During the uptrend, RSI is unlikly to move much below neutral levels, but is likely to rebound off the 50-point level.
The Straits Times Index (STI) retreated by 50 points week-on-week to end the week of July 15-19 at 3,447. This level represents a minor support and the index may well be able to stop its decline soon. An earlier breakout indicated a target of 3,613 and this remains valid.
The target is achievable despite a negative divergence materialising between short-term RSI and the STI. Usually, during a strong uptrend, negative divergences by short-term RSI is likely to cause temporary corrections and consolidations.
