SINGAPORE (July 29): Short-term indicators are showing signs of fatigue as they hover around the top end of their ranges. Short-term stochastics has turned down and could drift sideways before easing. The 21-day RSI has formed a minor negative divergence with the Straits Times Index and this could be a sign of latent weakness or fatigue for the index.
The chart pattern shows that the STI has tested the area near 3,400 to 3,407 about three times. The most recent approach was on Jul 24 and 25, when the STI tested 3,386 on two consecutive days. With quarterly momentum also fading near its support area and equilibrium line, the index may not be able to re-test 3,400 this month. It reached 3,407 on Apr 4, establishing this area as a resistance.
Elsewhere, ADX continues to fall and the DIs remain neutral (see chart below). This indicator suggests that the index may drift rather than move sharply lower. Volume has contracted, another sign that investor interest is at an ebb.
Annual momentum has stalled after moving marginally above its equilibrium line.
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The chart pattern is weak, and prices are struck near the confluence of the 100- and 200-day moving averages at the $15.79 to $15.81 range. Volume remains thin. However, short term stochastics have turned up from the low end of its range; 21-day RSI has formed a minor positive divergence with price. ADX is low, so any rebound is likely to be tepid. A break above $15.81 would require an expansion in volume.
Overall, prices may have bottomed, but they do not have sufficient energy to stage a clear break above resistance at its 100- and 200-day moving averages.
