During the week of 12 October 2020, the Straits Times Index (STI) closed at 2,533.02 points. How will it fare for the week of 19 October 2020?
P.S. Was late in posting a STI weekly analysis due to some priorities on weekends.
 |
| Picture 1: Daily chart of STI, via TradingView. |
The bears retest the 2nd support region
Note that this chart is still based on last Friday's closing (16 Oct). I highlighted last week that the bears may conduct a throwback towards the 2nd support region to test the demand.
Yes, it indeed happened on last Wednesday and Thursday. The STI started to decline at the midpoint between the 2nd support region and the 1st resistance region.
A lower high was formed
While declining from the midpoint, a lower high was formed at 2,570.19 points on last Tuesday. With lower high and lower low formed, STI is considered to be a downtrend.
What can happen to STI this week?
Declining from the midpoint towards the 1st resistance would proved that there is a strong supply throwing down at this point in time.
The throwback was done, with the bears pulling STI down. However, whether the region is able to withstand the supply side is still unknown. Since this is a retest of the 2nd support region, it would be safer to have a wait-and-see approach.
The bears are at an advantage for now.
