It seems like the recent high of 1947 will remain as the near-term resistance for the time being as the recent rally seems to have lost its strength.
While the Straits Times Index appear resilient on the surface, it remains locked in a rising wedge formation: As the index is sitting right on the rising wedge’s support line, risk of a break is high – a scenario that would also imply 130-point downside risk for the STI.
Straits Times Index is heading towards 1,759 or 38% retracement level. Market breadth indicators also support the same conclusion as the rising wedge theory, as decliners have outpaced gainers since last Thursday. This is a clear signal that the broader market is making adjustments to the overbought condition.
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