PSEi (Chart: Daily Resistance: 3910 Support: 3700)
The index made a bearish move last Thursday, sending the index down 100 points and breaking the long standing support line from Feb 2010. The two days when the index went lower (Wed –Thurs) was accompanied with higher than usual value turnover and gives an indication of a very bearish atmosphere. However, trading last Friday gives a shimmer of hope for the index because a small white candle was created with larger value turnover than Wed-Thurs. We can see that Friday’s trading seem to have respected the support near 3727. which is a good indication that by next week, we could expect an upward movement for the index.
A word of caution though, since the support line from Feb 2010 was broken, which is a major event for the index, the upward movement that we might see for the coming week might just be a return move towards the same support line from Feb 2010, which is now considered as a resistance. So taking long positions for now is not recommended, not until probably the index is able to break above the resistance line from Nov 2010. One can take positions now for range trading only, taking advantage of the small spread that might occur if the index is able to move up to the support-turned-resistance line at 3910.
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