A surprise from STI

STI gave the traders a surprise this morning, well, it is more of a shock and surprise. It opened with a gap down of 58 points, and at one point went all the way down by 77 points to 2,676!

As I did my entry last night, I recall 2 support level that I have mentioned, 2,751 and 2,667. I was really expecting STI to hold on for a while before further drop but it seems that STI cannot wait at all.


Fig 1 STI Weekly Chart

Looking at the weekly chart, the plunge fall short of reaching the 23.6% fibonacci retracement line. At the same time, it can be seen that STI is supported by the 89 weeks moving average.

Both the indicators are reaching the bottom. However, they have yet to show sign of reversing.


Fig 2 STI Daily Chart

On daily basis, both indicators are also at the bottom with no sign of reversal yet, but they are bottomed. What interest me is that the gap down while shocking seems to be trying to create a morning star. This however needs to be confirmed, but my take is that Monday is an up day.

On a side note, STI stopped shortly above the 23.6% retracement line of 2,667. I believe this is the second point for the neckline formation, and in head and shoulders, the neckline is inclining. So now B wave would result in the right shoulder.