Memory of a friend and, Engulf pattern on Dow Jones?

My return to Kuala Lumpur seems to be a monthly event by now. 

On one end, I have to fulfill my role as a son and brother. At the same time, I believe my age is catching up with me. I took a coach home the last round and drive back this time. The coach with seats compatible to that of first-class flight, while I can stop as much as I like when I drive. Yet neither of them is less tiring.

My trip back 6this round is unhappening, just going through the routine of bringing my mum to places and cook for her. 

When I left the house heading to the market one day, I saw a property development in the horizon, the location used to be the low cost residential blocks in the district.

I still remember the first time I went there. I was still six, on my way to school in a school bus. The school bus topped at the residential blocks. It was stench with the smell of rotting rubbish. Till this day, I cannot comprehend how people can tolerate such stench day after day.

After some time, a number of new blocks were added to the place, it was of height of 16 floors, which we used to derive its name.

I remember the school bus added a few passengers for its trip. There was this boy called Ah Keong, one year younger than me, well built, strong voice, chiseled face with short spiky hair.

While he was from a poor family, he was cheerful. At the time, watches were getting popular, many parents bought for their kids. Ah Keong for a while did not have one. One day, he showed us one that he wore one his wrist. he felt proud because he finally possessed one, even though it belonged to his father.

His happiness was short lived because it stopped moving after a short while, joy turned to worrisome because he was not sure what his father would say that night.

I left for Singapore after primary 5, and I have not heard from him until 2 years later.

On one of my returns from Singapore for my school holidays, I chatted with my brothers on updates during my absence. It was then that my brother told me that Ah Keong has passed away. The news came to me suddenly and I was not prepared for it. while I did not react in appearance, I felt as if a ton of bricks just hit me. 

 I asked my brother how he died, he told me that Ah Keong was sick with a high fever, and in a state unconsciousness, he sleepwalked, climbed the balcony of his home and fell to his death.

As I stared at the build site in the Horizon, memory of him resurfaced. He did not have the chance to enjoy the full extent of his life. It also makes me asked myself, " now that I have opportunity to live to close to the full extent of my life now, have I made full use of it?"

The answer is not, there were times when I seemingly wasted my time on very short-term views while lacking vision of my future. Thinking back, I DO regret wasting my time on fruitless pursue, and it is too late to go back. It is also a mistake that I do not intent for repeat, at least for my children. 

As a result of my own demise, I constantly monitor my children's progress, discuss with them about their next step in life, their future. I want to make sure that they are certain where they want to go.

Having said all these, I miss my friend. Probably I will still be able to meet him one day.

Anyway, back to charting. 

The US Fed announced this week that they are concern that inflation is still strong in the country and they intent to increase interest rate to curb the inflation. I believe it was Thursday that they made this announcement, because it led to a 600 points drop  for Dow Jones that day.

My update on Dow Jones was Dow Jones started its descent Dow Jones started its descend dated 14th April 2024. I believe that it was heading down at the time. Unfortunately, it was supported by the 21-week moving average, reversed and headed north after that. 

Will the news this round trigger its descent?

Fig 1. Dow Jones weekly chart

To start with, while Dow Jones reached a higher high, it results in further divergence, sending warnings of weakness in its climb. 

At the same time, it is stopped by its Bollinger band envelop, which also coincide with multiple resistances resulted from various projection measurements. There are at least 3 resistances in this region.

The issue now is, is Dow Jones reversing? 

On first look, it seems that Dow Jones also produced an engulfed reversal pattern. However, the shorter bar does not seem to be short enough. This creates the possibility of a congestion stage, especially when it stops short of penetrating its 8-week moving average. 

It is tricky to determine i it is to head down or up at this moment, the movement in the coming week will be crucial.

For the time being, I feel there is a higher chance of Dow heading downward, but it may not go far.

It is likely to be supported by its 55-week moving average presently at 36,603. Crossing this level, the next support level will be 34,503 to 35,553.

Should it continue, next level of resistance will be 41,291.

Crude oil is cooling down

In my last update on Crude Oil titled Cost of living is going to creep up again....., I felt that while Crude Oil is climbing, it is range bound within a congestion band. Furthermore, the trade volume was thinning indicating weakness in its upward movement.

The rising cost of petroleum is more due to strengthening of USD against SGD, I estimated that there will be resistance at 1.36376 for SGD.

Fig 1. Light Crude Oil weekly chart

It seems that Crude Oil has recently broken through its congestion envelop with continuation downward.

It is presently locked in both resistance from 55 and 89-week moving average while supported by its 21 and 144-week moving average. At this point, I will consider its 55-week moving average to be most important, if it manage to break upward in the coming week, 

Its down trend comes with an increased in volume with MACD crossing downward.

The potential of further continuation is high base on the present read. Even so, I consider its 55-week moving average to be most important, if it manage to break upward in the coming week, it may reverse.

In its more major trend, there is support between 28.79 to 54.12. Its more immediate support to between 60.41 to 71.06.

What about the other factor, SGD?

Fig 2. SGD weekly chart

SGD is trickier, it reached the resistance level I have estimated earlier, which is also the 61.8% projection. While its drop was quite significant, it was supported by its 144-week moving average. it broke through this support this week, supported by its 55-week moving average.

One thing that I have also noticed here is a 3-wave pattern (upward) prior to its continuation down trend on 2nd October 2023. Its second up trend since 25th December 2023 also seem to be in a 3-wave formation. In addition, the latest descend has already violated the high on12th February 2024.

There is a mild divergence on MACD with higher high on chart comes with a lower high on MACD itself.  In addition, MACD is crossing downward. 

Presently, SGD reversed from its high of 15th April 2024, coincidentally a 61.8% projection of a major move and 100% projection of its minor move.

Couple with the alignment of the moving averages, the potential of down trend is relatively high.

Where are the supports for SGD?

Its more immediate support level between 1.3059 to 1.3293. If this is broken, the next support level will be 1.2873.

What if it breaks upward? Then the resistance upward will be 1.3875.

JPY is....ENGULFed!!!

It is quite a hectic week this week. Not because of volatility in market movement, but there is a public holiday in the middle of the week, running errant for my wife the day after, and my daughter's graduation ceremony. 

She has completed her 3 years of study in Singapore Polytechnic, the same one I went after my GCE "A" Level failure. It was the turning point for me, climbing back up after a major failure. My daughter also shared my experience, it was her lowest point when she did badly in her GCE "O" Level. 

It is through Singapore Polytechnic and its diploma courses that helped us finding our path. I went forth to obtain a degree from the University of Bradford then while my daughter is now accepted by the National University of Singapore, a prestige institution in Singapore. 

I have been telling my children that " it is not about falling down, but getting back up", which is why I allow my children to fail. 

My son with a lack seriousness dealing with his PSLE, he failed to enter the school of his choice. This failure led him to treat study seriously and he redeemed his honor through his GCE "O" Level result. Although he still tends to slack off, every failure to him triggers loud alarm in him with a sense trigger warning, and this helps to guide him back on track.

My daughter on the other hand hid her incompetence due to embarrassment in admitting her weakness. As a result, she did not seek help from me until it is too late, her failure led more conversation between us. Even though she is still stubborn, she is willing to share her situation with me.

Same thing with trading, it involves a lot of failures before I can succeed. The most important thing is to ensure I get back up. This involves dropping my own arrogance and reflect on my own action.

Enough of my chit chat. What shall I look into today?

I have early mentioned about the Nikkei reversal, I did not check on JPY. The last time I did a piece on JPY was Nikkei & JPY divergence dated 25th June 2023. It was due to my curiosity on the divergence between JPY and Nikkei at the time. Even so, I only estimated resistance between 145 to 149. It hit a high of 159.881 this week. 

Is the depreciation of the Yen with no end? Considering that I foresee the weakening of the Nikkei, surely JPY should align with the direction of Nikkei by now.

Fig 1. JPY weekly chart

While I estimated in my earlier update that JPY continued to weaken, breaking my resistances of 145 and 149 respectively. It even cut through the previous high of 151.937, reaching a new high of 159.961. This coincides with the 61.8$% projection of both a major and minor move (blue lines), resisting its advance.

At the same time, there are signs of weakness, with divergences observed on MACD on every new high on Nikkei. 

What's more? 

A long downward bar formed by the end of this week after reaching a new high, only to stop by the 8-week moving average, resulting in an engulf formation. this is a reversal pattern but requires confirmation from the next bar.

These are signs of JPY reversing, meaning that it will get stronger than USD at least in the coming weeks.

So where do I see the support?

Using projection, it can be observed support zone of between 134.9388 to144.5568, which also coincide with its 144-week moving average of 135.9637 and 145.8182.

JPY will be quite interesting in the coming weeks, especially when JPY continue diverge with Nikkei