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Short-term pause persists, Straits Times Index to head higher later

Goola Warden
Goola Warden2/3/2023 07:46 PM GMT+08  • 1 min read
Short-term pause persists, Straits Times Index to head higher later
The STI may still be consolidating following its breakout. The uptrend should resume in a few days.
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The Straits Times index dippd marginally week-on-week to 3,384 which is to be expected. Overall, the chart pattern following the breakout of the five-times tested 3,306 is almost text-book like. The breakout has been followed by a retreat. Usually the retreat could approach the breakout level but it has not done so for the STI as at Feb 3.

The 50-day moving average is at 3,282 while the 100- and 200-day moving averages have just made a positive cross. Quarterly momentum has taken a dip, suggesting that the consolidation phase is not quite over. On the other hand, directional movement indcators are supportive of an uptrending phase.

As a result, the STI should be able to hold above breakout-turned-support level, and eventually head towards a target of 3,600.

Risk-free rates as represented by the yield on 10-year Singapore Government Securities (SGS) may have peaked. A tentative downtrend has developed, wth the yield breaking below 3%. Support is at 2.79%, a recent trough from which prices rebounded. A move below 2.79% could materialise.

That would likely be the phase where the STI readies itself for the next leg of its upclimb

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