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STI’s downtrend to resume after rebound

Goola Warden
Goola Warden5/20/2022 8:3 PM GMT+08  • 2 min read
STI’s downtrend to resume after rebound
Despite a 49 point rebound, the STI is not out of the woods as indicators point to further volatility.
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The Straits Times Index rebounded back to 3,240 as at May 20, from 3,191 as at May 13. The May low was at 3,165, a level that may provide some support during the next decline.

Despite the rebound, the STI is not out of the woods as the move appears to be temporary and in reaction to short term oversold pressures. Once these are alleviated, the index could resume its downtrend. So far, the rebound has taken the STI above the 200-day moving average, currently at 3,218.

At present, the rebound move does not appear to have invalidated the large top that formed with a neckline at 3,300, which coincides with the 100-day moving average at 3,299, establishing this zone as a resistance. If the market is weak - which it is likely to be - the index is unlikely to reach 3,300. This is because directional movement indicators are negatively placed with ADX rising as DIs are negative. In addition, quarterly momentum is in negative territory and has yet to bottom.

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