SINGAPORE (Aug 4): Here are some technical charts to monitor this coming week:
Straits Times Index (daily)
The STI Index (3,326) fell four points during the past week. Although the move is very minor, negative divergences have started forming between RSI and the index. A breakdown below support by RSI is an indication of weakness and this has not materialised yet. Quarterly ROC has turned down, and it could start to form a negative divergence with the index. ROC remains above its equilibrium line, and a break below equilibrium would indicate weakness.
The STI’s overall uptrend remains intact. It had moved to a two-year high of 3,354 on July 27 before retreating. Early last month, the STI broke out a thrice-tested resistance area at 3,265-3,270. This level should act as support. The breakout indicated a near-term upside of 3,400, reinforcing the main target of 3,500 which was obtained in January.
Both annual and two-year momentum remain in rising trends with two year momentum looking particularly strong.
Tuan Sing Holdings (35 cents) attempting breakout
Prices are attempting to clear a several-times tested resistance at 34.5 cents. A successful breakout indicates a target of 41 cents. The probability of a breakout looks good. Quarterly momentum has broken above its own equilibrium line, along with 21-day RSI. ADX turned up last month, and DIs are positively placed.
In addition, volume expanded markedly on Friday (Aug 4) to 5.9 million shares on a white candle day, a sign of demand. During much of June and July, volume barely rose above a million shares a day. The three-year high was at 47 cents but there is significant resistance at 45 cents. The breakout will be seen as being successful if prices can stay above 34 cents over a three-day period.
Oversea-Banking Chinese Corp ($11.21) relative strength intact
Although a correction of sorts could set in, this banking stock continues to maintain greater relative strength than peers. Its uptrend is neat and sustainable, the long-term annual momentum and two-year momentum indicators are in uptrends, and quarterly ROC, ADX, and moving averages are all positively placed. The 50-day moving average which acts as a support line is at $10.68, and the 100-day moving average is at $10.13.
In addition to a series of negative divergences between price and 21-day RSI, quarterly momentum has fallen below a secondary trendline. RSI is also suggesting that prices are likely to consolidate the gains made in July. A week ago, the candlestick chart formed a harami or inside day pattern and that has caused the upmove to stall. The “roundophilic” level of $11.00 provides psychological support and $10.68, the next level of support.
The uptrend is likely to continue after the consolidation. A minor swing could materialise to $11.70 and $12.60 eventually.
