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.

Re-visiting DAX and FTSE

I was off for a week last week, going back to my hometown Kuala Lumpur to visit my mother. My brother went for business trip and I volunteered to look after her in his absence.

 I was in fact quite busy throughout the week, from going places to cooking some of her favorite food. It was quite tiring by the time I returned to Singapore. 

Worse still I caught some gastric flue on my trip and the first thing I experienced after reaching home was acid reflux. I first thought it was indigestion due to over consumption of food. But the issue persisted a few days and I am still not yet well till now.

I had not given a thoguht throughout this period as to what to write on ( ironically, every thing is typed out and nothing is written). Nevertheless, I have decided to look at Europe, and by Europe, I am looking at DAX and FTSE.

I originally wanted to tie this page to Colonization, but I found the topic to be to wide and deep and my brain cracked while writing (again, irony). I have discarded the earlier work and decided to 

It has been quite some time since I last looked at FTSE and DAX in my entry Checking on FTSE and DAX - 12th Dec 2023, which was done 12th February 2023. It must have been my fault on the wrong date typed in.

I have estimated at that time that both FTSE and DAX were moving upward with FTSE targeted for 8,060 to 8,278 while DAX between 16,824 to 19,892.

So how far did both go?

Fig 1. DAX weekly chart

DAX managed to climb further from 15,307 to a peak of 16,427 before retreating.  However, it's climb was not without difficulties. I believe there was a plunge right after my entry on February 2023, only supported by its 21-week moving average. 

It bounced further up but seemingly with much resistance, and failed to reach the lower objective of 16,824, which is the 61.8% projection resistance. 

So will it at least reach the 61.8% projection of its major move? 

Based on its more recent developments, it reveals a new level of minor resistances between 16,473 to 16,578. These are both 100% projection resistances from different formations. It would seem that DAX may have a tough time crossing this barrier and it will take lots of momentum to do so.

But it may not have the momentum it needs. There is a divergence on MACD on its recent peak, it does not mean a reversal now, but highly possible reversal on the next downturn. I suspect the 100% project levels will encourage to go down, at least with a major correction to its 55-week moving average.

Fig 2. FTSE weekly chart

I noted a possible reversal by 8,060 for FTSE, it was close, FTSE reversed at 8,046. It managed to find support only at 144-week moving average, twice. It failed to achieve higher high after the first rebound and retested the 144-week moving average the second time. 

So what do I make of FTSE? 

I can't ignore the fact that the reversal was very steep. Even though the rebound was equally steep, it failed to break the previous peak. The second drop was more gradual with bars tends to overlap each other, indicate to me a possible counter wave. 

I believe FTSE is on wave c of B. While its climb this week is strong, it stopped right below the 61.8% projection resistance of 7,689. It may correct before moving further up to reach its 100% projection of 7,961.

There is still no divergence noted on FTSE, but what is the concern? 

A retreating Bollinger going to meet with the 100% projection line. This may create a more prudent resistance when coincide with FTSE. But that will be a story for a later date.

Checking on FTSE and DAX - 12th Dec 2023

I was going through the charts at the end of the week, and I was not very keen on having any entries on them. First off, The counters are in congestions, and I am having some trouble figuring out their trend. Furthermore, the only one with clearer indication is Nikkei. Nevertheless, I have decided to up-date these counters in the coming week.

I then thought to myself, is there any counter that I have not touched for a long time? Going through my entries, seems like it has been quite a while since I last checked on FTSE and DAX. My last up-date on FTSE was Is Britain's economy in trouble? dated Oct 2022. DAX was seven longer in my entry DAX and FTSC dated entry in April 2022.

So FTSE and DAX it is for this week!

Fig 1. FTSE weekly chart

FTSE was on a gradual climb after its collapse in 2020 and I came to believe that it should be reversing downward in my earlier entry.

Apparently, FTSE is not ready to do so and shot upward with support of its Bollinger band. The alignment of moving averages seems to support the continuation. The earlier congestion happened after FTSE reaching its first resistance zone between 6,521 to 7,138. 

It is now testing the previous high with its closing still remains below the last high mark of 7,903. There is a possibility of pull back before new height can be achieved.

The congestion created an additional pattern suitable for projection measurement, leading to next resistance level of between 8,043 to 8,869.

After it began to climb, its formation leads to a minor read with resistance between 7,855 to 8,196. 

FTSE has actually crossed level of 7,855 with minor congestion before its next climb. This gives addition new resistance level of 8,060 to 8,278.

While being able to derive many resistances, I noted that there is no alignment between them, giving me the impression that these levels may not be strong enough to stop its climb.

Of all the resistance levels, 8,043 and 8,060 are very close and it is a possibility that there could be a reversal at this point. 

Fig 2. DAX weekly chart

DAX is was stronger than FTSE, achieving new peak of 16,290 in November 2021 after the plunge in 2020. This was followed by a retracement of 50% to a low of 12,414 before resuming its climb.

At present, it has broken through a series of moving averages, retested these resistances turned support level. before continuation upward. The most pressing issue for DAX now is to break through its peak of 16,290. At present moment, it seems that DAX has the momentum to do so.

Utilizing its major move, the projection indicates resistances between 16,824 to 19,892. At the same time, it's uptrend behavior also provide indication of more minor resistance level of between 15,529 to 16,604. Lastly, it is latest climb, the resistance between 15,819 to 16,384.

Is Britain's economy in trouble?

 

There are multiple videos on Youtube.com recently indicating UK economy is in trouble and about to collapse.

UK has not been stable since their exit from the European Union. Liz Truss is the third prime minister in line after Terresa May and Boris Johnson. Strategically, I did not see a very specific direction set for the country since the break-up, with only a single policy unchanged, that is follow the US lead, not only that be US poster boy.

" How do you know?" You might ask. That is a good question.

There are 4 elements in in marketing call the 4 Ps: place, promotion, prices and personal selling. A seasoned marketeer will make use of any of the 3Ps for their strategy and Price is the last choice on their list. when you move to price strategy, you are out of option.

when the first thing Truss promised for her premiership is to cut tax, it is already clear that there is nothing she can offer to the people, and the only thing to do is to cut price, and in this context cut tax.

Personally, cutting tax is the worst thing one can do. It means lesser capital to run programs in the country including infrastructure maintenance, national security such as military, law and order and safety, as well as nation building such as education, training, business support and health.

I still recall my time in UK during the 90s, when I stayed in one of the poorest cities of England, Bradford. Its wool industry has just collapsed, and the city council was with little fund to run the city. The place was very gloomy and run down with little option of growth. It was a sorry sight.  

I went back with my wife in 2001, I wanted to show her the university that I was proud of. The city it seemed has taken a turn to the worse. At one point, my tears rolled out of my eyes, not able to accept the state which Bradford has reached.

Anyway, enough of divergence. Truss strategy to finance her policy turned out to be issuance of bonds, which means increasing the country's debt! When this did not settle well with the market, they further claim that they can also print more money to support the country's need. they are definitely the biggest fan of the US.

So how is UK doing economically?

 We first look at its currency since it was much affected by Truss political gimmick. However, I will not compare it to USD as USD is rising against all other currencies. I have to compare it against a more related currency, I will use EUR.

Fig 1. GBPEUR Monthly Chart

From the monthly chart, it does not look good on GBP. We can see frfom the chart that it dropped from a high of EUR1.50 in 2007to a low of close to parity in 2009. Although it managed to strengthen till 2015, its decision to leave EU again caused it to fall till 2017 when it started to congest till this year.

At present it is resisted by a series of moving averages, tested and retreated from the 144-month moving average. However, its behavior thus far resembles that of a counterwave with bars overlap.

We can derive 2 zig zag patterns from its movement. Using the movement between 2007 till 2015, I will expect support level at between 1.1237 to 0.9274. This is evidence from its repeat congestion for years between 1.10 to 1.20.

In addition, another zig zag is visible. The support level from this is even lower at between 0.97865 to 0.8302.

The support levels is not looking good for GBP as it is going to be weaker still comparing against EUR.

Let's get closer then as the short-term target may be more important.

Fig 2. GBPEUR Weekly Chart
With a closer look, there are another 2 zig zag, the most recent one has already been reached. So let's focus on the larger picture. Measuring with this set up, the support level found to be between 1.12289 to 1.06360.

However, it may seem that the 1.12289 support is strong as a potential reversal (inside the circle) on this pair, breaking the fall and pulling it back into the Bollinger band. We might see a damp in its descend in the short run before it makes another leap up-ward. 

So it is a good thing for Truss to U-turn on her tax cut policy.

What about the economy then? I will look into the FTSE.

Fig 3. FTSE Weekly Chart

The thing with FTSE is that while it is at the top at the moment, it fails to achieve a new high against the previous peak in 2018. In fact, its momentum starts to taper off and presently testing the neckline at 6,788. If it breaks this line, we are likely to see an objective of 5,889.

If based on the zig zag measurement on the other hand, it will not be easy for FTSE, support level is between 5,964 and 4,898.

However, for these levels to be realized, the neckline has to be crossed. For the time being, I believe it is highly possible since it has already broken through the moving averages, return to test and resisted.

Well, UK is still not at its worst presently, but the future is gloomier as it seems.

A look at FTSE 100

 So far my TA is limited to Dow Jones, Hang Seng and Nikkei.

Lately, a thought came into my mind. May be I should look at more charts during the weekends? If so, what counters may be relevant to me? FTSE came to my view.

Fig 1. FTSE100 Weekly Chart

On the first look, FTSE is on an up-climb. The only Issue I have with it is the gradual gradient of the climb. There seems to be a lacking in excitement after the correction started 1st March 2021, Timing seems to coincide with the worldwide outbreak of Covid-19 (Wuhan virus).

Nevertheless, FTSE is till now supported by its 55-week moving average. Yes, the climb is gradual and as far as I can see, it will continue in the short run.

I am really not into this counter, it opens at 4:00PM in my time zone. This timing coincides with my starting to prepare my family's dinner, yes.  I am the chef of the family.

If I am in this market, I will continue to go for long until abnormality.
 

I have placed 2 Projection measurements on this chart since there are 2 corrections. I have also placed a retracement measurement due to the steep drop.

At present, FTSE has broken through the 100% projection and 78.1%% retracement line. While restricted by Bollinger envelop, signs are still indicating long. So where are the resistance.

I will put my attention on 2 ranges: 7,699 to 7,784 and if this is broken through, 8,184 and 8,296.

Consider the wave pattern, I estimate that FTSE is likely in counter wave since March 2020. It has not yet surge pass its previous high of May 2018 and January 2020. The range between 7,699 and 7,784 seems a plausible area for reversal.

Still I will need to see some drastic move like a reversal bar with long but failed penetration into the zone before it can be confirmed as reversal.

Anyway, time is the proof if I am right or wrong on this one.