Did stock market signal bottom for STI and HSI?

Very strong signals from price action over past 3 days suggests that current phase of Straits Times Index STI and Hang Seng Index HSI may be over. One week before September FOMC meeting, does this mean short sellers are squaring their trades or is the market betting on ‘no rate hike’?

 

Straits Times Index potential double bottom

STI formed what could be a double bottom off 2840 or 20% off the top and what could be a major recurring level.

STI potential double bottom on daily time frame

STI potential double bottom on daily time frame

  1. There is historical precedence for 20% correction to a support for the index (see ‘Can past give Singapore stock investors lesson or two on STI?‘)
  2. Price action on Monday and Tuesday indicates price reacting to, finding support at 20% or 2840.
  3. This could be a potential double bottom chart pattern; neckline can be found at 3000 psychological level or 2999 to be exact (high of 28 August 2015).
  4. If history repeats, the index could recover half of losses.

 

Hang Seng Index bullish engulfing, recovers 2014-low

As for Hang Seng Index, this market rebounded strongly to recover in a bullish engulfing candlestick pattern, former 52-week low (2014) that it broke last week. If the market closes like this at the end of this week, we should see bulls back in control while bears will have to stand aside for awhile.

HSI recovers 2014-low; everything below 'false break'

HSI recovers 2014-low; everything below ‘false break’

  1. This kind of ‘false break’ pattern is very important that we highlighted and explained in ‘Trading 101‘.
  2. Price below 2014-low now a bear trap.
  3. It is a powerful signal that marks market tops and bottoms which we have highlighted here, here and here (China A50, Copper and HSI).
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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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