Since Oct 07(3942) STI had lost over 62%, mimicking the trend witnessed in all the leading global stock markets. In the last week the Index has taken a good support near the long term trend line drawn by joining the respective lows of 1998 and 2003. (see the following monthly chart).
The "dotted" line indicates 98 & 2003 lows on "close i.e. line" chart; whereas the "solid" line indicates 98 & 2003 absolute lows on "Candlestick" charts.
Second, on the weekly chart, the entire fall was within perfect parallel falling channel with recent low of 1473 taken a good support exactly on the lower end of the channel, and also given the biggest rally of over 28% since May 2008(3269). After considering these observations on weekly/monthly charts, the possibility of significant bottom formation, here at recent low of 1475, is bright.
In the extreme short term, the ongoing rally is likely to be terminated anywhere between 1.9k-2k area with possibility of retesting 1680-1620 before confirming the "absolute" reversal in the trend, at least till the year end i.e. Dec 2008.
