SINGAPORE (July 29): Here are some technical charts to monitor this coming week:
Straits Times Index (daily)
Friday’s 23-point drop has not dented the Straits Times Index’s (3,330) uptrend. It had moved to a two year high of 3,354 before retreating and its current level is above last week’s close of 3,314.
In the short term, the 21-day RSI had problems pushing significantly higher but no negative divergence has materialised yet between RSI and index. Similarly, quarterly ROC has not formed a negative divergence with price. However, the STI may continue to consolidate in the near term as some component stocks could ease.
Two weeks ago, the STI broke out a thrice tested resistance area at 3,265-3,270 indicating a near term upside of 3,400 and reinforcing the main target of 3,500 which was obtained in January. The 50-day moving average, currently at 3,248, should also act as a support line.
Both annual and two year momentum remain in rising trends. Two year momentum looks particularly strong. On a cautionary note, annual momentum has formed a negative divergence with the STI for the first time in five years.
Oversea-Chinese Banking Corp ($11.39) temporary pause
This banking stock has greater relative strength than peers. Its uptrend is neat and sustainable, the long term annual momentum and two year momentum indicators are in uptrends, and quarterly ROC, ADX, and moving averages are all positively placed.
In the short term though, 21-day RSI has made a series of divergences. Because of its time period, this indicator is unable to cope with a strong uptrend. RSI is also suggesting that prices could consolidate the gains made in July. In addition, the candlestick chart has formed a harami or inside day pattern which is short term negative. The “roundophilic” level of $11.00 provides psychological support and the 50-day moving average line at $10.74 is likely to act as a secondary support line.
The uptrend is likely to continue after the consolidation. A minor swing could materialise to $11.70 initially and to $12.60 subsequently.