STI – Standing on shaky grounds

Indeed, STI did not hold at the rising window support level and headed towards 3200 level and has been testing 3200 level for the last 2 days of the week. As pointed out last week, this level is a very important level to determine whether STI will still carry on to be bullish or not. Let’s review the levels and re-analyse the changes in the indicators behaviour.

Trend: Uptrend, 20ma up (turning flat), MacD above 0

Support: 3200 (20ma), 3145 (50ma)

Resistance: 3313 (Recent high), 3370

Observations:
Candlestick – Long black candle engulfing the white candle.
Histogram – Many Rs. No Bearish divergence.
RSI – Around 60%. No bearish divergence is seen.
Stochastic – Starting to form a bullish cross. Oversold.
Bollinger Band – Now at mid band.

Conclusion:
STI manages to pull off a good retracement after a formation of a higher high. Expectation of a higher low level still remains at 3200 level. If STI is to bounce off this 3200 level, STI would confirm its continuation of its uptrend movement. However, if this 3200 level fails to hold, STI might even return back to its sideways movement or even worse case, downtrend.
Looking at the changes of the indicators, there is still not signs of bullishness from the Histogram as yet but stochastic is starting show a bullish cross at oversold. RSI is also getting closer to the 50% support level. Hence, indicators wise, some positive signs are showing but still need more bullish confirmation from the candlestick and histogram.
In conclusion, STI is currently on shaky grounds on whether it could still retain its bullishness going forward. But there is some positive signs from the indicators but what is lacking are the confirmation candles. Or else, the last line of defence for STI to prevent it from turning downtrend would be at 3145 level.
What to watch out for this week:
1) Confirmation of bullish signal.
2) Breaking of 3200 support
Trading strategy to adapt right now:
- Wait for bullish signals to form and long when there is confirmation of bullish signals.

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