The thing with MYR

The Malaysian Ringgit was in my radar recently after it shot up touching its trendline resistance. It however did not break the trendline, and it congested. But its recent development interests me. I ponder upon this question on what's the reason for its climb? Politically Malaysia is in a mess, the 1Malaysia is a total flop and the people is more divided than ever.

So what attracts people, especially Singaporeans to invest in Malaysia? Since there are people dumping SGD for MR.


Fig 1 MR Weekly Chart
The MR has been trading in a tight zone every week, however, week on week it is coming down, so it may seem. If I am reading this right, MR is making a penant and this is in fact a bullish sign! The sign will need 5-7 weeks ( since we are using a weekly chart ) to complete, it is almost done by now.

The measurement for a penant proppels MR to SGD44.43 per MYR100.

What's more, the 21-week moving average has done a golden cross with 89-week moving average which gives more positive signs to MR against SGD.

The only weakness is that both indicators has turned from the top and are coming down. But this is also a standard signature for a penant or flag pattern.

Presently, the penant stopped at 42.776, coincidentally, this is the exact location (well, not really exact, its 42,770) of the previous high in April 2009. Meaning that the point is supported. MR is likely to reverse next week.

An additional point on this chart. If I consider 42,770 to be the neckline to a double bottom, its minimum objective would push MR to 44,916! The penant that I have seen would then be the pull back to its neckline before further climb.

Okay, amidst such euphoria on MR,I also need to look at alternate reading. Prior to the down turn, MR was also in a rectangle formation between Mar 2005 till May 2008. The objective of this pattern is 39,835, which MR has not yet fulfill. But the recent moves has already cause MR to break its envelop from below, rendering the rectangle a failure. The possibility for its fulfillment is much lesser. Unless of course the neckline is broken, signifying a down trend continuation.