In my opinion, STI has formed an interim bottom due to two factors. The first factor is that the current downtrend is getting too steep. If we assume that STI sheds an average of 100 points for every trading session, it will reach a value of 0 which is impossible in just around 16 days. This is completely irrational thus this downtrend cannot be sustained for long.
The second factor is that there was a strong closing on the 28th of October. STI opened on a huge gap down at 1496.12 and subsequently went on to gain a whopping 12.9% of 192.77 points from a low of 1473.77 to close at it's high at 1666.49. This strong showing was coupled with a heavy volume.
Whether this interim bottom is the final bottom is up to anyone's guess. However, there is a high probability of it being the final bottom since STI has tanked as much as the previous Asian Financial Crisis. Using the low of 1473.77, STI has fallen 61.9% from a peak of 3875.77 and that is close to the percentage amount that STI suffered during the Asian Financial Crisis.
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