SINGAPORE (Apr 27): Here are some charts for our technical analysis this week.
Straits Times Index (Daily, 3,577)
The Straits Times Index trended sideways, rising just 4 points during the week, to end at 3,577. The sideways move followed an almost non-stop advance during mid-April. The rally enabled the STI to regain the confluence at the 50- and 100-day moving averages, currently at 3,489. The two moving averages should provide the new support level.
Short-term indicators look like they are peaking, Short-term stochastics is poised to peak and turn down while at the top of its range. ADX which had been falling is flat, and the DIs are neutral. The 21-day RSI has turned from its “overbought” line.
However, quarterly momentum is hovering around its equilibrium line and could still rebound. On the other hand, annual momentum continues to form a negative divergence with the STI.
From a chart pattern point, the STI remains below what appears to be a resistance area that has been tested twice. On Apr 19, the STI tested 3,604, just shy of the year’s high of 3,609 attained on Jan 24. A break above 3,609 provides a measuring objective of around 3,880, but this has yet to materialise. A break below 3,475 would lead to sideways fluctuations.
Venture Corp encounters support
On Apr 26, Venture Corp tested its 200-day moving average, currently at $20.84 and then rebounded sharply. The intra-day low on that session was $19.84, almost $10 off the high of $29.61. Volume picked up significantly during the decline. There is some suggestion that fundamentals have changed.
Technically, the moving averages appear intact. However, quarterly momentum fell very sharply in a throw-down move that normally occurs during a change in trend. So far, it is too early to call a change in trend. However, prices could move into a range, putting an end to the continuous uptrend.
In the short term, the 21-day RSI is at the 30 line which is an oversold line. It may whipsaw this level, and move lower first before a rebound, as short-term stochastics has not quite bottomed. It should be a matter of days before prices rebound.
Based on the chart pattern, resistance is likely to materialise $23.07. The more impotant level for investors should be the 200-day moving average at $20.84. A break below this level is negative.