In our previous update on the STI, we were looking for the index to test 3050. The index went to a low of 3070 and has since bounced higher. Today. price has closed above the cloud, triggering an Ichimoku cloud breakout and a change in trend. The STI trend is now bullish but can the index sustain its upward movement?
MACD has turned bullish and both its lines are rising. This is a good sign and show a rising trend. Conversion and Base lines had a bullish crossover, confirming the bullish trend. Lagging Span is above price of 26 periods ago and could be about to cross over the cloud. The index rally should be able to move higher.
On the topside, there is a gap zone resistance from 3246 to 3256. This could be the first hurdle to the rally. However, if the index is able to surmount this gap zone, the index could head higher to 3382, which was it previous high. Using an Ichimoku reversal breakout with V price projection target, we have a price target of 3354. Using Fibonacci price projection we get a Fibonacci 161.8% price target of 3329. If the index is above 3256, we think it is likely to go to either 3329 or 3354
However, if the index is unable to surmount 3256, it run the risk of declining back lower to 3150. For now, watch out for the continuation to 3256 n for a break out of this 3256 gap resistance.