On 6th of July, we expected the Straits Time Index to make one last rally to test the resistance zone between 2,900 and 2,954 provided the 50% Fibonacci is broken. However, this action fails to materialise. Although the index did make some up move in response to the bullish engulfing candle, the stock swiftly reverse downward by forming a shooting star and broke below the flag, signify a bearish downside will continue. However, the stock has not break below 2,500 to form a lower low and instead, it shows a slight bullish candle which resemble a bullish hammer above 2,500 psychological support level.
In order for the STI to reverse upwards, the next level at 2573.51 needs to break upward with a stronger momentum, otherwise the move will be considered corrective and the stock will resume its downside.
Mid-Term target of the STI remains at 2,208.42.
The daily chart of the STI shows a clearer picture, Although the first 4 days of the STI is on a rallying mode, the crucial Friday’s candle fails to close above the Thursday’s high at 2,566.70. Zooming in, the STI’s up move last week has actually form a smaller flag which indicate an incoming correction ahead.
Moving forward, the stock will likely test the immediate high again at 2,600 region before a sell down to test support zone 1. Longer term rebound is at support zone 2,208.42-2,263.00.
As expected on our updated report on 3rd August has come true after the strong selling managed to close above key support level at $8.17 at the last hour. As the stock has broken out of the neckline resistance of the inverted head and shoulder, the mid-term Bull Run will continue even though there is a strong bearish contender by forming an evening star formation.
Even though the evening star poses a threat after the 2nd candle rejected the 200-day moving average which increase the risk to reverse to the downside, we are holding on to our target price based on our report on 24th July at $9.23. First, the occurrence of pull-back happens almost 67% of the time after a breakout of the head and shoulder pattern. Secondly, the bearish candle fails to close below the neckline at the last hour of trading last Friday. As such, the stock’s bullish sentiment remains.
Our report dated 4th August indicated a strong probability of a correction but it fails to materialise. As such, the wave count has changed and we are looking at a wave 3 forming on a longer time period basis.
After the stock broke out of the resistance on 5th August, the stock has made a new high. However, zooming in on the sub-wave count, the i-v sub-wave of wave 3 has already being completed and we are looking at a minor correction should the stock fails to break above $1.88. Potential rebound is near $1.74, which is the resistance turned support level.
Long term target price is at $2.00.
Dairy farm bullish momentum was hopeful when the Morning Star formation was continued after prices continue its upside based on our report on 3rd August. Despite successive upside, the momentum remain week after two pin bars appeared on Thursday and Friday. As such, we have revised our target price lower to $4.55-$4.59 resistance zone.
The next potential strong rebound is at the support zone of $3.67-$3.81.
The KLCI had a stellar rally in mid-March 2020 after a strong sell down in February 2020. However, the rally was very much in a corrective phase after prices broke out of the rising wedge formation recently. Zooming in, the stock also made smaller double top within the wedge and prices has tried to break below the neckline resistance of 1,563.01. Judging from the Fibonacci extension levels of the double top, we are looking at 2 possible rebound level, namely at 1,511.99 and 1,435.23-1,458.98.
Diving into the wave analysis, the stock has completed 3 impulse wave and since 1st July onwards, KLCI has been on a corrective wave 4 with a potential expanded flat in the making. As such, the potential rebound of the sub-c wave of the potential expanded flat confluence with the support zone 2 which we’ve highlighted earlier on.
On 5th August, we issued a bullish call on the Hang Seng after a morning star formation was spotted. Indeed the price made an attempt to rally but on last Thursday, the formation of a bearish engulfing candle indicate that the breakout of the falling wedge was a false one. Friday saw the most ferocious sell-off and although the pull-back above the upper trench of the support zone at 24,558.00, Monday’s price momentum saw prices gapping lower with the candle closing off at a doji within the support zone, citing indecision.
Moving forward, the Hang Seng will try to move upwards again but the upside may be limited as first the support zone 2 highlighted at 23,705.00-24,000.00 is a much more attractive level to stage a rebound.
Should prices break support zone 2, the whole 5-wave expanding/broadening wedge will be invalidated. Prices will then test the lower level at support zone 3 at 21,693.50-21,139.26.
We had a strong conviction that Tencent will make an attempt to push prices higher with the ascending triangle formation in place which we mentioned on our report on 6th August. However, the strong sell-off on Friday has invalidate the ascending triangle and formed a triple top formation instead after prices breaks below the neckline resistance at $512.00 on Monday 10th August.
Based on the Fibonacci extension level of the triple top pattern, the likely rebound will be at support zone 1 which stands at $476.85-$490.13 and support zone 2 at $447.00-$455.74. Which is also the 161.8% and 200.0% extension level respectively.
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