Spot-on market analysis and insights from the trading desk

Straits Times Index – new highs after deep pullback | Technical Analysis | Stock Indices


I just returned from Italy, and it’s good to see that the STI has made new highs. If I have time, I will respond to the numerous email requests I have received, but no promises. I will be looking for stocks to go long.

Straits Times Index (STI) – Swing counts are all you need to catch the trends | Technical Analysis | Stock Indices

To be honest, it’s actually possible to trade by just counting swings, but it takes experience. From basic TA teachings, an uptrend is formed by higher highs and higher low, while a downtrend is formed by lower highs and lower lows. This gives us an easy way to identify a trend immediately. However, the tricky part is being able to identify trends in multiple timeframes amidst the fractal nature of the market. Such a technique becomes very powerful, because it gives you the confidence of knowing what the path of least resistance is. Below is an example of this analysis applied to the STI Index.

On the larger timeframe, the STI has completed a lower high, but on a smaller timeframe, it is still making higher highs and higher lows. Hence, there are 2 possible setups for such a situation:

1) go long when STI manages to go past the previous H on the higher timeframe
2) wait for a short entry (lower H) on the lower timeframe.
If the STI succeeds in making a lower low (by going below 2666), then it will be very bearish indeed. However, seeing that the US indices have succeeded in making higher highs, there is a good chance of the STI making new highs (by going above 2947) too. However, if this lower high completes, then be prepared for a prolonged range bound market, and be prepared to trade swings on a smaller timeframe.

Straits Asia – successful breakout heading for 2.30 | Technical Analysis | Singapore Stocks

After a forming a higher low, it seems that the H&S has failed, and in addition price has gone above the 20-EMA and 50-EMA. Also, price has broken out of the symmetrical triangle, and at the same time breaking through the resistance at 2.10 and closing strongly.

EUR/SGD – going down, down, down…

The Euro is going down, and is showing extremely weak technicals, which underlie the festering Greece debt fundamental problems. This is the first test of the 20-EMA after staying away for quite a long time, showing the bearish pressure. It also coincides with a breakout below the support of 1.92 and a pullback. On an unrelated note, it seems that my holiday here in Europe is getting cheaper and cheaper. I will be timing my exchange of SGD to EUR near the support levels.

S&P 500 – new highs after breaking out of inverted H&S | Technical Analysis | Stock Indices

After completing an inverted H&S, the S&P 500 has proceeded to make new highs. Judging by the numerous strong white bars, the upward pressure is quite strong. It might be a good idea to go long on a pullback, perhaps on a test of the breakout to new highs. On a side note, I will be heading to Budapest this weekend.