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Despite the political uncertainty that dominates much of the Thai news headlines, the SET has recovered strongly since its significant low in early January.
The rally from the March 2009 major low was impressive and eventually peaked after the completion of a 300% advance. The index had earlier hesitated after hitting lines representing gains of 100% and 200%, as requested in Gann-theory analysis. The initial fall from this high measured 16.66%. It then entered a period of choppy sideways trade, before extending this correction to one of 25% in January. January’s low looks more durable, however, and is now supported by a cluster of four independent Gann-percentage lines. This tightly aligned support band should hold firm. Alternatively, any breach of this band (defined as 1230-1237) can be considered as the trigger to unleash the next downward lurch.
It is not particularly obvious on the chart, but the 1374 level holds some significance. A break above this level should be used as the trigger to buy the index (note we are very close to this level following today’s rise), with the target then becoming 1607. Only isolated resistance at 1406 holds any concern, where a period of sideways consolidation may occur.
Recommendation: prepare to buy on a break above 1374. The target then becomes 1607. Stop-losses can be activated on a break below 1230.