Since the middle east unrest started in February and then followed by Japan earthquake, tsunami and nuclear crisis, STI has formed a resistance around the 3,110 level and at the same time STI dropping to an intra-day low of 2,911.
Take a closer look, this might not be a bad situation. As STI fell from 2,947 to 2,935 from 24th Feb 2011 till last Friday, RSI and Stochastic on the other hand forming a higher low which diverge from STI trend hence creating a positive divergence. Furthermore, STI might be forming an inverting head-shoulder formation with the left shoulder already formed and half of the head created. If the inverted head-shoulder formation really valid, the neckline will be at 3,110 and a breakout of the inverted head-shoulder formation will see a target in the area of 3,285.
Now might be too early to confirm the formation of inverted head-shoulder formation but the RSI/Stochastic positive divergence signal is there and this will trigger a rebound on the STI
