Good morning, in the above chart, i attempt to show the key levels for the STI. Key resistance is 2745, 50% fibonacci retracement is 2961 and lower bound of the range bound trading for the past 3 months is 2548.
In my last blog entry, I expressed discomfort at the way the STI has been trading for the last 2-3 months. My main reasons are the bearish divergence between the STI and its MACD and the decline in the MACD over the past 2-3months while the STI has been rather flat.
My view has changed after observing that the STI managed to break the psychological barrier of 2700. It has come down somewhat over the past 2 days, but it looks like a break above 2745 is coming soon.
I would suggest traders go long during pull backs, but close positions should STI fall below 2548.
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