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.