the key resistance. The longer horizontal line shows the next key resistance at 3,200.
The two slanting lines show clear sign of bearish divergence between the price chart and the momentum indicator.
What does all these mean?
Being able to breakout from a key resistance that was established since February is a sign of strength. In the mid term, there is a good chance to retest 3,200. The time line to achieve this target is within the next 22 days. On the short term, the bearish divergence foreshadows some weaknesses ( short term ) ahead. Additionally, the warning in my previous post about August being a bad month for the STI ( calendar effect ) may still be relevant. Therefore, it is advisable to be cautious because the potential upside is about 100+ points but the downside can be tremendous.
Labels: Market Direction
posted by Market Wizards @ August 07, 2012
