Charts tip Straits Times Index is showing some weakness: Analyst

Singapore two-dollar billsSingapore two-dollar bills

The Straits Times Index is showing some signs of weakness on the charts, hovering near key support areas, Phillip Securities said in a note on Thursday.

“As news of China planning to impose reciprocal tariffs on $50 Billion of U.S. goods surfaced, the general equity market went into full scale risk-off mode,” it noted.

The sharp selloff on Wednesday pushed the STI to close below its 200-day moving average, signalling some weakness, it said.

“More importantly, the STI is currently hovering at the last line of defense at the 3354–3341 support area,” Phillip Securities said.

That support zone has kept the chart’s uptrend intact since October of last year, with two successful reversals of selloffs, the note said, adding that support needs to hold for the long-term uptrend to stay intact.

If that support zone breaks, a deeper correction might follow, with the next support at 3275 and then 3195, it said.

“The long-term uptrend will then shift into an immediate downtrend after the STI closes below the 3354-3341 support area,” it said.

It noted the index’s resistance levels were at 3469, followed by 3550.

The index ended Thursday up 1.98 percent at 3405.65.

STI Chart 5 April 2018