Singapore: STI Index (.STI) remains weak as it tests 2018 low
At times of sharp declines, important lows provide support. The STI has moved below the Oct 2018 low of 2,972 and is testing the intra-day Oct 2018 low of 2,961.
Short-term stochastics is at the low end of its range but it maybe another three to four sessions before stochastics can bottom and rebound. The 21-day RSI is at the low end of its range and is in the early stages of a minor positive divergence with the index. ADX continues to rise. It is at 31 and would be oversold only when it moves towards the 47 to 50 range. The DIs remain negatively placed.
Once again, the STI is likely to stage a bounce in reaction to the increasingly oversold levels of short-term stochastics. However, a sustained rally may not develop within the week.
Still, traders should watch for signs for selling pressure to alleviate as that could provide for a temporary rebound. On Friday, March 6, the STI opened at its high and closed at its low, forming a long black candle with a shaven bottom. A sign for a developing bounce could be a long shadow below the body in the candlestick chart, or a doji could develop.
In addition, volume needs to contract, and daily ranges need to narrow. These are signs that the STI’s selling pressures alleviates.
Originally, the Dow Theory, the grandfather of technical analysis was used to predict business and economic cycles.
If the charts maintain their downward thrusts, in particular, in places where the indices have had a long uptrend such as the Dow Jones Industrials Average, the signs are ominous for business and economic conditions.
Another point for the Dow is its wide ranges, increased volatility, and increased market participation in recent sessions.
Markets are usually volatile during top formations. Bottom formations are usually defined by slow, sleepy movements within narrow ranges, with shrinking volume.
Overall, the bias in prices is: Downwards.
Note: this chart shows extraordinary price action to the downside.
The projected upper bound is: 2,706.02.
The projected lower bound is: 2,304.37.
The projected closing price is: 2,505.20.
A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 4 white candles and 5 black candles for a net of 1 black candles. During the past 50 bars, there have been 20 white candles and 29 black candles for a net of 9 black candles.
A falling window occurred (where the bottom of the previous shadow is above the top of the current shadow). This usually implies a continuation of a bearish trend. There have been 11 falling windows in the last 50 candles–this makes the current falling window even more bearish. The two candles preceding the falling window were black, which makes this pattern even more bearish.
Three black candles occurred in the last three days. Although these candles were not big enough to create three black crows, the steady downward pattern is bearish.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 11.1108. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a sell 5 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 43.74. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 20 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -53. This is not a topping or bottoming area. The last signal was a sell 4 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 19 period(s) ago.
Rex Takasugi – TD Profile
STRAITS TIMES closed down -32.640 at 2,519.280. Volume was 43% below average (neutral) and Bollinger Bands were 15% narrower than normal.
Open High Low Close Volume 2,530.970 2,536.720 2,507.830 2,519.280 168,539,504
Technical Outlook Short Term: Oversold Intermediate Term: Bullish Long Term: Bearish
Moving Averages: 10-period 50-period 200-period Close: 2,584.59 2,730.99 3,081.13 Volatility: 23 51 28 Volume: 269,213,408 372,057,568 267,492,096
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
STRAITS TIMES gapped down today (bearish) on normal volume. Possibility of a Runaway Gap which usually signifies a continuation of the trend. Four types of price gaps exist – Common, Breakaway, Runaway, and Exhaustion. Gaps acts as support/resistance.
STRAITS TIMES is currently 18.2% below its 200-period moving average and is in an upward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods.
There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. Our volume indicators reflect volume flowing into and out of .STI at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on .STI and have had this outlook for the last 6 periods.
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