STI Heading for a Correction Soon?

Recently the market is on a rally and most of the counters are now overbought. I believe a correction will be coming soon. Maybe by as early as next Wednesday.

My analysis is based on Harmonic trading pattern AB=CD and classical support/resistance. Both happens to coincide with each other.

The bearish AB=CD pattern information can be found here. I suggest you read it. Very good information.

From the chart below, STI rallied from A to B, then retrace 38.6% from B to C, and could rally again from C to D for 261.8% (projection). By then, it should hit the gap which will act as resistance as well. The bearish AB=CD pattern would form.

A to B is about 9 days. So C to D must take at least 9 days also for the pattern to be valid. So by coming Wednesday, if the STI continues to rally, should be able to hit 2960. It should have a correction.

sti correction ab=cd 30 oct 2011
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