Singapore FTSE STI: Need to be cautious

The FTSTI ended slight on a bullish mode last week. Technically, it was expected to test the 3,300 points resistance level but manages to reach a high of 3236.10, which was the close on the 2nd of May. Although we are currently seeing an upward rally on the FTSTI in the short term, the underlying trend is still down and there is only a change of it reversing its trend if it breaks the resistance level.

However, the momentum of the up trend, which was strong in the past few weeks have started to show a sign of weakness. The Relative Strength Index (RSI) indicator is showing a bearish divergence on the daily chart. The same indication is happening on the MACD indicator. Therefore, we need to be cautious as the FTSTI may now be in a resistance zone with 3,300 points as the resistance level and a downward correction is expected to the next support level. The immediate support level is at 3,100 points. By Benny Lee