SINGAPORE (Dec 20): During the past five trading sessions, the Straits Times Index lost two points as it remained entrenched beneath its 200-day moving average at 3,224 and holding above the confluence of the 50- and 100-day moving averages at 3,203 and 3,212 respectively.
Chart 1: STI with moving averages and momentum
Quarterly momentum has strengthened and rebounded off its equilibrium line. In doing so, momentum moved above its own moving average. This is a sign of strength. Volume, which had been low, picked up slightly on Dec 20.
Chart 2: Short term indicators
ADX is at 11, which is a low level and an indication that the index is stuck in a narrow range. The DIs are positively placed. Short term stochastics is rising, and 21-day RSI has rebounded above its equilibrium line.
In sum, indicators are generally positive, suggesting that the likelihood of a break above 3,224 is possible. Volume needs to expand further on a white candle day and ADX needs to turn up from a low level for a sharp rebound to materialise.
The index peaked temporarily at 3,285, before retreating and this level is likely to provide resistance when prices rebound.
