Right timing: Goldilocks market enters home of the three bears

Right timing: Goldilocks market enters home of the three bears

By: 
Goola Warden
09/02/18, 09:54 pm

SINGAPORE (Feb 9): Here are some charts for our technical analysis this week:

Straits Times Index (3,377, daily)
The Goldilocks period of a perfect rising trend appears to be over, and the uptrend of the Straits Times Index has been broken.

As to how far down the STI can go, the 200-day moving average -- remarkably still intact -- is at 3,328, and is as good a guide as any. Unfortunately, any rebound off this level is unlikely to prevent a breakdown below the moving average. Quarterly momentum is in steep retreat, and has just broken below its equilibrium line.

The chart pattern shows the STI breaking below a broadening formation, a typical chart pattern at the top of bull markets. The breakdown level is at 3,400, with the breakdown indicating a target of 3,100. Volume expanded as prices fell, confirming a change in trend.

This will not be a one-way move. The market is likely to decline progressively, in a series of peaks and trough, with each peak lower than the previous peak, and each trough lower than the previous trough.

The immediate resistance is at 3,400. The 21-day RSI is at 38 and has room to fall.
   
STI Weekly chart shows annual momentum turning down
Annual momentum has broken down after a series of negative divergences suggesting that an all round weaker phase lies ahead, and could persist for months.

 

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