STI and HSI update 01/12/2011

STI - Inverted head and shoulders?


STI looks to be forming a potential inverted head and shoulders formation, with the neckline at the major resistance level of 2900.

The immediate resistance for STI is at 2780-2800. Significant support would be in a range from 2680-2720, with a gap support forming at just past 2700 as of yesterday's close. The 50-days moving average remains flat, and is now at around 2730. The index could find some minor support at the level.

Short term: Bulllish
Mid term: Neutral with a chance of retesting 2900
Long term: Remains bearish until index manage to break 2900


HSI - more headwinds ahead


Similarly to the STI, HSI could be on the way to form an inverted head and shoulders too. Chartwise, HSI is weaker than STI as the neckline of the formation is tilted downwards, meaning HSI could find it tougher to breakout of the neckine at around 19650.

In the case of a breakout of 19600, next resistance for HSI would stand at around 20200. Immediate support at HSI is now back at 18900. This level is very crucial to HSI it can act as a springing board for HSI to breakout of the H&S formation. Similarly, a failure to hold the level would see HSI back down towards 17600, and if 17600 fails this time, we could see HSI test October lows of 16200.

Short term: Bulllish
Mid term: Neutral, with limited upside capped at 19650
Long term: Remains bearish until breakout of 20200