Straits Times Index – Daily timeframe (Update from 7 May 2018)*Entry Price: 3296 Stop loss : 3185 Take profit : 3417
Current Sentiment: Bullish
Support 1: 3270 Resistance 1: 3340
Support 2: 3200 Resistance 2: 3417
Price fell as expected after the last update as the weekly bearish divergence played out. The bearish momentum was so strong that it broke price below the key support area of 3340. Looking at the daily timeframe, after price broke below the 3340 support area, the bearish momentum accelerated with price breaking a new 8-month low on 22/06/18.
However, some sign of strength showed up lately as the 3270 resistance turned support area halted the initial selloff on 22/06/18. The strong bullish rejection off the 3270 support area on 22/06/18 succeeded in forming a bullish reversal candlestick pattern, Dragonfly Doji signals a possible reversal higher next. Moreover, with the sharp selloff in the past few weeks, the Relative Strength Index (RSI) has also fell into the oversold condition. The current RSI reading is at an oversold region of 25 suggests a mean reversion higher too.
Watch out for a bullish follow through for the reversal higher to play out. For this rebound, the bulls should be targeting the 3340 resistance area followed by 3417.
However, if this dragonfly doji fails to hold, the next key area to watch is the 3200 psychological round number. The STI should some find some support around the 3200 area if the current selloff worsens.
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