Singapore Stock Exchange (STI) Technical Analysis – 15 March 2013

Singapore Stock Exchange has been trading mostly sideways for the past month. The movement is range bound between 3319 and 3234. In our previous Technical Analysis of Singapore Stock Exchange on 24 Feb 2013, we summarized our analysis as follows,

The bias is to the down side with more selling expected. But there is likely one more push up to 3310 – 3315 region before the resumption of selling. On the other hand, should volume pick up and the price breaks through the 3320 level, the next target would be at 3400.

At the time, Singapore Stock Exchange was at 3288 and our analysis was that STI would retest the 3320 level. Well, the STI did come back up but only as far as 3297 before it progressed down to 3234. The STI then surged back up to 3319 before selling continued and closed at 3286 for this week. Basically, it went on a roller coaster ride to close 2 points off from the level set on 24 Feb 2013.

Here’s the Singapore Stock Exchange chart that was published in our analysis of 27 Jan 2013. This chart shows the likely phase that STI is in relative to the previous tops. The second chart below is the updated chart of STI. In that chart, we have highlighted the likely juncture where STI is at right now.

Singapore Stock Exchange Chart 27 Jan 2013

Singapore Stock Exchange Daily Chart 15 March 2013

The main take away from this updated chart is the information provided by the MACD. Notice that in the previous two tops (in green), the MACD turned down and approached the zero level. Thereafter, it turned up and made a lower high whereas the STI was trading sideways. The same pattern has formed once again. A similar divergence is clearly visible. This means that it is quite probable that STI is going to head downwards soon.

The question is how deep is the correction going to be. Well, in the previous two similar setups, the correction was between 180 – 340 points. Minimally, we can expect a similar correction in the near term. We would need to analyse again based on the strength of the downwards move to determine whether is it going to be a shallow or a much deeper correction.

Should the Singapore Stock Exchange power ahead upwards and breaks the 3320 level with volume, it would indicate a bullish scenario and the target would be 3400 in that case.