HKD situation is improving...or has it?

 I did an article After thought of HKD and China indices last week to follow up on my article The complexity of Hong Kong Dollars (HKD) - personal thought. The HKD chart was only an observation that the market continued to test the HKD7.850 /USD1 limit. As it is a pegged currency, I do not expect it to break while on the technical side it should go further.

It was during the same weekend that a Hong Kong commentary on youtube.com that situation on HKD has improved. I have decided to take a look. Based on on the daily chart (Fig 2), the relax of HKD choke hold started on 10th August 2022, three days after my article.

For the convenience of writing this article, I will describe the chart at it is, So a descension means HKD getting stronger, while ascension means HKD going down. A red bar on the chart means HKD strengthening while green bar weakening.

Fig1. HKD Weekly Chart

Based on the weekly chart on Fig 1, it was a quick descension, however, it was also a quick recovery, with HKD losing 2/3 of its gain, leaving a long tail. To me there is a reluctance for HKD to go up as it stayed above the 21-week moving average at the end of the week.

The only support of continuation is that the bar remained red by the end of the week, supporting down trend continuation (HKD going stronger).

To be honest, I do not like to use the weekly chart in the middle of the week. The last bar that is green in color is the bar of this week, it is still incomplete. It is actually misleading as I tend to include the unfinished bar for my read.

Little can be observed with the weekly chart, it will be good to look at it in more detail.

Fig 2. HKD Daily Chart

More can be seen with the daily chart, with a strong descend for 3 days breaking 89-day moving average. However, it ended the week with a dragonfly hogging the moving average. It went into a congestion this week while climbing back up slowly. 

This to me is a minor counter trend after partial completion of a main trend, there is a high possibility of continuation downward. The next level of support (based on flag formation) would be between 7.8202 to 7.8299.

However, it is still too early to say at this moment since the 21-day moving average might be reluctant to cross the 55-day moving average. There is some indecisiveness here.

Fig 3. HKD Hourly Chart

The hourly chart seems more alive the bars have body! 

At the same time, I am seeing 3-wave formation since its descent on 10th August. The reversal started on 12th August 2022 seem to me is a counter trend to the descend started 10th August. It has not yet completed though.

Based on its projection measurement, I should see the resistance at between 7.8439 to 7.8473. Using its more recent move (today), its objective might be as far as between 7.8431 to 7.8448. This would also coincide with the retracement resistance of 7.8450.