A plunge in Nikkei 225 this week

I have decided to include this entry this week. In my last up-date on Nikkei 225 in After a week's break...... I was still positive on this counter while it was barely supported by the moving averages. It however, surprised the world with a plunged of over 900 points on Tuesday, 20thDecember 2022.

To be frank, I was happily trading this counter in the morning and moved away by 9:00AM. That was part of my strategy. It really took me by surprise when I checked on the market status by 3:00PM. but I do not regret not capturing this plunge, becaussse it is not part of my strategy.

It is due to a surprise move by Bank of Japan to consider relaxing the the tight limit set on their bond yield, leading to possibility of increase in interest rate in future. The move caught the market off guard and thus resulting in the Tuesday's plunge.

Fig 1. Nikkei 225 weekly chart

By the end of the week, Nikkei actually broke as stayed below the 144-week moving average. I estimate that the counter may try to reverse up in the coming week, but may be kept below the belt by the end of the coming week. If this is so, we will see continuation down trend.

Another observation is that Nikkei seems to be in a triangle formation. It has not been broken yet, therefore I will not use this as a gauge for measurement. 

There are 2 formations that enable me to use projection to estimate its support levels. The  first makes use of the top of the major trend and counter trend. However, the down trend here with a gradual slope and to it is not a very good indication for trend reversal confirmation. Giving me a sense that the whole thing might be a counter trend itself.

The support level using projection is between 23,108 to 25,443. 

Base on the more recent fluctuation on the other hand, I can see the more immediate support levels. It surpassed 26,276 and the next level is between 23,921 to 24,901.

If it reverses however,  it will be possible for Nikkei to surpass the previous major high.

What about its currency JPY? After all, interest rate affects currencies much more than others.

Fig 2. JPY weekly chart

Contrary to Nikkei, JPY actually strengthen against USD, meaning that the demand for JPY increased. I have spoken to my brother briefly, he is an accountant. He said it is logical, the demand for JPY and the drop in Nikkei is redirection of JPY for government bond.

What happened here is the drop of JPY (on the chart) is supported by its 55-week moving average, and the moving averages support remain intact.  It is possible a reversal might happen next week, IF  the bar next week tests but ends above the moving average.

For the time being, I will maintain the indication given by the counter. Using projection (again), I estimate the support be between 129.67 to 132.65.

How is the market judgement on PRU15 of Malaysia

 I have meant to have this entry earlier, However, I found it with a little bit of difficulty in compartmentalize the article. Primarily, I have to interpret the chart and match it with the political development of the country.

Nevertheless, my previous entry With no clear majority..., I have noted the potential move of MYR towards its 55-week moving average, while KLSE is hitting its resistance at 55-week moving average. This was after the result of election indicating no one party or coalition with a clear simple majority. 

A month has passed since then, how is Malaysia doing now that we have a new government to lead the country?

Here is the issue, we are not yet at the end of the week therefore this week's bar is incomplete. Therefore, there is still some uncertainty in the predictions.

Let's start with KLSE.

Fig 1. KLSE weekly chart

KLSE actually tested the 55-week moving average and then retreated. It did not reverse, instead in a seemingly congesting, stuck between 2 moving averages. It is still uncertain if KLSE will stay above the 8 and 21-week moving averages.

If it breaks, there is a high chance that KLSE is going to head south.

Using a projection measurement, this will lead to a support level of between 1,349 to 1,408.

If on it manage to hold and head northward, the resistance level to note will be 1,505 to 1,535. It coincides with the 144-week moving average. However, this measure is with the assumption that we are at the lowest bar this week, which is yet to complete.

What about the Malaysia currency, MYR?

Fig 2. MYR weekly chart

MYR actually managed to break the 55-week moving average but moved back up-ward in subsequent weeks. However, like KLSE, there is no momentum in MYR, giving me a feeling of a flag formation. It presently managed to stay above the 55-week moving average.

However, I my re-iterate that the week is ot yet complete and it is possible that MYR will sink below the moving average by end of tomorrow.

Nevertheless, I have to establish some assumption. Including that MYR may retrace back to its 38.2% level at 4.4496, coincidentally is the 21-week moving average presently.

Only after this retracement that MYR may, and I must emphasize "may" head downward to between 4.1186 to 4.2664.

On a side note, it seems that the market is still not verry confident with the new government, the first parliament meet really did very little to address the economic situation of Malaysia. Instead, the members including the prime minister having useless arguments. The prime minister even warred the side to behave themselves. 

I thought to myself," should this not be the job of the speaker of the house?" This should not be a concern of the prime minister, He is there to answer question, it is the speaker of the parliament to decide the validity of the question ask and the conduct of the members.

Up-till now, the parliament meet looks more like a monkey show and Anwar Ibrahim has an urge to demonstrate his control. I really do not find much confidence in this government, especially when they now have the ability to change the constitution. 

Tesla.....

I was supposed to include an entry yesterday, but I was lazy. My wife's family just have a gathering the day before, I contributed a single dish that took quite some effort to prepare, plus, I was the designated driver for all the errant. In addition, I spent my time yesterday preparing a dish that involves lots of ingredients, taking out my whole afternoon.

 On the hind side, I do not really know what I want to check on, currencies? indices? I have done that the last 2 weeks.

I have decided to stop for the weekend and work on it today. But the question still remains: What shall I look into?

Ever since Elon Musk took over Twitter, the internet has daily news following on what this man is doing. Many leftists consider him as a threat while the rights praise him as the savior of free speech. I thought to myself, why not I check on the company that is his main base of conquest, Tesla. 

Surely, it should be quite robust considering that his is the only company with success in electric car and venture into space exploration, not to mention the purchase of Twitter.

Moreover, more news emerges with him acquiring more companies like GM. 

My only problem is that acquisitions normally happen before the market plunge and recession begins, and the companies that buy off other companies normally get hit very hard since their purchases are over-priced.

Let's look at Tesla then.

Fig 1. Tesla weekly chart

I am not sure about others, on first look, I can't help but to notice the head and shoulder formation on this counter. The counter has already broken through the neckline with moving averages rushing to conform with its trend decision with golden crosses. 

It has already fallen from its top of 414 to the present low of 150, which is a mere 36% of its peak. I will have to say that Tesla is not really doing that well. Elon Musk really need to stop venturing out and focus on sustaining his core business.

There are 2 formations that I can use to for measurement. Expansion for the head and shoulder measurement and the other, projection from the most recent zig zag formation.

To be frank, I am in quite a bit of disbelief when I derive the expansion number, its 100% expansion which coincidentally is the objective of the head in shoulder, actually produces a -0.78 result. No, it is not a decimal multiplying a certain number, but -0.78 is its objective. 

Is this an indication that Tesla going bust?

Meanwhile, projection of its recent development leads to support level between 137 to 205, of which the later has been breached. I suspect that it may reverse on reaching 137 to retest the neckline.

On a side note, with all the counters I have checked on so far on a negative gradient, US tech market is really not doing very well. It is alarming as we should be anticipating recession or worse depression in US.

After a week's break.....

 My entry last week mentioned that I did not have anything to up-date, mainly because most of the charts I was in progress of my prediction in my past entries.

I have made an attempt to write about FTX and crypto currencies. However, I put it on hold after I have begun, basically I have little interest in this group of "commodities", they are not real to me, and base on my read on Bitcoin (the representation of crypto to me), it is heading towards negative. I am not sure how the whole market will react when this happen. 

since then, I just focused on my daily trade, which is based on 3-minute chart working with hourly chart. 

Plus, I have to introduce some outings for my son as he has not much plan on what he wanted to do. We made a trip to Johore Bahru on Tuesday for father-son bonding.

By the end of the week, some interesting development happened, at least the way I see it.

Fig 1. Dow Jones weekly Chart

Dow Jones turned at its 38.2% retracement line with a strong burst up-ward.  

It seems to have turned again after breaking through the moving averages, with a seemingly hang man and along bar with color change. 

However, based on the behavior of its previous trend, I believe that it is a correction, with support of its 21-week moving average and its journey might end with support from 55-week moving average. It will then proceed to continue its main trend up-ward. 

As the move is yet to complete, 

Fig 2. Nikkei225 weekly chart

Nikkei has been trying a few times to break its 144-week moving average and failed. It continued to have higher lows on every attempt.  After its last reversal on 2nd October 2022, its ascension was decent and only to congest after it broke through all the moving averages that I have placed.

Its latest descent after breaking through the congestion band, it is supported by multiple moving averages and to me it is poise t move up-ward. 

Using projection measurement, I will see resistance between 29,195 to 30,296 with Nikkei.

Fig 3. Hang Seng weekly chart

Hang Seng has is shooting up after reaching its 100% projection objective. It has a mild retreat after resistance from 21-week moving average but continued its trend up-ward. It has presently crossed its 61.8% retracement line with no sign of reversal.

Using projection, it is seen with close to reaching its 100% objective of 20,650, coincidentally its 55-week moving average as well as where the neckline is located.

Nothing to up-date

 I was checking through the charts the last few days, thinking that there might be something interesting that I can mention.

Turn out there is nothing much at this moment. So there is no entry this weekend......