STI Approaching Cluster of Resistance Levels

The STI is approaching a cluster of heavy resistance between 2660 and 2750. There are retracement levels, the 200 week moving average and historical highs in this region. Our view is that the probability of a pullback in this region is high, however, the cluster of resistance levels makes it difficult to identify a more precise region where the pullback might begin. The market might see-saw between resistance levels before selling off.

We mentioned previously that there are several heavy resistance levels around the 2660 to 2700 region. Historical resistance is present at the 2580 and 2660 levels that we mentioned last week, a fibonacci retracement level at 2680, the 200 week moving average at about 2700 (not shown) and historical resistance at 2744.

The stagger of the different overhead resistance levels on the whole, implies that there is a very high probability that we will see a correction in this region. However, the fact that there are a few heavy resistance levels in close proximity makes it difficult to pinpoint which level will eventually exhaust buying pressure and precipitate a pullback.

We might see the STI rally to test a few of the higher resistance levels before pulling back decisively.

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