As expected, the STI received another lift from the surge on Wall Street overnight and the market was keen to attempt the key 1700 resistance (which is also near the 100-day moving average).
In fact, the STI made two attempts this morning ? the first was not quite successfully and while the index appears to have done so on its second attempt, the intraday technical indicators are looking a little mixed.
The intraday MACD has just cut up again deep inside the positive zone, suggesting that the overall market tone remains bullish; but the intraday RSI is now showing deep overbought signals.
And with the US index futures easing further, we believe the upside in the afternoon may be quite limited; profit-taking may start to emerge, especially on some of the more speculative counters.
We continue to see the 10-month downtrend line ? currently hovering around 1757 (dropping by about 5 points per day) ? as the next big hurdle.
And should the index fail to hold above 1700, we could see a pull back to 1652 (50-day MA), ahead of 1600 (30-day MA).
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