After about one week of sideway movement on Straits Time Index (STI), the stock market trend appeared to be sitting nicely on the gap support now which was formed between 2876 and 2832. The gap on STI was formed in March 08 while the market rally up.
Using classical technical analysis, I also observed a possible formation of a descending triangle, which is a bad bad sign that the market will dive down further if it turns out to be true.
Let’s examine MacD indicator and see how can we prepare our game plan for this market?
MacD has a bullish cross over which can signal that the market is taking a relief now from the downtrend and possible to have a short term technical rebound. I have been waiting of the technical rebound for the last 2 weeks but it did not happen due to another wave of subprime crisis is bothering the market now.
Anyway, has the relief been over? Or will it have a higher rebound? I do not know. Technical analysis cannot predict the market but it aids our analysis to spot the signal of market trends.
I am very tempting to open a short position now, but my previous few mistake reminded me not to act on impulse. I need to be patient and wait. I shall now monitor STI closely to see if it break the gap support, if it does and confirm the descending triangle, that can also offer a good opportunity for shorting.
DISCLAIMER: This information is used for learning purposes only. It does not constitute an offer or solicitation to buy or sell. You should do your own analysis on top of my postings.
