Dow may be correcting, but let's look at FTSE and DAX first...

It is less than 2 weeks before the great US election, I believe Dow Jones has begun to react pending election result. For the first time after 6 weeks, the bar this week turns red, and it is LOOONG. It closed at 40,092, slightly below its 8-week moving average of 40,119. 

Is it early sign of reversal? 

I will probably leave it for next week's up-date.

MEan while, it has been a while since I give an update on the 2 European indices: FTSE for UK and DAX for Germany.

My last up-date on these 2 counters was Re-visiting DAX and FTSE dated July 23rd 2023. Gosh! has it been THAT long?

SAt the time, I anticipated a correction for DAX to its 55-week moving average before continuation upward. While I did not place an objective for DAX due to its pending correction, its projection measurement for DAX were all upward. 

I also noted strong resistances for FTSE even though it will trend higher with an estimate objective of 7,961. 

So what happened to these 2 counters since then?

Fig 1. DAX weekly chart

DAX's correction went beyond the 55-week moving average. It was stopped only by 144-week moving average before it continued its climb, which met with another correction, this time supported by its 55-week moving average.

These corrections create opportunity for projection measurement. It has past its first 100% projection at 19,236 but stopped by another 61.8% projection. I suspect that this is a minor congestion with support at its 100% projection of 19,236, as well as its 8-week moving average. The next resistance level is its 127% projection at 20,523.

It is also close to reaching the 100% resistance level of its major projection at 20,078. crossing this will allow it to head for its 127% projection level of 22,272. 

There is some concern though, while climbing higher, its bars are short and over lapping. this is a sign of weakness for me. With 3 lines of resistance very close to each other right ahead, I suspect it may be on another round of correction before heading higher.

Why am I still bullish on DAX?

I am not seeing divergence yet, especially on MACD. With this new peak, and MACD is much lower than before, I believe that this is the first diverging sign.

Fig 2. FTSE weekly chart

FTSE went further than my expected objective reaching a high of 8,478 before it begins to correcting, at one point falling to a low of 7,913, which was supported by its 55-week moving average. 

While the formation of a hammer candlestick giving indication of reversal of its correction, it is resisted by its Bollinger envelop. I believe its correction is not over and may re-visit its 55-week moving average before heading higher, if that is the eventual direction.

So far, all the projection measurements maintin a continuation upward,with its closest resistance between 8,556 to 8,694. Crossing this level, it will meet a tougher resistance at 8.903.

However, before going higher, it must first go lower with support between 8,029 to 8,073.

So far there is yet sign of divergence on MACD, so I believe that any downward trend is still a correction and not yet reversal.

Is Japan on continuation upward?

I was going through all my entries contemplating what I shall explore this week. 

I first looked at Dow Jones and noted that it is on its way up with potential objective of between 45,000 to 47,000. I guess that it may not be the right time to conduct a study on this counter. It was only September that I have made an entry on this. I believe that with Dow will continue to climb until the completion of the US election, which reversal will appear, after all, the trading market is always about anticipation.

What shall I research on then?

It was about 2 months ago that I made an entry on Japan situation through The curious case of JPY-Nikkei divergence on 4th August 2024. I guess it is about time that I check on this counter, then.

Fig 1. JPY weekly chart

In my last entry, I estimated the possibility of correction before further downslide (JPY strengthen against USD). Unfortunately, JPY refused to wait and in continuation without correction. While it managed to reach new low, there was a lack of momentum and reversed upward after re-bounced from its 144-week moving average support.

The question here is: Is this a correction or trend reversal?

Based on the chart, there are a lot of indications of an uptrend (check out the arrows). The issue here is that the uptrend started by the end of 2023 has a reduced level of momentum. The reversal by June 2024 witnessed a steep decline before it reached its 144-weeek moving average support.

What's more, there is a divergence on MACD, providing more justification of down trend (JPY strengthening against USD). 

I still believe that JPY is on a correction phase with resistance at 153, its 61.8% retracement and projection. It may reverse and continue downward thereafter.

On continuation downward, it is crucial to note the support at 139.58. This is the previous low which turn the neckline. Should JPY cross this level, we should see support at 125.73 with its objective at117.226.

Fig 2. Nikkei weekly chart

In my last entry, I noted Nikkei to continue its down trend with minimum objective of 32,039, considering a double top formation, with additional support from its 144-week moving average at 32,217.

The momentum of its down trend was so strong that Nikkei plunged below my estimated levels, reaching a low of 30,632. This followed by a strong recovery with a hammer candlestick indicating a reversal upward. 

While there was divergence on MACD prior to its fall, I think its predicted move might have been fulfilled. It has been climbing up since then only to congest at its 61.8% projection. I believe that it will continue upward upon breaking through this congestive level. 

There will be a few resistances ahead though. the first resistance zone between 40,970 to 41,620. The next resistance level after crossing this will be between 42,843 to 43,301. This zone will be stronger as there is a total of 3 projection resistances in this zone.

SSEC reversing SO SOON?

It was 2 weeks ago that I have an entry for SSEC in Is China doing badly? I was adamant that SEC was actually heading upward with resistances between 3,174 and 3,225.  

Even though there are additional levels on my charts indicating resistances between 3,370 to 33,555, I have not included them as I did not anticipate a strong move to reach these levels.

There was another concern, the long term moving averages of 55, 89 and 144-week moving averages were still intact, meaning the possibility that there may be a little more downturn before going higher.

While gapping up the week after my entry, crossing the resistance levels that I estimated, it's climb was milder. 

I went back to KL over the weekend, which normally led to a pause in my entries. This time round, additional alteration of family matter led to my urgent departure back to Singapore. A complete disruption of my weekend.

Meanwhile, I started receiving videos about people getting burnt due to abrupt reversal. "Are they over-reacting?" I thought. Afterall, I just looked at SSEC because of similar claim and it turned out to be false 2 weeks ago.

So I took a look at this counter again this week.

Fig 1. SSEC weekly chart

The week opened with a huge gap up, even violating my 100% and 127% projection, went above the 161.8% projection. Not only that it went much beyond the Bollinger envelop resistance.

The move this week also crossed the previous high, justifying a double bottom formation with objective of 3,711, which it was close to reaching.

Unfortunately, the surge was too strong leading to an equally strong pull back, with SSEC eventually closing within the band and coincidentally, its 100% projection. 

The movement also created a candlestick formation called Dark Cloud Cover uniquely for uptrend. This is a reversal pattern mark the beginning of a down trend. The 2-bar formation makes an equivalent shooting star.

So is SSEC reversing down?

If based on the candlestick formation, there is no need for confirmation of reversal. Furthermore, the momentum of its downward movement this week is strong, leading to the possibility that it would be on a down trend from now on.

The problem is that there was a gap up prior to the incident, and the move this week failed to cover the gap. 

In addition, it hung onto the Bollinger envelop after this forced reversal.

It gives me the feeling that while it may be heading down further in the coming week, there may be limited downside. Afterall, the 55-week moving average support is close by at 3,016. 

There is another scenario though, if SSEC inch back higher with candlesticks of small bodies, it will be indication to me that there is a continuation downward that may eventually surpass the 55-week moving average support level.