STI ‘death cross’, resistance at key Fibonacci Retracement level
The Straits Times Index’s recent correction, if the word correction can even be used at all, cannot be totally unexpected.
- Back in May, we saw how the STI printed bearish signs #1, #2 and #3 in the form of “pin bar, bull trap, 76.4% Fibonacci ratio“.
- Late June, I posted what I thought was bearish sign #4 in the form of “evening star“.
- And then in August, an un-numbered bearish sign which we will update here, 50-day and 200-day moving average approaching death cross.
Perhaps the most explicit caution I wrote
But investors who give a lot of weight to signals coming from technical analysis will do well to plan for the worst. And any consolidation between now and the forthcoming correction should be employed with some urgency.
Straits Times Index bearish signs #5 #6 #7
Signal #5 - the 50-day and 200-day exponential moving averages made their death cross late August so that the 50-day short time trend is now below. This is bearish. The next signal #6 came when we see the 200-day moving average pose as resistance throughout November. Bearish signal #7 – the breakdown of a triangle chart pattern which is usually a consolidation pattern but now exposed as a distribution.
3 signs that the STI is not doing well
Shifting to lower trend line, lower support; what to look out
Investors should look at action from the index to observe if there is any support from this lower trend line. If support can be found, there is hope that bullish players may enter the field to buy the dip. If not, 3000 becomes an important round number psychological support and technical support to look forward. Short term speculators can expect the index to go lower.
This chart serves out the bigger picture
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Soh Tiong Hum is Director of TerraSeeds Market Technician Pte Ltd. TerraSeeds is a trading educator in Singapore since 2005.
Soh Tiong Hum is a member and regular speaker at Technical Analysts Society Singapore events and has a bi-monthly lunch time event at IG Singapore on forex and stock markets. He is an avid blogger on technical analysis topics; his Twitter account @sohtionghum
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