A week of whipsaws

This week has been a week full of whipsaws. Whipsaws in technical analysis, in my own layman term is that price action seems to break through a crucial level but it only broke through slightly thus giving the impression that it has broken through it, only to discover in subsequent closings that it din go in the forecasted direction.

This can be seen in the Straits Times Index. There was a gap up previously and this act as a resistance. Subsequently there was a closing above the gap and it seems that this resistance has been broken but it headed south again. Now there was a gap down too previously and this acted as a support. The closing on thursday seems to suggest that this support has been breached but on friday, it managed to climb back to land on the gap down.

Straits Times Index:


For the Dow Jones, it has broken it's resistance level which was acting as a support previously. The channel seems to be forming a rising bearish wedge and it remains to be seen whether it will break out from the downside or from the upside.

Dow Jones Industrial Average:


I am tilting towards bullishness in the short term though i am still bearish on the long term. A higher low and high has been formed for the Dow Jones and a higher low was been formed for the STI. Furthermore, it seems all news has been discounted into the price action already and this is perhaps the recovery phase but I believe the market cannot recover back to it's previous high.

Ferrochina has been good for shorting since the testing of the gap at $1.46 has failed and the result is that this counter is plunging downwards. This price action of this counter is very regular and it might be worth taking another look.

Ferrochina: