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.
- 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.
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.
Director, TerraSeeds Market Technician Pte Ltd. Trader, investor. @sohtionghum was picked ‘Top 70 Forex Twitter in 2015’. Operates multiple strategies.
“Dear reader, I do not have a financial license to give advice. I do not know you the reader. Your financial objective and risk tolerance may be different from mine. I am not responsible for any consequence of your action.