Chart B

Let us now look at chart B which shows the chart for STI. February 2008 ended on a negative note causing investors to duck for cover as the market came crashing down and broke through the 3000 psychological support emphatically. It can be observed that when the index was trading near the downtrend resistance line, it had failed to break 3100 level decisively in two previous attempts. Before STI can attempt to trade towards 3100 level, it has to overcome the gap resistance at 3000 first. This gap resistance was confirmed on 12^th March 2008 when STI opens at the resistance and closed firmly lower. Based on Fibonacci analysis, the major 38.2% Fibonacci support level has been broken. The immediate support now will be taken from the low achieved in January 2008. If this support is compromised, we may see STI testing the 50% Fibonacci support at 2570 thereabouts. Money flow index indicator is suggesting there is more room to fall before a decent rebound can take place.

This article is written on 18^th March 2008.