The STI Index has transformed the double bottom formed by the troughs in October 2008 and March 2009 into a cup and handle pattern as shown by the weekly chart. A breakout above this pattern in mid July 2009 marked the beginning of a journey from the lower blue channel boundary via the green flag channel towards the upper blue channel boundary.
Having cleared the blue, red and green dotted resistance lines during this upward climb the STI now faces it first hurdle for 2010, the upper boundary of the blue channel. Breakout above this immediate resistance will empower the next ascend to the 3000 milestone and mount an advance to the upper red channel boundary.
However, if the DJIA 120.46 points dip on new year eve extinguishes the raging flames of the bulls a retest of the red dotted resistance turned support line is inevitable. Support failure here will result in a tumble back to the blue dotted internal channel line and the lower green channel support boundary.
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