Stronger technical rebound likely once STI 2200 is tested

At today's 2259 low, the STI is down 6.8%, within recent 3.7% to 8.3% pullback ranges. It is now below 13-day MA for 3rd day in a row today as it is unlikely to climb back to this MA at 2354 currently.

The last time it stayed below for 7 days in a row was during the second half of April's 8.3% fall from 1947 to 1791, the biggest since the rally from March 9 low of 1455. An equivalent 8.3% fall will take index to 2224.

Since nearest key support ie the May 8 high of 2284 has been broken, next key support levels to watch out are 2190 (around 2200) and 2095 (around 2100).

The 2000 psychological level should hold as a correction from 2425 to this level is 17.5% which would be too severe and may break the bull's back.

The current fall can still be regarded as a pullback as it should not exceed 10% (at 2183).

A 38.2% retracement of the rally from 1455 to 2425 will take STI to 2054 while the half way mark is at 1940 (near the earlier resistance of 1960/1947.

There should be a rebound once 2200 is tested but traders must be quick to take profits as the downphase may last another week before midyear window dressing come in starting next Friday June 26 till June 30.

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