Is China doing badly?

 I have been receiving more videos about how badly China is performing at this stage of time. Massive unemployment, closure after closure for factories and eatery outlets and people sleeping on the streets while airports are empty.

It makes me wonder: Is China getting worse? 

It really took a long time for China to reach the level of Asean at the cost of its Neighbours. It was also very scheming to trap countries to go in debt through its One Belt One Road project.

I was very negative on China market for a long while. My last update on China was So Biden and Xi finally met at San Francisco... on 26th November 2023. It was at the time when I noted a potential reversal on CNY, with ration that it was due to the weakening of USD. SSEC on the other hand would continue to weaken with potential support between 2,564 to 2,892. 

It was Trump who stopped China's ambition to dominate with its parasitic behavior.

Is China really continuing on its decline?

I began my investigation with checking on SSEC index. Unfortunately, something is wrong with https://finance.yahoo.com, it hangs whenever I download SSEC chart. 

Eventually, I managed to obtain a reasonable chart for analysis through a chart from https://uk.investing.com/.

Fig 1. SSEC weekly chart

Since my last read, SSEC went to a low of 2,6535 before reversing up, followed by a continuation downward by 20th May 2024, stopped by its 55-week moving average. 

What's interesting is that the downtrend did not break its previous low of 2,635 and surged upward this week, breaking through most of its moving averages, falling short of its 144-week moving average, and the neckline of its supposing head and shoulder. 

Where shall it go from here? 

With such a strong surge this week, it is possible for a correction in the coming week, falling back to the moving average resistance turned support.

Nevertheless, there is a high potential for it to go further after its correction with its next objective of 3,225. It depends a lot on where it can break the neckline. 3,174 will also be a crucial resistance as this is the previous high.  

Meanwhile, with its close to 5-year head and shoulder setup, there is still a chance of downtrend. Then the support will be between 2,006 to 2,335. For this to happen, 2,692 is crucial.

What about its currency, CNY?

Fig 2. CNY weekly chart 

CNY broke through the 7.0275 neckline of its double top formation this week, giving a potential objective of 6.7045 with support at 6. 8263.In addition, its double top formation also provides another range of support levels. It breached its 61.8% projection support of 7.0723 last week with the next range between 6.8551 to 6.9459.

It is likely CNY will continue to strengthen against USD.

At the same time, it is possible for the move this week to be a false break with CNY correction back to its 55-week moving average presently at 7.1596. The possibility of it continues upward (CNY weaken against USD) for the time being is low.

After thought:

After finishing this entry, I find it not really to my satisfaction. It seems that I have reservation on my view on the situation.

For SSEC, I am bullish with exception of a possibility that it may reverse the coming week, if the reversed bar is longer, then we should expect a continuation downward. 

However, when I looked at the daily chart, I saw 3 consecutive long bars with gap in between surging up. This made me feel that it is bullish at least on daily chart, if reversing down this coming week, I believe it is only a correction, with its 8 and 21-week moving average as the support. While the bars may look long, I should expect short bodies overlapping for the coming weeks.

The entry on CNY is much shorter than I have anticipated, because the pattern formed is relatively straight forward.

Why am I having reservation still?

The pattern is too obvious, this causes me to have some self-doubt that if 90% of the people see the same thing, it will lead to the counter to behave differently.   

 

 

Hang Seng is climbing...

My last update on HSI in The flaw of group project in school and is Hang Seng continuation...downward? on 17th June 2024. It has been 3 months since then. 

At that point of time, while there were indications of down slide. I noted that it was more likely to be a correction of an upward trend. 

It continued to decline there after until its reversal on 4th August 2024. I did not set any support level for its correction in my last entry. 

Using retracement measurement through its up trend. I noted the reversal point was its 61.8% retracement line.

Fig 1. Hang Seng weekly chart

While climbing higher since, there was a mild correction when it hit its 55-week moving average, and managed to break through 55-week moving average decisively this week. It is heading up.

One point to note here, it is facing an uphill task now, what do I mean by this?

Its climb will face numerous levels of moving averages. If I am to be strict on my selection, I will limit to Fibonacci numbers.

Its climb this week is held back by its 8-week moving average, with next level 144-week moving average in waiting. There is a possibility that a correction will happen every time HSI hit a moving average.

At the same time, this week's escalation of HSI also crossed its minor 61.8% projection with its 100% objective at 18,665.

What I will see is another resistance level of 19,594 to 21,573, with an additional resistance 22,868.

But what troubling me is its double top formation with support at 8,447 to 13,221. These levels have not been reached. Is it possible that Hong will go on further decline with the present move as a congestion prior to continuation?

A belated happy birthday to Malaysia...or was it a little too early?

 It was Malaysia's National Day on 31st August 2024. It was 2 Saturday ago.

You might expect Malaysians with great enthusiasm, rising up together to celebrate the event. On a contrary, it was more of a non-event with majority of the people treating it as another day of rest. It was a long time since I last stayed in Malaysia on this date, I sense no sign of passion for the country.

It might interest many here that 31st August in 1857 was not the day when Malaysia was complete. It was not until 16th September 1963 that Sabah and Sarawak joined the Federation, which complete the collection of all member state. The complete name of Malaysia is not just Malaysia but the United State of Malaysia. For some reason, I feel that there is a little plagiarism to the United State of America.

It took another 2 years before Singapore departed from the Federation in 1865, it declared independence on 9th August 1965.

It is because of this that some consider the actual birthday of Malaysia is 16th September and not 31st August.

I was supposed to create an entry on Malaysia on the weekend of National Day. Unfortunately, I was preoccupied with satisfying my mother's needs. 

Nevertheless, I am not late if I consider its true birthday, which is labelled as Malaysia Day.

My last update on Malaysia were So, another proof of weak government leading to a good economy? on 18th February 2024 for KLSE while Divergence after divergence after divergence... on MYR.... on 8th April 2024 for MYR and SGDMYR. 

I was actually bullish on both MYR and KLSE at the time. So am I right on both?

Fig 1. KLSE weekly chart

KLSE is on an uptrend, I expected resistance at between 1,674 to 1,860, which is its 61.8% projection. KLSE reached its 61.8% projection and retreated the week after National Day. It is presently supported by its 8-week moving average.

I believe KLSE should be on a correction or congestion phase with support between 1,556 to 1,615 if it breaks the 8-week moving average at 1,639. An important point is the previous high of 1,695. Should this level be breached, we may see an objective of 1,997, and 2,183. 

Fig 2. MYR weekly chart

In my last update, I noted multiple divergences on both MYR and SGDMYR, indicating potential reversals. 

Reversal came and MYR surged against both SGD and USD. Well, reversal against USD partially because USD on the decline. 

What I see for MYR now is a double top formation with neckline at 4.57, and MYR reached its objective of 4.358. 

It is congesting at the moment, with and with a reduced downward momentum since 12th August 2024. 

I believe there is more downside to this counter with support at 4.2836. 

Another import level for MYR is 4.2224. This is the previous low for the counter and crossing this will form a major double top with support between 3.6987 to 3.8996.

Fig 3. SGDMYR weekly chart

While MYR also strengthen against SGD, SGD is more resilient. It congested after breaking its 144-week moving average. For the time being, I do not see a very specific top formation for this counter.

There is a mild downside potential though. If SGDMYR not managed to pull itself back up, its next level of support will be between 3.2189 to 3.2838 using projection. 

As far as I concern, the Malaysia political arena remains in a messy state with the Government remain under the scrutiny of a strong opposition. Many will consider it troubling because the government's hands are tied. Me on the other is happy with the outcome, this leads to little interference to the economy allowing it to recover.

In fact, this is very similar to the US Republican's ideology emphasizing free market with minimum government control. 

With a stale mate situation in the Malaysia political arena, the politicians WILL have to listen to the people. They will less and less able to use racial topics to divide and conquer. My only hope is for Malaysians to be wiser in future electing people who REALLY willing to serve them, like Khairy.

It is tumbling down, but it is not yet for Dow Jones

I remember it was a day of tumble on Dow Jones, leading to a group of anti-Biden-Harris using it to determine that US market is collapsing and that it is due to Harris' proposal. 

That was a month ago that happened to be Singapore's national day. I wanted to complete the Singapore's read first before continuing with proceeding to checking on the US market. After all, it was only a single week of downturn and insufficient for me to determine a reversal.

unfortunately, what followed led to further delay in my entries.

First off, my wife's family gathering used up one of my week. Then a gout attack on the second weekend caused me to take some pain killers, but the wrong prescription from the pharmacy caused me to take anti-depressant instead.

At least I know now that it did not make my less depressed, but instead I was attacked by continuous drowsiness and slept throughout the weekend with no improvement on my swelling and pain.

Then I had a week's off going back to KL, focusing on my mum's needs.

Finally, this week, I get to sit down and work on this entry.

I have been following the US political arena and if you are observant enough, you will notice that US is on deterioration as a country. It is very deep in debt while the politicians lack the will power to bite the bullet and move towards austerity. 

They attempt to distract the people into focusing on personal gain, ignoring the more pressing issue what the country is heading into the abyss of down fall. 

Having said that, I believe it is not yet time for US to collapse. There is a Chinese saying that 'even a rotting ship contain 3 portion of iron nails'. There are sufficient talents and resources in US for it to stay afloat, if they play their cards right.

Fig 1. DJIA weekly chart

Since the tumble a month ago, Dow Jones actually reached a new high after its fall stopped by the 21-wek moving average, only to 'tumble' again this week. Strange that there is no comment from anyone this time. Is it because the event does not match the narrative?

Ok, let's stay objective in looking at Dow Jones chart. 

The Dow just reversed from a major 100% projection, crossing and stayed below its 8-week moving average. The gradient of ascend remained gradual, indicating a weak momentum. The potential of a downward movement is increasing. 

On the other hand, it has not produced any reversal candle stick. Neither has MACD shown any divergence, indicating that there might be some upside. 

I suspect it may still be another correction with the next support at the 55-week moving average of 38,060, which is mildly above the Bollinger envelop of 37,824. If this happens, it crosses a crucial point of 38,390, which become a neckline for double top base on the present set up, this will lead to a new objective of between 35,389 to 36,708.

On the upside, its immediate resistance is between 41,773 to 42,2185.

For the time being, I do not see that Dow Jones is crashing, at least not yet. However, the same can't be said for its currency.

Let's look at JPY first.

Fig 2. JPY weekly chart

My last entry on JPY was The curious case of JPY-Nikkei divergence, I noted JPY strengthening against USD, with downward potential of 143.141.  As of today, it crosses this level reaching a low of 141.6770. It corrected after the support from Bollinger envelop, it continued its decline but more gradual with present low still above the earlier level. 

Based on the present set up, I do not have upward measurement as there is still no reversal nor divergence indication. So, I will assume continuation downward with further strengthening of the currency against USD.

The next support level is between 129.176 to136.906.

If I am to set an up-side resistance, it will be the 55-week moving average of 149.2248.

Guess I should be seeing more downside on Nikkei since it always move in the opposite direction to JPY.

Fig 3. EURUSD weekly chart

My last entry on both EUR and GBP is Divergence between GBP and EUR dated 3rd Sept 2023. That was more that a year ago. I suspected at the time that EUR and GBP might part their ways. They did not, both continued to weaken against USD for a short while before reversing back up.

I see from the latest chart that EUR is correcting after crossing its 61.8% projection resistance now turning support. It remains above this level of 1.10258. I believe that it should further strengthen against USD with next resistance level between 1.12922 to 1.14787.

One point to note here is the previous high of 1.2759, this coincides with the 61.8% retracement level which is also very close to the 100% projection resistance.  I suspect it may be difficult for EUR to break this point. 

Fig 4. GBPUSD weekly chart

GBP actually fair batter than EUR, it crosses its previous high of 1.31425. It presently retracted from its 100% projection point in what seemingly a congestion at this point. It may hit higher after this.

The next resistance for GBP should be 1.33897 to 1.37742.

One point to note is the gradual gradient of the uptrend for these 2 counters. I suspect while both currencies strengthen against USD, they may be negotiating a top formation. But I think it may take some time before reversing downward.

In conclusion, it is not Dow Jones that is going down, but USD certainly shows much weakness at this point of time. The most important asset of USA is its currency that is used in all international trade. But generations of US politicians take it for granted and print USD as a quick fix for all their problem. Its debt is in level of Trillions, an amount unseen in history. If USD breaks, it signifies the collapse of USA.