SIA - Likely correction in the near term

After a strong 25% rally within a short 3 weeks, SIA looks to be facing some correction pressure as a hanging man bearish candlestick appears to be forming just under its 5-month downtrend resistance line signaled potential near term reversal.

Of the five times since Sep 2007 that SIA’s RSI crossed above 75%, its share price corrected thereafter. With a recent RSI high of 82%, there is a good likelihood that history could repeat itself with a potential share price downturn in the days ahead.

Should the share price correct from here, we expect a pullback to the immediate support at around $10.80 (resistance-turned-support level and 5-week uptrend line), and then to the next critical level at $10.00.

Any upside from the current level will likely meet resistance at $12.20 (2009 high), followed by $13.20 (Oct 2008 minor peak).

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