Technical analysis: SG market outlook – Banks leading rallying to the upside August 10, 2021 231

  • The FTSE Straits Times Index has been consolidating for the whole of 2Q21.
  • It has yet to reach its 3,200 psychological-resistance high since our last report on 19 April 2021. Our long-term target maintained at 3,500.
  • Local banks staged a bullish return on the back of strong fundamentals. Technical charts suggest attempts to break key resistance levels.

The STI has rallied significantly and its ongoing ((D)) leg hints at further upside in the near term. Its 3,265 resistance zone continues to hold the key below its resistance zone.  Thus, only by breaking it then we will see the upside resuming.

Our end-2021 target is 3,500, which is near wave ((D)) of the symmetrical triangle.

 

 

The index’s double three corrective wave will be considered complete once its 3,500 expansion level of waves (1)-(2) is met, as this is a sign of its impulse wave (3). Should that happen, we could see a return of the first wave of its larger impulse wave. This implies a higher probability of a break above its 2007 high, in the long term.

 

The STI has broken out of its immediate downtrend line. Uptrend is intact after a series of higher highs and higher lows.

 

Pennant formation is a sign of strong bullish continuation. Given this, we are confident the index has not reached its minimum expansion target of 3,444.61, which is its 161.8% expansion target of 2,208.42-2,839.39 and 2,420.27.

 

That said, we also do not discount a reversal and correction down to its support zone 2. If that happens, the index will form a bullish flag instead.  

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About the author

Profile photo of Chua Wei Ren

Chua Wei Ren
Technical Analyst
Phillip Securities Research Pte Ltd

Wei Ren specialises in Technical Analysis and has 11 years of experience in studying classic technical price action. He also study and research extensively on Elliott wave theory, Dow Theory. He believes that history plays an important role in how the market is reflected in the future.

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