Hang Seng plunge causing a stir from critiques

Hang Seng took a tumble on Monday this week dropping below 15,000. Critics of the Hong Kong government was quick to criticize the result of its incompetence. 

However, while Hang Seng opened much lower in the beginning for the week, it made a remarkable recovery. Even when it did not manage to supersede the high of the previous week, its gain within the week was spectacular. Something that has not been observed for quite a while for Hang Seng.

There is little news on Hong Kong, with exception on the trial of Jimmy Lai. While the Hong Kong government on appearance insist on pushing forth its Basic Law Article 23, it is lacking in will power to implement, thereby continued to delay the prosecution of Jimmy Lai. 

The Hong Kong government knows very well that it is in a chicken tendon situation: it is pitiful to discard while tasteless to eat. There is no gain going either way, especially when Xi Jin Ping has now abandoned Hong Kong. Moving ahead will result in escalating exodus of funds while retreating may demonstrate its lack of competence in the eyes of CCP.

As a result. the economy is being left alone.

This reminds me of the 4 little dragons of Asia during the 90s: Singapore, Hong Kong Taiwan and South Korea. Of the 4, Singapore and South Korea's economy with strong governmental intervention, Hong Kong with advantage through its relationship with China, enabling it to be the bridge between China and the world.

Taiwan was the only country where the government was weak, and businesses really need to depend on themselves to survive.

Fast forward to this day. South Korean government has weakened with businesses need to be independent, Singapore while retaining its tight governmental control, it no longer able to dictate the direction of its economy. Hong Kong has for years become addicted to its dependency to China and is experiencing its withdrawal syndrome from its addiction.

Taiwan is the only country which remain with a weak government. In exchange, an economy with companies having strong competence in their field. 

It seems to me that in order to create a strong economy for the country, the one necessity is a weak government that can only manage minimum function. This seems to coincide with the concept of the Republicans of USA.

Just back to the subject, what is happening to Heng Seng so far?

Fig 1. Hang Seng weekly chart

At first glance, it is quite clear that Hang Seng is moving within a channel. It has bounced back from its minor 100% projection and its violation of the Bollinger envelop. At the same time, there is yet divergence indication of from the chart.

What does this mean to me? 

It is possible for Hang Seng to move upward, but not yet a reversal. There is a higher chance that Hang Seng is in process of a correction and retest its 55-week moving average presently at 18,289. Should this level be breached, we may see resistance at its 144-week moving average of 21,219 and even its 100% projection target of 22,860.

What if it continues on its down trend? 

Then I will see support at 12,514. This coincides a major 61.8% projection and 127% extension support.

The British government of Hong Kong was barely involved with its economy before by 1997. This allowed organic growth for Hong Kong, creating a vibrant economy with strong and unique culture.

Most probably an incompetence Hong Kong government is a blessing in disguise for Hong Kong. The city will be allowed to be left alone to recover. But its culture has already been damaged badly and it will take a long time to recover.

Procastination

I meant to include this entry last week, I was disrupted by my travel to Kuala Lumpur to visit my mum and brother. 

Having said that, I did bring my laptop on my trip, together with my portable monitor. The set up enable trading function as long as there is network connection. Plus, I have managed to work on the charts during the weekend. So what stopped me from proceeding?

Nope, it is not that I am lazy, because I was motivated to work on my other interests. The only thing that I dragged was the struggle I needed to go though in completing the essay, including entering the data values such as resistance and support levels. 

In adidtion, my interest in trade are Hang Seng and Nikkei, while Dow Jones provides a rough gauge of the market health. My interest for GBP and EUR is much lower on the ladder, my motivation on studying these 2 counters and their relationship is low unless some impact on international market.

My last entry on these 2 countes is Divergence  between GBP and EUR dated 3rdc September 2023. I was with the impression then that EUR with confirmation on a continuation downtrend while there is yet indication on GBP. It is possible at the time that GBP and EUR will diverge from each other.

The one chart that I did not include in my earlier study was EURGBP which reveal their relationship.

Fig 1. EURUSD weekly chart

As per my prediction in my earlier entry, EUR broke down crossing the previous low of 12th March 2023 before bouncing back up. However, EURUSD failed to cross its previous peak of 16th July 2023, stopped by its Bollinger band.

As of this week, it has fallen back to below its 144-week moving average.

I believe that the direction is general direction is still down because EUR behaves like it is in C wave of the counter wave. 

Using Projection, it will find support at 1.0643, 1.0324 and 1.0096. I believe higher chance of EUR reaching between USD1.0096 to USD1.0324.

There is a chance that EUR will fall further due to its major set up, 1.0448 is crucial level to watch for. Should this level be violated, it is possible for us to see a target of 0.951676 to0.845533.

If EUR manages to hold of its descend, we may see a climb of up to between 1.1572 to 1.22378.

Fig 2. GBPUSD weekly chart

GBP did not deviate from EUR since my last prediction, it however, did not descend as much as EUR and did not cross the previous low of 1.1803 before rebounding upward. while it congests after its climb, it stays above the 144-week moving average.

Furthermore, there is not yet strong indication of a reversal.

I feel that there is a higher chance that GBP is going to get stronger.

It is possible for GBP to reach higher between 1.381765 to 1.492465.

There is however a chance for GBP to reverse downward. 1.2037 is the level to watch out for as this will become its previous low, this also coincides with its 61.8% projection support at 1.211155. Should this level be breached, we may see 1.168601.

It seems for the time being, both counters are at their junctions with some uncertainty of their directions.

so are they deviating from each other?

Fig 3. EURGBP weekly chart

EURGBP seem to be on a down trend while within a congestion. Furthermore, its recent move pushed the pair to below the moving averages, we may see further weakening of EUR against GBP. 

That present, the pair hovers above 0.8470 the 61.8% projection with support at 0.8470 and 0.85462. Breaking this, the next level of support will be 0.82721.

What may be the reason for such deviation?

After leaving the EU, there was a sense of euphoria in UK, with many dreamt of a bright future. However, after being part of EU for so long, it gained much influence from European culture, including those negative aspects. UK turned left, focusing on woke culture and becoming weaker. 

In the process it is losing its own culture and heritage, embracing the culture of Europe.

It was a right move to leave the EU. At the same time, there is internal conflict as certain fraction are in fear of independence and the lack of external support. they have forgotten that UK was once a strong nation with glorious achievements. 

The internal differences need to be flushed out before it can recover. I feel that UK has begun to realize that they have no other to depend on and they have to get back on their feet.

EU on the other hand, has maintained the same status as before, not learning from the Brexit even. In fact, many members of the EU lack strong economical drive pulling the whole EU down. The issue here is: EU is oblivious to the issues it is facing and lacks political will to reform. It is bulky and lacks the momentum to face changes in the world. In addition, there is a lack of unity between members as each has their own vested interest. 

EU needs to unify in their goal, or the alternative is continuing deterioration.

My cost of petrol went up, but not because of oil.....

The last time I did an update on crude oil and SGD was Did SGD get weaker? dated 1st November 2023, that was about 2 months ago. 

I estimated at the time that SGD will continue to strengthen against USD with support level of 1.30320 to 3.1723 for SGD=X chart. 

As for crude oil, it has broken its 144-weekly moving average support of 77.78, withy next support level between 53.71 to 63.64, its previous low.

The petrol price has been stabled at SGD2.810 for the last few weeks. The price, however, went up to SGD2.830 when I went for the pump this week.  

This made me think, " has the oil price gone up so drastically last week?"

Why am I sensitive about the oil price?

I noted a potential reversal signal on oil price about 3 weeks ago. However, I was hesitated in logging in my observation considering more information needed. 

Earlier this week is the crossing to a new year with Esso announce shutting of its operation for system adjustment due to its 1% GST increase. 

Esso is not alone in this; many entities reportedly increased their prices siting the 1% GST adjustment. 

Toast Box for instance came up with an essay to explain why they have to increase the price of their kaya toast and local kopi. ignoring the fact that they are already charging premium for something that cost less than SGD2.00.

However, it is not difficult to see that GST is an excuse many use to increase their profit margin.

So is the increase in petrol price the result of crude oil reversal, USD strengthening against SGD or the 1% GST hike?

Fig 1. SGD weekly chart

Since my last entry, SGD hit a low of 1.3144 last week before recovering with a long bar this week. Its recovery is only stopped by its 8-week moving average. However, I suspect it may be in a correction with its 55-week moving average resistance of 1.3497. 

At the same time, I still feel the general direction is still down with USD continues to get weaker. It is presently within the support zone between 1.2998 to 1.3568. It may retreat to its 61.8% projection level before continuing downwards to 1.2998. Next level of support will be 1.2592 if SGD breaks out of this zone.

Its recent correction between January to October 2023 also created a Zig Zag pattern allowing me with another projection estimation with support between 1.2306 to 1,.28626.

I suspect the best position of reversal of SGD at this moment is between 1.2592 to 1.2826, which is the crossing of both projection measurements.

Fig 2. Light Crude Oil weekly chart

There is not many changes with Crude Oil readings. While the bar on 10th December 2023 demonstrated a potential reversal showing a hammer. However, the hammer seems week and the behavior that follows seems weak and struggles to break through its 8-week moving average resistance. 

There is a potential to move higher though., with next level of resistance of 79.35 from 55-week moving average. This considering the crossing of MACD at this point. 

Should its 55-week moving average resistance broken, its previous peak of 95.03 is crucial.

The direction for the moment is still down based on the present set up. Crude oil is still moving within a channel (in green shade). The support levels for this direction are between 28.17 to 53.71.

I believe the price of petrol should be heading higher, but the present increase is not due to crude oil, and it is the power of GST hike.