STI finds support from confluence for now
I pointed out here that Straits Times Index was due for a correction. It has fallen since but not much.
Straits Times Index supported for now by confluence of supports
At the moment, it is temporarily supported by a confluence of factors:
- Horizontal support at bottom red around 3230.
- Bottom of equidistant channel drawn by connecting top to top.
- Moving average.
Big picture suggests more to fall
I do not think that such a tiny retracement is meaningful at all to attract genuine investors from the sidelines. Besides, there is a number of risks that may blow up anytime as well in conjunction with the end of QE in the US:
- Unrest from ‘Occupy Central’ in Hong Kong escalates.
- Ebola runs out of control.
Considering what SARS did to the economy and stock market back in 2003 and how much more infectious and fatal (62% versus SARS less than 10%) the current Ebola outbreak is really frightening.
What you need to know about Ebola | Source: Mike Faille, National Post
Potential support levels for Straits Times Index?
Since we came up with 3300 as a critical level based on Fibonacci levels as well as previous support resistance, we will go back to these levels.
Huge implications from this price action at very significant resistance
How far more can STI drop? Fib-R suggests the following supports below:
A simpler 10% correction from the top places support at 3050. Coincidentally between 305o and 2970 is also psychological level 3000 so this is a good zone to evaluate technical picture again. In the meantime, STI may move inside the current equidistant channel while it corrects but look out for acceleration if it falls below this channel.
Straits Times Index still has room to correct further
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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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