Picture 1: STI daily chart via TradingView
Confirmation of downtrend
After a lower high was formed, price continued downward and touched the 1st support region as expected. It made a lower low last Thursday at 2,574.85 points. STI is therefore, confirmed to be in the bear's territory for now.
STI pierced down its 1st support region twice
There were two occasions when STI broke below its 1st support region.
Firstly, a comment made by the US White House adviser which was "misinterpreted" had sent the STI down during the first half of trading hours on 23 June 2020 and pierced through the 1st support region. It later made a V-shape recovery before the lunch break after the adviser clarified that the China trade deal isn't over.
Secondly, STI gapped down two days later on 25 June below the 1st support region. For this, I did not study into why exactly it happened but it is likely due to the US side with the increasing number of coronavirus cases.
Now, let's analyse the STI to see how it will fare next week.
Weak bullish rebound spotted
In picture 1, STI closed inside the 1st support region (I have changed the colour to white so it is clearer) as a green doji to end the week of 22 June.
However, the green doji had a taller upper shadow than its lower shadow. This shows that the bulls dominated the trading session initially, but had eventually lost its strength to the bears. Furthermore, the green doji made an unsuccessful attempt to cover the bearish gap between 24 and 25 June as shown in picture 2.
Picture 2: STI daily chart showing the gap down, via TradingView.
(Note: Some technical traders look at the shadows to confirm a successful gap close but I look at the candlestick's body as it is more accurate.)
A possible look at the 2nd support region
With that, I am still currently bearish on the STI and will be looking at the 2nd support region (shown in picture 1) next week. Although the downtrend isn't strong right now, I am expecting the bears to accelerate its downward movement soon.
