Picture 1: Daily chart of STI, via TradingView
Tug-of-war between the bulls and bears
In both of my previous STI analysis articles (6 July and 13 July), I re-iterated my viewpoint that the bears could make an attempt to pull the price down from its 1st resistance region back to its 1st support region.
The week of 13 July did seen three occasions when the STI managed to touch its 1st support region - 14, 16 and 17 July (Tuesday, Thursday and Friday). Presence of bulls can still be seen as STI made a pullback to backtest its 1st resistance level, before the bears regained its strength to end the week. Evidently, the bears had won for the week of 13 July.
1st support region remains the key
From the chart, both Thursday and Friday were two red candlesticks and were closing lower and lower. In addition, we have yet to see a green candlestick to determine that price is stalling in its area of demand (1st support region).
Theoretically, as long as price remains well above its 1st support region, we can safely say that an uptrend has been formed. However, there could be difficulties for the uptrend to sustain.
Picture 2: STI daily chart showing a symmetrical triangle pattern, via TradingView
An incoming major movement!
When all the labels are removed, drawing in both upper and lower trend lines, we would see a symmetrical triangle pattern (as shown in picture 2). From a broader viewpoint, STI is consolidating inside a triangle since June. A consolidation within a tighter and tighter boundary would point to an imminent strong movement on either side.
Bears are dominating?
From the same picture 2, we can see there is a break down below its lower trend line. With that, I will be expecting a possible major break down in STI which potentially, may touch its 2nd support region next week.
Despite a possible uptrend, I am not very optimistic on the ability of the 1st support region to withstand the current selling pressure given the number of red candlesticks over the last two weeks.
Coronavirus situation worldwide
Around the world, the US continues to see a large number of coronavirus cases towards 4 million cases, as India exceeded 1 million cases and Brazil exceeded 2 million cases. As what the World Health Organisation mentioned, it took 100 days to hit 1 millions cases globally. Now, it only takes 100 hours to reach 1 million cases. Apparently, the global coronavirus situation is accelerating on a rampage which could go even faster with more and more people infected.
Singapore officially in a technical recession
Last week, it was announced that Singapore's Gross Domestic Product (GDP) fell 12.6% in Q2 compared to a year ago. The economy nosedived 41.2% in Q2 from previous quarter. This is much worse than the 3.3% contraction in the previous three months.
With two consecutive quarters of contraction, Singapore has officially entered into a technical recession.
