STI – Out from the mess

Trend: Uptrend, 20ma up, Macd above 0

Support: 2890 (with falling window), 2850 (20 & 100ma), 2800 (50 & 200ma close)

Resistance: 2950, 3020

Observations
Candlestick – White candle with lower shadow.
Histogram – 4 Gs. No Bearish divergence is seen.
RSI – Around 50%. No Bearish divergence is seen.
Stochastic –Might have a bearish cross soon. Overbought.
Bollinger Band – Trading out of upper band. Broke out from the squeeze.

Conclusion:
STI had a fantastic week last week as it has broken the recent high of 2880 level. This breakout indicates that STI may carry with its uptrend movement and could possibly go higher. It had beat many people’s bearish expectation and could whip out bearish players from the market. Could this happen and what will be the key levels to confirm bearish players are out from the market?
STI breakout of the previous high strongly indicates that the current trend is still uptrend and a higher high could be seen soon. The possible level where higher high could be seen is at 2950 level. This breakout also causes STI to be out from the messy range of MA lines which STI suffered a range bound movement before this breakout. Hence, as it is trading above all the MA lines, they will turn into good support levels for the upcoming uptrend movement.
If STI is to retrace after a lower high is being formed, higher low could be form at 2890 level where the breakout occurs. This level could be firm as there is a confluence with the rising window as support. But a stronger support level will be at 2850 level where there is more confluence with the MA lines. These levels should hold in order to see further upside.
But on the other hand, due to the possible formation of head and shoulder in the weekly chart, it is important to note if the daily turns into downtrend, the head and shoulder formation will get clearer. Hence, the support at the strong support level of 2800 must hold or else the trend will turn into downtrend. To fail the head and shoulder formation, STI must break 3020 resistance level.
In conclusion, the market still remains bullish despite of speculation on in downside are actively being discussed in the market. Market is always right. Hence, we should remain bullish and expect upside. But there must a cautious note in our mind as the weekly chart might have a possibility of head and shoulder formation. The caution will not apply if 3020 level is being broken. At that time, bearish players should be rushing out from the market.

What to watch out for this week:
1) Higher high being formed at 2950 level.
2) Breaking of 2850 level might mean the uptrend is not strong.

Trading strategy to adapt right now:
- Wait for retracement to support level of 2850 – 2880 level and go for long side when there is bullish signal.
- Countertrend at 2850 level. (Not encouraged)

*Disclaimer applies