SINGAPORE (April 4): The rebound that took place in the week of March 23–27 failed to get past 2,561 reached on March 27, establishing this as a resistance level.

Daily chart with oversold quarterly momentum

It is also within the area that the Straits Times Index broke down from in February, which was a previous support at 2,528–2,623.

While the sell-down was sharp with rising volume indicating the presence of sellers, the rebound took place on a contraction in volume, suggesting that the move is a bear market recovery. The STI is likely to remain in a sideways rangebound trend that is likely to be a continuation pattern.

The support has been established at 2,208, the intra-day low reached on March 23. Ideally, the index is likely to retreat towards this level to re-test it as part of a base formation.

In the week ahead (April 6–10) which is a short week, the market could hover around its current level of 2,389 to as high as 2,528 as short-term indicators are rising. Short-term stochastics will continue to rise and 21-day RSI is likely to move towards 50.

ADX is retreating and –DI is falling as selling pressures alleviate. This is because the market remains oversold. On the other hand, there is no buying demand. Hence volume is likely to continue to contract.

Annual momentum is declining, confirming that the low of 2,208 is likely to be re-tested this year.