Technical Pulse: Straits Times Index April 5, 2018 847

Straits Times Index – Daily timeframe (Update from 20 February 2018)

4 Apr

Current Sentiment: Bearish

Support 1: 3275                    Resistance 1: 3469

Support 2: 3195                    Resistance 2: 3550

As news of China planning to impose reciprocal Tariffs on $50 Billion of US goods surfaced, the general equity market went into full scale risk-off mode. As a result, the ongoing selloff in Straits Times Index (STI) accelerated as it closed with a whopping -2.12% on 04/04/18.

With the sharp selloff on 04/04/18, the STI has closed below the 200-day moving average signalling some weakness.

More importantly, the STI is currently hovering at the last line of defence at the 3354 – 3341 support area. Note the 3354 – 3341 support area has kept the uptrend intact since October 2017 and had successfully reversed the selloff on two occasions shown by the yellow highlighted boxes.

From a price action perspective, the 3354 – 3341 support area needs to hold for the long-term uptrend to stay intact.

On the other hand, if the selloff continues and breaks below the 3354 – 3341 support area, a deeper correction might happen with sellers targeting the 3275 support area followed by 3195. The long-term uptrend will then shift into an immediate downtrend after the STI closes below the 3354 – 3341 support area.

Watch the 3354 – 3341 dividing closely.

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About the author

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Jeremy Ng
Research Analyst
Phillip Securities Research Pte Ltd

Jeremy specialises in Technical Analysis and has 10 years of experience in studying price action. His areas of expertise include intermarket analysis on the equities, currencies, commodities and bonds market.

He is also a regular columnist on The Business Times - every Monday ChartPoint column.

He graduated with a Bachelor of Science in Banking and Finance from University of London.

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