STI closed 2,974.61 on 30th April 2010, was a flattish performance for the day as practically unchanged from its open value. There still no confirm clear sign of market will move higher or lower at the moment. The following were observed :-
1. Falling wedge formation backtest and rebound from support with volume
2. Mini head&shoulder was developed with the neckline around the 2,950 level
3. A potential evening doji star pattern could be formed but need confirmation; a gap down with a black candlestick for Monday session. Evening doji star is bearish in nature
4. There was expansion in volume for past 2 trading sessions
5. Stochastic %K cut up %D from oversold but %D yet to cut up smoothed %D
6. Short-term GMMA lines in compression again while long-term GMMA lines still in expanded mode trending up
7. DI+ looks about to cut up DI- but with ADX lied below 20 indicating no strength be it upside or downside hence market could be range bound and trade sideway
Things to look out for the next few trading sessions :-
1. Confirmation of evening doji star
2. Neckline support of the head&shoulder formation cannot be broken down
3. Any downside movement should not be accompanied with heavy volume else will be bearish
4. Support level between 2,880 - 2,945 should not be broken else long-term GMMA lines might go into compression mode
5. ADX signal movement towards 40 will be bullish if DI+ cut up DI- and bearish if DI- cut down DI+
For the bullish bias, falling wedge formation backtest completed and resume uptrend to estimated target 3,150. The compression in short-term GMMA is opportunity to trade along the existing uptrend of the long-tern GMMA.
For the bearish bias, breakdown of head&shoulder formation at the neckline will have an estimated downside target of 2,850 which breaks the support zone of 2,880 - 2,945 and could caused further downside as then the long-term GMMA lines would be in compression mode.
Another possible scenario is market will be side way and range bound with the range 2,920 - 2,980 if the ADX signal still stay flat around or below the 20 level
