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Sunday, July 31, 2011

STI weekly update 01/08/2011

Last weeks posting for STI is here.

As mentioned last week, STI weekly has turned positive and it closed the week positive again.  Next resistance is at 3208, 3281 and 3314.  These are the previous highs.

STI Daily Chart: Previously we saw a breakout of the triangle on STI and so far the price has remained above the triangle after the island reversal pattern was spotted.  From the Symmetrical Triangle chart Pattern we deduce the Target price above 3450.  However, the pattern to be successful we should see a very strong breakout.  So far, the breakout has not seen any conviction in buying, this could partly be due to the weaker sentiments in US bourses and overall global economic conditions.  

A lot of times after a breakout on a chart pattern happens there is a throwback in the price back towards the breakout price.  But before that happens the breakout takes the price generally 5% above the breakout price first.  For instance, the breakout was at 3146.  5% of it comes to about 3300 which seems way far ahead still.  Added to the fact is that in the short term the market has turned overbought.  Also on friday we saw a Doji on STI daily chart which might indicate indecision.

Elliot wave on STI Hourly:

Last week I posted the Elliot wave count that I think is ongoing.  So far it has turned out as expected.  We might be in minor wave 4 (could be a double zig zag) of a major wave 3 currently as depicted below.  If the count is correct, ideally we should see a wave 5 up next.  100% fibo projection of wave 1 gives target of 3221.  123% fibo projection of wave 1 gives 3260 and 138% fibo projection gives 3280.  However, in the short term the market looks overbought.  I do not know how this count will turn out.  We shall see how it goes over the week.  Especially in the light of the big economic news from the US.

If this count turns out true then after completion of wave 3 we might see a nice wave 4 pullback followed by a wave 5 up towards the eventual target.  I will try to update this chart and count regularly on this blog.

Please do comment on your thoughts.  Good luck with your trading.

PS:  Just my personal view.  I could be wrong too.

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