The STI briefly spiked above its key resistance level of 2200 (1.5-year downtrend line), but came back down due to a lack of positive catalysts. Market fatigue could also be setting in ? after all, the index has chalked up nearly 21% of gains over the last five sessions ? although we cannot rule out the return of bargain hunters in the afternoon session.
On an intraday basis, we note that the MACD indicator has become less bullish although it could still level off near its centre line (which has shown to be a strong support level over the past few days). This morning's pullback from its intraday high has also sent the RSI into the oversold region, and this could pave the way for some bargain hunting in the afternoon.
However, our key resistance remains at 2200 ? failure to convincingly clear and sustain above this level could herald a deeper pullback to 2100 and even 2000 in the days ahead.
The FSSTI has been rallying for 5th consecutive days. From a low of 1790, six days ago, the index has thus far rallied to 2174, which is marginally above a 38% fibonacci retracement/ resistance level. The index furthermore, faces trendline resistance at about 2200. This would be the most significant resistance from March lows and the odds of a pullback are high. The 100 day price oscillator indicator is now at an even higher overbought level then it was during 2007-2008 period.
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