Straits Times Index grapples with multi-year resistance, Fib-R 61.8%

Straits Times Index indication of broad Singapore stock market

The Straits Times Index is now resisted by a multi-year zone and coincides with a fibonacci retracment of 61.8%. Before the index can go higher, this zone must be overcome.

Overall the overhead resistance consists of:

  1. Multi-year resistance zone painted in green. Labels numbered from 1 to 5 show the number of times price action has tried and tested this zone in the past. The more times it is tried and tested, the stronger it is as a resistance, the bigger the move if it breaks.
  2. An upward rising trend line in red shows upward trend that started let 2011 might be over and the current move could be a pullback.
  3. A Fib-R of 61.8 coincides with the previous two.
Straits Times Index weekly chart

Confluence of 3 different studies show STI at resistance

Fibonacci ratios have been very predictive of the Straits Times Index so far. I wrote about this on several occasions

 

STI daily chart

Plain summary: resistance on top, new low below

 

New 52-week low in February bucks 2-year trend

The Straits Times Index made higher lows in 2012 and 2013. That is a trend that indicates bullishness. 52-week lows are like the maximum strength of bears so rising lows show that the strength of bears are waning. An STI correction early this year to 2953 paints a picture of bears gaining. That’s not good. Investors should keep that in mind. Unless STI makes new highs to paint the opposite of this picture, that 2953 low could be giving away the start of a new down trend.

A 52-week high is a major psychological level. I wrote a story about its sibling the 52-week high here.

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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 was ranked #23 out of The Top 70 Twitter Accounts To Follow In 2015 by MahiFX. Come find Tiong Hum on Google+
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