SiMSCI at Pivotal level; key chart features

Singapore stock index futures SiMSCI parked itself at a very interesting level with proposition for both long and short traders. This is the type of setup that many traders are going to trip over. Chart features below.

 

Potential turning-breakout level

  • There are two reasons that make this a highly interesting setup A) red trend line B) year open level at 323.20.
  • Trend line – Usual actions associated with trend lines – for most investors and traders, buy the breakout – whereas for pro-traders, to fade the breakout.
  • Year open – This is a psychological level that functions as support/resistance also. Consider as long as SiMSCI trades above this level, the market is green, below the market is red. Now imagine green/red acts like a switch e.g. when market goes into green buy, when market goes red sell, then this is a level definitely meant for action taking.

In addition,

  • A double top can be seen right on top of trend line. Double tops are bearish reversal patterns so this gives +1 boost to bear traders looking for a fade.
  • If the double top is confirmed, then past two weeks price action above trend line qualifies to be a a nice big bull trap.
  • The neckline of double top which is crucial to confirmation sits just nicely guess? – right on the year open itself. This combination really gives that pivotal word a capital P. So if that double top neckline breaks, the index goes into red for the year as well – nice touch. If it fails to break, bulls have the upper hand and bears will have to kill themselves for shorting into a known strong level.
  • Consider that the index has gained more than 10% from post-Brexit low without retracing, this is an additional +1 reason for bear camps to seriously inspect the whole setup.
SG30 (SiMSCI) daily chart August 2015- - present

SG30 (SiMSCI) daily chart August 2015- – present

 

What kind of price action signal am I looking out for?

This being Friday there is no reason to become huffy and puffy to jump a trade, especially a short one (which I prefer) when central banks have decided to suspend rational price discovery in stock markets by promoting rounds and rounds of risk-taking behaviour (including banning short selling). Besides July FOMC is middle of next week.

I am going to continue monitoring next week that SiMSCI might have another round of rally to fake a breakout of that double top high. Such a move would be truly wicked but not rare at all. In fact I foresee the market to do whatever it takes to close July on a high note and then for August to open at high and wham! turn South with a bang.

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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's Twitter account @sohtionghum was ranked #23 out of The Top 70 Twitter Accounts To Follow In 2015 by MahiFX.   Disclaimer notice: "I do not have a financial advisor's license. I am not qualified by any regulator to give financial advice. I do not know you the reader. Your investment means and motive may be different from me. My posts here are based on observations and meant for education. I am not responsible for for any consequence from your actions."
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