The Philippine Stock Exchange Composite Index (PSEi), which is composed of thirty listed companies, bounced at the at the 3,881.34 level last Monday after a 5% drop a week ago due to China’s inflation concerns. In the process, it could have formed a falling wedge pattern inside the 2-year ascending channel. A falling wedge, as some of you might know, is in fact a bullish pattern as it represents a temporary retracement. This pattern will be validated once the breakout occurs. If the resistance gets cleared out, we could get the size of the falling wedge’s base and add it to the possible breakout point. In that case, there could be a minimum upside target for the PSEi that would reach the 4,413.42 all-time high. However, before it reaches that level, it first needs to surpass the 4,246.27 resistance. On the flip side, if the falling wedge fails to perform and the index drops, the ascending channel’s support could be a good stronghold. The PSEi however is currently moving below the 50 and 100-period moving average which hints weakness. But if you personally ask me, I’m still bullish on this as long as the 2-year ascending channel remains intact.
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