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Unbreakable Resistance Line Suggest Downside For STI
Trend Spotting | 02 October 2009
By: Xavier Lim
Articles (51) Profile

Strong resistance line. Despite testing the key 2,700 resistance a few times, the STI did not managed to break through. This has created a near-term downward pressure on the STI.

Indicators showing bearish signals. With the RSI indicator falling below the 50-mark level and the STI slipping below the 25-day moving average (MA), our view is that the positive tone is waning.

Initial support at 2,500. We expect the index to find initial support at 2,500. Breaking it, the next key support is likely at 2,400 (resistance-turned-support). If STI falls further to 2,200 level and rebound back to 2,400 again, we cautiously expect the STI to likely to form a head-and-shoulder formation.

Immediate resistance at 2,700. Immediate resistance remains at 2,700. But it seems unlikely for the STI to go back there in near-term due to the 25-day MA showing signs of initiating a bearish crossover soon, coupled with the STI is trading sideways between 2,500 and 2,700, while the RSI indicator is trending down.

Armed with an arsenal of investment knowledge, Xavier is the Senior Research Editor at Shares Investment.

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