Straits Times Index has 2 upside gaps that were formed and currently one of them is being tested as support. The gaps are near the level of 3726 and 3660 and i have marked them with horizontal lines. Currently STI seem to have found support on the 2nd upside gap. By candlestick charting, STI formed a tweezer bottoms with a harami near 3754 so this level should hold as a good level of support in the short term. Today's white candlestick was formed with low volume and coupled with bearish divergence in the RSI and the A/D line, i am quite bearish about STI now. I am getting ready to exit my positions the moment they touch my stop loss point.
Straits Times Index Chart:
I will post a chart on the HSI since the Hang Seng's movement has been affecting the STI's movement recently.
Hang Seng Chart:
There was movement in yongnam as it formed a white candlestick with relatively heavy volume today. Moreover, CSC and Koh Bros found support on the charts that i charted in my previous post despite STI's drop 2 closings ago. This augurs well for the counters in the construction sector and these counters could be worthwhile holding on to.
Thursday, October 4, 2007
Brief respite
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1 comments:
Bearish divergence occurs when price action hits a new high level but the corresponding technical indicators fails to hit a new level. It acts as a warning signal that the new high price action cannot be sustained for long and one should be cautious. It should be further confirmed by other technical indicators such as a break of the trendline or support level or a chart reversal pattern.
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