Trade Idea: MSCI Singapore Free Index

The Singapore stock markets saw a bounce in recent sessions and it may be attractive to look for entry levels on fresh short positions, given that the city-state markets are still in moribund conditions.

SGX logo
Source: Bloomberg

The Singapore Blue Chip Cash, which is similar to the MSCI Singapore Free Index and is strongly correlated with the Straits Times Index (STI) is currently trading at the 23.6% retracement level of 375.78.

I feel a move higher to the 38.2% retracement at 379.96 and into the 200-day moving average at 380.19 will present attractive levels for a modest short position. The move will coincide with the 14-day RSI indicator heading into the 50 mark, which has been untested in recent sessions.

To protect against a stronger up-move, stops could be placed at 390, just above the 61.8% retracement of the 15-April to 9-June sell off. Target profit areas at 360 -365 may provide a good risk-reward trade.

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