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Wednesday, June 16, 2010

Where is Straits Times Index Heading?

Daryl Guppy wrote an analysis on the Straits Times Index – June 16 2010.

Summary of Keys Points to note:

  1. STI is showing a successful rebound from support level near 2660.

  2. This is a rally rebound, not a trend rebound, in the long term sideways consolidation pattern.

  3. The RSI can be used to generate rally entry and exit signals. A move above 70 on the RSI is an exit signal. A move below, and then above the 30 area is an entry signal for this style of rally trading.

  4. The danger with this consolidation pattern remains on the downside. The width of the trading band is measured and projected downwards. This gives a downside target near 2400, which is just above the long term historical support near 2300.

  5. The most bullish outcome is a return to the sideways consolidation that has been in place for several months. This also sees a return to range bound rally and retreat trading.

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