With reference to analysis dated 17th April 2010 on STI divergence detected from index and RSI, STI hit an intra-day low of 2,944. As the current short-term trend is bias towards the downside, there could potentially form a falling wedge with the apex of the wedge to be around 2,900 level. The decline in volume also indicates a typical characteristic of a falling wedge. As per stated, the support region is between 2,880 to 2,945 and the apex of the falling wedge is well within the support region.
From the GMMA chart, the long-term GMMA lines still in expand mode define clearly of moderate strength in uptrend while the short-term GMMA lines are facing being compressed. If the potential falling wedge is to be fully developed, the short-term GMMA lines would be very compressed near the apex region of the falling wedge ie around the 2,900 level.
Thing to monitor :-
1. Formation of the falling wedge did not void ie STI trades within the define lines of the falling wedge
2. Long-term GMMA will not enter into compress mode
3. STI will not drop below the 2,880 ( lower boundary ) of the support region
4. STI breaking out near the apex region with expanded volume
If the falling wedge formation is valid, collection point will be around the apex region and when short-term GMMA is being compressed.
