Singapore FTSE Straits Times Index (FTSTI): Expected to gain short rally from rebound

The Singapore market was in a very volatile mode. Banking and finance stocks faced heavy selling pressure. Singapore is technically in a recession. Despite technically being heavily oversold, the FTSTI was sent to an unexpected low of 1,473.77 points recently, lowest since August 2003 after easily breaking the support level of 2,100 points. It also rebounded sharply to close at 1,794.20 points in the same week. It was a roller-coaster month for Singapore investors.

The STI is still highly oversold because the short term 30-day average is at 2,100 points. The weekly chart on the STI has formed a bullish candlestick reversal pattern called piercing lines and therefore a short rally is expected from this rebound. Furthermore the RSI indicator shows a bullish divergence which means that the down trend is rather weak on the daily chart. With the trend is still strong downwards in the longer term, the rally is expected to be short with a resistance at 2,100 points. While the 1,473 low becomes the immediate support level, stronger support level only exists at 1,200 points.

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Article contributed by Private Trader, Market Expert, Trading Coach and Chief Market Strategist of Nextview, Mr. Benny Lee. For more articles and commentaries from Benny, click HERE.