Despite this rebound, the chart pattern continues to indicate a downward bias. The break below the neckline support indicates a downside objective of below 2,900. As a result, the STI may move towards at least 3,000 as the chart pattern looks like a double top.
The 50- and 100-day moving averages had made a negative cross at around 3,297. This is likely to continue to exert downward pressure on prices. The 200-day moving average has flattened at 3,225. During the week of June 27-Jul 1, the 50-day moving average may make a negative cross with the 200-day moving average. Quarterly momentum retreated from its equilbrium line and may take some weeks to reach a low.
Short term traders should start getting cautious with the rebound while longer term investors could ready their dry powder for a market sell-off ahead of the 75 bps hike in the Fed Funds Rate by the US Federal Reserve next month.
