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STI's correction is not likely to breach the main uptrend

Goola Warden
Goola Warden • 2 min read
STI's correction is not likely to breach the main uptrend
STI is in a mild consolidation/ correctiive phase with support appearing at 4,758. However one of the mega-caps looks weaker than the index
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The end-of-week correction in the Straits Times Index appears par for the course as the index had moved to overbought highs, and is unlikely to change the main uptrend. The 50-day moving average, which acts as a support line, is at 4,758. On Jan 13, the STI closed at 4,937, up four points week-on-week. If the index fell to 4,758, the uptrend would still be intact.

In the short term, prices could continue to ease. 21-day RSI has broken below a support and minor top formation after hovering around the 75 to 91 range. This may cause the STI to move towards 4,758. Resistance has been established at 5,021, the high reached on Feb 12.

DBS, which ended the week at $57.06, has broken below its 50-day moving average at $57.18. In addition, both quarterly momentum and 21-day RSI have moved below their own support levels, with RSI dipping below its equilibriun line. The easier phase may well persist. Support appears at $100-day moving average at $55.27, a level that coincides with a support are at $55. Interestingly, DBS is the only bank that has dipped below its 50-day moving average, and looks weaker technically than OCBC and UOB.

Bitcoin traded at US$66,833 on Feb 13, almost unchanged from week ago levels of US$66,238 and chart patterns suggest that the support at US$60,000 is likely to hold. During the week, bitcoin rebounded because its indicators had fallen to oversold lows, with 21-day RSI down at an oversold level of 21. Directional movement was also at extreme negative levels with -DI at -40. While those indicators have rebounded, weekly indicators remain weak. The breakdown of the head and shoulder like top formation was at US$82,527. Resistance for rebounds appears at around US$75,000. Eventually, though, further declines are likely with US$60,000 giving way.

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