STI Upward Trend Under Pressure

STI vs USDSGD
Above is a chart showing the inverse relationship between STI and USDSGD. A strong USDSGD generally leads to a weak STI, and vice-versa.

The relationship as it potentially points to funds flowing into and out of Singapore market.

Last May, we saw USDSGD broke out from its accumulation phase with STI breaking below its Distribution phase which lead to an Mark Down phase.

In recent trading, we seems to be in similar position again. And if USDSGD is to breakout from its $1.362 level, we will potentially see STI entering into Mark Down phase again.

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Wyckoff's Law of Effort

Law of Effort Wyckoff's Law of Effort states that on any single trading day (or week depending on time frame), huge volume (effort) push by participants should see huge price movement, resulting in a wide spread (long body). This is a basic principle of effort and result. However, as per Singtel's case study, we saw huge selling volume on 11 May, yet the price action only shows a narrow spread (small body). This divergence of effort and result in Wyckoff's Law of Effort principles, indicates possible exhaustion in selling or hidden buying. Thus, with a lack of weakness, Singtel should continue trading range bound for the coming days or weeks till further strength or weakness is observed. Swing Traders who trades range can consider positions at 3.70-3.72, with exit target 3.76-3.78.

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