Straits Times Index – Daily timeframe (Update from 25 June 2018)
*Entry Price: 3,285 Stop loss: 3,165 Take profit: 3,469
Current Sentiment: Bullish
Support 1: 3200 Resistance 1: 3,354
Support 2: 3189 Resistance 2: 3,469
The dragonfly doji rejection from the last update failed to hold. As a result, the bearish momentum accelerated.
Price initially broke below the 3200 psychological round number initially on 06/07/18 as it closed at a low of 3176 points. However, the bearish momentum appears to be fading as buyers re-emerged the following day and closed price back above the critical 3200 psychological support. Moreover, the subsequent bullish follow-through on 10/07/18 signals further sign of strength as it broke above the immediate downtrend line.
Keep in mind the Relative Strength Index (RSI) has been oversold since 14/07/18 as it hit a low of 23 on 25/06/18 suggesting for an imminent rebound. RSI measures momentum. A reading above 70 represents overbought condition while a reading below 30 represents oversold condition. With the recent bullish breakout, the RSI has also risen back above the 30 oversold region suggests the start of the mean reversion higher.
Hence, expect the STI to recover back into the long-term uptrend next for price to test the 3,354 resistance area followed by 3,469.