SINGAPORE (Nov 1): The Straits Times Index is testing and challenging its 200-day moving average at 3,225. While volume expanded, it remains to be seen if it is sufficient to trigger a clear breakout in the immediate term.

Chart 1: STI with moving averages and momentum

The positives among the technical indicators are the upturn of the 50-day moving average, and the continued rally by quarterly momentum, which has broken above its own moving average and resistance.

Chart 2: Short term indicators

Short term stochastics continue to rise. However, it is near the top end of its range. The 21-day RSI is also rising, and has yet to meet its resistance. ADX is rising and the DIs remain positively placed.

Indicators and the chart pattern suggest that the STI could move above its resistance first before retreating. A break above current levels of 3,229 would provide the index with the impetus to test 3,380. If this materializes, prices could move higher in the near term, supported by rising momentum and directional indicators. The break above 3,225 would establish this level as support.

By the middle of the week of Nov 4-8 the STI may feel in need of a pause or corrective move.