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| Picture 1: STI daily chart via TradingView |
Millions of bears crossed the road, not the chickens
The Straits Times Index (STI) closed at 2,423.84 points last Friday. A wait-and-see approach was recommended in my previous analysis.
Indeed, thsi wait was over as the bears emerged as the winner, dominating the STI in reds by breaking down the 2nd support region. The week of 26 October were all red candlesticks - the bears won apparently.
The bearish strength was extremely strong especially during the last three days, forming a three black crow pattern. The price even gapped down during each day's opening from its previous close.
STI reached the 3rd support region
The strong bearish momentum had broken the previously strong 2nd support region, which ended up resting on the 3rd support currently with no bottom in sight yet.
It had also broken its previous low.
What can happen to the STI next week?
As STI touched its 3rd support region, I am expecting a possible temporary rebound by the bulls for a tiny pickup - but likely to be short-lived.
In overall, the bears are still in control especially with the price gapping down with solid red candlesticks. With that, we can expect a bearish continuation plus a possible breach in the 3rd support region in my opinion.
The US Presidential Election 2020
Since the US Presidential Election 2020 will be held on 3 November, the STI is very likely to experience high volatility during this week.
This is especially so when the number of coronavirus cases exceeded 100,000 cases in a single day, tensions in America will definitely be high which might bring in potential civil unrest even after the election.
You might want to avoid trading and stay cautious on the sideline.
