Nikkei & JPY divergence

I was pretty aimless this week, a little unsure what I should discuss for this week's entry. 

While going through the forex pairs, I noted something interesting on JPY.

As I mentioned in Nikkei run away surge on 20th May 2023, Nikkei was surging upward. Further to that I also mentioned in EUR GBP comparison on 6th May 2023, both GBP and EUR were strengthening against USD. I also noted in Occult always lead to eventual collapse on 17th June 2023 that it was USD weakening against major currencies.

With Nikkei continue its uptrend, I would expect JPY to be stronger against USD.

Fig 1. Nikkei weekly chart

Since my last update, Nikkei made further progress and has in fact reached its 100% expansion level, coincidentally the double bottom objective. It is also at 61.8% projection of a its major trend, while 161.8% projection of a minor trend.

This week, I saw Nikkei retreated from its resistances. However, a single bar of reversal requires more development to determine its next destination. However, I suspect a potential congestion and possibly a retreat to its moving averages before heading higher.

the interesting part however, is the JPY.

Fig 2. USDJPY weekly chart

While Nikkei was on the rise, JPY continued to weaken against the USD. What does this mean?

It is really a question that I ponder because I am quite unsure. To me it is likely a sign of fund exiting the market cashing out utilizing the gain from Japanese stocks.

While Nikkei is seemingly reaching its objectives, the decline of JPY against USD has not.

It is only close to reaching its 61.8% of its expansion at 144.841 from its double bottom formation. It has also crossed its 127% projection at 143.176. 

If this trend continue, I will see resistances between145.4207 to 149.7654.

Is this normal?

To be more certain, it is good to conduct a comparison between JPY and Nikkei.

Fig 3. Nikkei - JPY comparison

Based on the chart in Fig 3, I noted relatively normal behavior of JPY - Nikkei relationship, until early 2022. while Nikkei seemingly still in congestion band, JPY strengthened against USD, which could be indication that fund being pumped into the market. 

However, when Nikkei began to surge by 2023, JPY started to decline against USD. This as I see is possibility of funds leaving the market as demand of JPY is on the reduction.

I suspect the Japan market is in process of distribution. 

However, I must make it clear here, this is only my speculation based on what I see from the chart. 

Occult always lead to eventual collapse

In my earlier entry on 20th May 2023, I noted spontaneous surge in viewership. There were 2 spikes one with 143 views followed by 68 views. I did not know at that time what the people were looking for.

After my last week's entry, I finally knew.  

There was a whopping 430 views after my address on the present US resistance against the woke culture. 

While I may feel good about having viewership of such size, it will not last and once the heat dies off, it will be gone. I should just stay on course with focus on technical analysis, after all, my JC teacher ever told me not to discuss on politics as I tends to be subjective.

It has been quite a while since I update the Malaysia situation. I have meant to include an entry in March 2023, the article was a little tough to complete at the time for some reason, coupled with the death of my father, led me to put aside that entry, 

I have decided to put it on freezer since it was outdated when I came back to blogging.

I came across MYR today while running through the forex charts, it compels me to have this entry one way or another. Just for comparison, I have included the charts I did earlier for time lapse comparison.

I went through GBP, EUR and SGD and noted continuation with USD weakens against all these components, with exception of MYR. 

Fig 1. MYR weekly chart (earlier work in March 2023)

I have noted MYR weakness against USD in March 2023, with the chart broke through and stayed above the moving averages. It has a high potential of further weakness against USD.

Fig 2. MYR weekly chart (latest update)

After its correction to the moving average, the pair continues to trust upward, with MYR continue to devalue against USD.

what does this mean? 

My aunt was a little sour when we met while I was in Malaysia this round, claiming that my family is having a better life in Singapore. I did not understand what she meant at the time.

If USD is in process of devaluation, weaker MYR against USD only means that MYR is performing even worse. 

Smaller MYR leads to escalating inflation with prices souring upward. No wonder my every return met with higher expenditure on food. The only solution will be focus on home cook as grocery is the only thing where government with some power to price control, like chicken and oil.

Looking at the chart, it has already broken the 61.8% retracement and testing the 78.6% retracement of 4.6341, congesting below this level, forming a flag with potential to go higher.

It is also reaching the 61.,8% projection of 4.6884 with further objective of 4.9760. MYR5 for 1 USD is becoming true as we speak.

Fig 3. SGDMYR weekly chart (earlier work in March 2023)

Looking at my work in March 2023, SGDMYR has just broken the neckline of a double bottom and poise to go higher with a weaker MYR against SGD.

Fig 4. SGDMYR weekly chart (latest update)

With the latest up-date, the direction has not changed with continuation upward. It has surpassed the 61.8% projection resistance at 3.4313 with further objective of 100% projection at 3.568.

It has however reached its short term 100% projection of 3.4400 with the next resistance of 3.4787.  

I suspect there may be a correction coming before heading higher.

Fig 5. KLSE (KLCI) weekly chart (earlier work in March 2023)

In my March 2023 read, there were already multiple indications further downtrend. Worst was the completed head and shoulder formation with retest of the neckline completed. It was already firm at the time that KLSE (or KLCI) was going down.

Fig 6. KLSE (KLCI) weekly chart (latest update)

In the latest chart, it is clear that KLSE has just past the 61.8% retracement lineof the uptrend during the pandemic. It pauses this week to retest this resistance line at 1,391. I suspect it may go further to the moving averages before heading further south with head and shoulder objective of 1,255. 

It is also very close to reaching its 61.8% projection line of 1,359 with 100% projection at 1,270. 

It is really a concerning that Malaysia, a country with so much natural resources, continue have its economy being flush down the drain. I am really sad to see my country reaching such stage of deterioration.

Mean while, what is the government doing with Anwar Ibrahim as its leader? 

Nothing?

well, not really. 

There was a recent movie release about Anwar Ibrahim and his drive for "refomasi". Such "heroic" act, escalating his status equal that of Mandala. 

But no, he is not Mandala. Far from it, there is no effective measures issued from the government to improve the economy. Moreover, they focus their energy on confrontational act against critics and opposition to have them silenced.

I am no fan of Mahathir, I despise him as the reason for the present state of Malaysia. However, it is not the role of Anwar Ibrahim, the prime minister of the country, to personally tackle the corruption of Mahathir and his family. Yet it seems to be Anwar's personal vendetta to put Mahathir and his family in jail.

All these while he places the corrupts of UMNO in position of power, there is no more mention of pursue of accountability on these people. Zahid is very safe.

At this point of time, don't a moment think that people who voted him in push for accountability of his incompetence, nepotism and collusion. They believe in his lies of maintaining stability in the country and willing to close a blind eye on the existence of tumor within the governing body.

Malaysia is still sick and it is getting more and more serious every single day. It is run by incompetence who are unfortunately only great on their wits. I only see a continuation in the deterioration of the country.

Is it a pride issue or a market issue in general?

 I meant to include this entry last week, but I did not, because I procrastinated. There is a sense of tiredness in me to stop me from typing out what's in my mind. 

I have up-dated Hang Seng and Nikkei independently while held off the up-date on Dow as Dow was still in its congestion mode.

Throughout the week, I have decided to move away from trading. I needed a long break. So my family and I went to Kuala Lumpur to visit my mum and finalize my father's funeral process.

Throughout the week, I pondered about what I wanted to do for the blog. I have decided to proceed with the update on the few hot counters featured in boycott.

Fig 1. Tatget Corp weekly chart

Target was another highlighted company for the "conservative boycott" target after Anheuser-Busch. It was flagged out for "grooming children" due to its pride promotion which seemingly targeting children inclusively. 

It was also found that the company was heavily in organization with initiation to encourage and train schools to hide children transition from parents, not only fund but one of the VPs is the treasurer of the organization.

Little was said about its sales as it was not registered on weekly basis. However, the findings certainly shake the market as the counter plunged from its congestion band leading to a continuation downward.

An interesting point to note is the steep descend prior to its congestion. This seems to indicate that Target itself is not doing well.

I look at the chart set up and at present it does not look good for the counter as the directions in general are downward and may lead to Target head of sub USD100 in the long run, with support at around USD80.  

Meanwhile, Target has reached its short term 100% projection. My feel here is that it will be in continuation as it continues to penetrate its lower Bollinger envelop.

A side note here: while there are many liberals in the country, US of A maintain as a predominantly Christan conservative majority. Knowing a company that seriously violate the core value of this group, people may really not want to support the business. I think that it is really not a boycott but people are in general disgusted with their action and not want anything to do with them.

Fig 2. Anheuser-Busch weekly chart    

In my last update on this counter The distructive power of Narcissism I noted the possibility of an initiation of reversal instead of continuation.  

The sales of Anheuser-Busch was heavily affected by the Bud Light saga leading to a 60% drop on Memorial day. Its product has lost the prominent shelves, and it was toppled from the top position.

I ended up the need to redo the technical set up as a result.

while the long run set up is still up at this moment, the short term objectives remain downward, with steeper gradient. 

The interesting part is that the bar turned green this week but with a short body. This is likely due to the moving average crossing, a phenomenon that I observed a few times. 

I anticipate a congestion or a mild retracement towards the moving averages before its continuation downward with objective between USD30-35. The important support level however, is the previous low of USD44.50.

Similar to Target, I do not see this as a boycott but an genuine rejection of the brand by its consumers, which is a more serious issue. While boycott may be a temporary issue, brand rejection is more permanent and difficult to reverse back.

With these 2 counters seriously affected by the direction that they have taken, it makes me ponder if it is possible that US market in about to reverse downward in general. afterall, Dow Jones has been seen congesting downward the past months.

Fig 3. Molson Coor Beverage weekly chart

Miller Lite is the direct competitor of Bud light and its is under the ownership of Molson Coor.

During the Bud Light saga, Miller lite was also caught with an advertisement which highlight degradation of woman by beer companies. The stock seemed momentarily affected by market concern if it would goes the same way as Bud Light and Anheuser-Busch. 

However, it seems not really the case as sales was only mildly affected. The counter also saw a strong support from its 8-week moving average, propelling it to new height and presently testing the previous high of 66.67.

The few measurements I have are pointing upward with objective of around USD75.

Other than Molson Coor, I am also seeing similar uptrend with Walmart whose departmental store are also promoting pride month but not as prominent as target. 

As such what is the direction of US market in general? 

Fig 4. Dow Jones weekly chart

I hesitated with talking about Dow the last few weeks because it was in congestion, and I was waiting for its break out. It did last week and managed to remain above the moving averages. 

It is still not out of the wood yet. I has not broken through its previous high of 34,941 and its bollinger envelop remain relatively flat. 

I sense it may meet resistance when reaching the Bollinger envelop.

However, with higher lows consistently, the upward potential high for the time being.

The resistance I see will be the Bollinger envelop of 34,651. Projection resistance of between 34,382 to 35,545 while another set of projection resistance at between 35,254 to 37,731.