Jeffrey's Technical Analysis

Website changed (after 2011-08-14)

2011-08-11T22:43:00.004+08:00

This blog's website has been changed to:

http://jeffreyta.blogspot.com

Please kindly remark and change your bookmark :)

Thanks for all your support.

Safe heaven (2011-08-11 CHF analysis)

2011-08-11T09:21:00.003+08:00

Above is the 4-hour chart of Swiss Franc (CHF). Starting from May 2010 when USDCHF was at 1.17, Franc has been strengthening.

The situation worsened in August 2011 as CHF rose even faster following the debt concerns in Europe. Investors were speculating on Franc.

We can see that USDCHF was falling along the purple Pitchfork for over a month. Yesterday, it finally broke the fork and USDCHF plunged lower.

On the 4-hour chart, Franc formed a small flag after great surges. The flag was probably a bearish flag on this USDCHF chart signaling another bearish wave coming.

I expect that there is still room for CHF to rise as the debt concerns in Europe and US are still not solved. Speculators would be seeking something "safe" such as Japanese Yen, Gold, Swiss Franc and so on. These would be keep on rising until the concerns are more or less eased.

Cement again (2011-08-10 TCC International Holdings Ltd.)

2011-08-10T08:17:00.002+08:00

Finally Hang Seng Index dropped below 19,000 but later remained above this level. It seems like this level is pretty strong which the index could hardly break at this moment, and its time for some rebound.

Let's find some good stocks for short-term investment.

Above is the daily chart of TCC International Holdings Ltd. (1136.HK). The principal activities of the Group consist of the import and distribution of cement in Hong Kong, the manufacture and distribution of cement, clinker and slag powder in other areas of the People’s Republic of China. (from: http://aastocks.com)

To me, cement companies are currently worth investing ones. There are lots of constructions in both Hong Kong and PRC that require lots of cement.

Also, when the stock markets are fluctuating like that and possibilities of default in US and some EU countries, China has to devote more effort into building infrastructures in order to boost its competitiveness against US or Europe. Cement becomes one of the most critical materials.

Technically, the green line nicely supported the stock price, which plunged following the over-1000-point slump in Hang Seng Index.

Moreover, a big white candlestick was formed yesterday. This is a possibly trend reversal pattern which signals an end of the bearish movement.

4.80 is undoubtedly the first resistance, which resisted the stock price from going any higher yesterday. If TCC breaks above it, I would expect it reaching the previous high at 5.50.

In longer-term, this stock is a good stock. Current ratio and Quick ratio both turned into higher than 1.0 in 2010/12. Compared with lower than 1.0 in 2009, we can see that the company is trying hard to lower their liabilities and increase assets. Though long-term debt/equity and total debt/equity both rose, the amount is not very non-reasonable and if the company could make good use of these debts, they could make a good profit.

Take a rest now? (2011-08-09 VIX analysis)

2011-08-09T07:33:00.004+08:00

Another crazy plunge in US markets yesterday night (over -5%), and HK market would probably follow again today dropping over 1,000 points. I expect the index reaching 19,000 support level which I mentioned yesterday.

Daily chart of Volatility Index (VIX):

Finally I had to zoom in the chart to over 3 years. With the sudden movements these few trading days, the volatility index jumped and reached the 2-year high at 48.

I believe its time for the stock markets to take some rest. Nevertheless, we can see that the only period when VIX surged over 50 was during Financial Crisis in 2008.

Although there are many bad news coming and coming now, there is no single trigger that could result in it; unless one of the few countries goes default.

Therefore, consolidation/slight rebound should happen for S&P500 tonight, perhaps after the big fall in HSI today.

And then when its time for another crisis, the VIX would be jumping high again.

Bearish view (2011-08-08 HSI analysis)

2011-08-08T08:23:00.000+08:00

What a long time since we last saw Hang Seng Index plunge over 1,000 points. The strange thing for last Friday's incident was... there wasn't much bad news causing so. The raise in debt ceiling in US was even passed, and the stock markets just slumped. Europe and US markets dropped over 4% on Thursday and Asia markets followed on Friday.

S&P then downgraded US to AA+, and different parties carried various views on it. Buffet said US should get quadruple A but it was quite obvious that he was trying to calm investors down in order to maintain the stability of global stock markets.

OK let's get back to Hang Seng Index.

Daily chart of HSI:

Obviously, the candlestick on last Friday just broke all the short-term and medium-term support levels. There was a huge gap in between.

The index opened at 20939 and fell to as low as 20643. Finally, it rebounded and closed at 20946. An extremely long lower shadow was formed. The body of the candle was small too cause the open and close was almost the same. Therefore, we can treat it as a Doji.

With such a position and the previous black candlestick, this could possibly be a Morning star, signaling an end to the bearish trend and a start of bullish trend.

But this would depend on whether the candlestick today would be a white one or not. If so, it is a trend reversal pattern; otherwise, the bearish trend should continue.

Nevertheless, resistant level is at around 21,200, but this is not a very strong one. If HSI is going to fill the gap, it might stop at this level for a short while.

Weekly chart of HSI:

It looks clearer on weekly chart. I have been drawing the pitchfork for the past few weeks HSI analysis thread, and there is no doubt that the pitchfork does matter.

After HSI touched the upper line of fork, it slumped last week. Amazingly, it was then supported by the middle line of the fork.

Therefore, there should be some rebound at this point. Other than 21,200 shown on daily chart, the next one would be at 21,700, which is the 23.6% fibonacci level. This level has been doing well on supporting the index before, and now it would turn to resistant.

On the other hand, if HSI keeps on falling and breaking the middle line of pitchfork, it could reach 19,000. Another financial crisis would follow.

To be honest, I am not having an optimistic view. All the news we have now are bad ones. Countries in Europe and US itself are having problems repaying debts. For US, they are just delaying the time of default, no actions are done in regards to the decreasing ability to get revenue. Ultimately, they may need bail-out and its just a cycle. Once the bubble bursts, more than one countries would have to go default and markets will surely plunge hard. I'm not sure when this day would come, but to me, it seems like it will happen soon.

Important Economic Data this week (2011-08-07)

2011-08-07T11:21:00.000+08:00

8-Aug (Monday)
13:45 Switzerland Unemployment Rate {Forecast: Unchanged}

9-Aug (Tuesday)
10:00 China Consumer Price Index

10-Aug (Wednesday)
02:15 US FOMC rate Decision {Forecast: Unchanged}
07:50 Bank of Japan Meeting Minutes
14:00 Germany CPI {Forecast: Unchanged}
17:30 UK Inflation Report

11-Aug (Thursday)
09:30 Australia Unemployment Rate

12-Aug (Friday)
20:30 US Advance Retail Sales {Forecast: Increase}
21:55 US U. of Michigan Confidence

source: http://www.dailyfx.com

More on USD (2011-08-05 DXY analysis)

2011-08-05T09:18:00.003+08:00

Last week's Monday (25-July) I wrote that HSI would experience a big drop and reach 21,000 last week. It seems like I had made that conclusion too early and given no time for the index to move as so. And today HSI is going to reach 21,000 following the 4% plunge in US markets and more than 3% slump in European markets and Japan markets currently.

Looking at the weekly chart, we can find a support at around 20,900 (fibonacci). If the index breaks this level, which means it has plunged through the middle line of fork as well, next strong support will be at around 19,500.

Above is the daily chart of US Dollar Index (DXY). I anticipated that the index would drop further because of the bearish flag.

However, Japanese and Swiss both acted against their strengthening currencies, which harmed their export trade. Therefore, we can see that the Japanese Yen and Switzerland Franc both weakened yesterday.

Indeed, most of the major currencies weakened against US Dollar, which may be one of the reasons behind the 4% slump in stock markets.

DXY was back into the large flag, and broke out the bearish flag I mentioned on Tuesday. 76 will be the next resistant level.

MACD and EMA crossed and gave a bullish signal. RSI is at quite a high level, so the index would probably consolidate for one or two days before starting another large rise.

General trend is still bearish, as the index is still under the red down-trend line. If it breaks out (76), then we can conclude that the whole trend has changed. Bullish Dollar Index would basically mean bearish stock markets too.

Good luck.

Important cement (2011-08-04 China International Material Co. Ltd. analysis)

2011-08-04T09:20:00.002+08:00

Following the possibly of downgrade on US by Moody, the global stock markets plunged hardly. Hang Seng Index was down almost 2% yesterday, reaching as low as 21882, which is the support level I mentioned on Monday's thread. There should be a little rebound, but the general trend is still bearish.

Among some big companies, I was trying to find out any worth-buying stocks. Given such poor investing environment, most of the large-capital stocks are more likely to follow the market to slump.

Above is the daily chart of China National Materials Co. Ltd. (1893.HK). The Group is principally engaged in provision of cement equipment and engineering services, production and sales of cement and other high-tech materials. (source: http://aastocks.com)

The stock price has been under the bearish trend since April, and was moving to lower levels slowly.

Due to the sudden drop of global markets, the stock price followed and a long black candle was resulted.

The red line represents the resistant and green line is the support. Purple lines are the pitchfork lines.

As we can see, the price just reached the middle line of the fork. Therefore, we can expect a little rebound here.

If the stock price breaks down, the next support will be at around 4.05, which is an extremely large drop representing around 20% slump. Nevertheless, given these few days' situation, such plunges are not surprising.

The upside target is at around 5.50, then the price would be more likely to stop rising and turn to downward in short-term.

However, in long term, this company quite worth investing. Cement is a crucial materials used in construction sites, and usually in last three to four months of a year, there will be lots of construction sites in China hoping to use up the funding by Government; therefore, this company would probably get good profits later.

If it really reaches 4.05, then we can consider buying this as a longer-term investment. But what we have to keep aware of now is that when the price drops below 5, we can sell and wait until 4.05 and buy again.

Bearish flagsss (2011-08-02 DXY analysis)

2011-08-02T09:25:00.002+08:00

The House just approved raising US debt limit by at least $2.1 trillion. Default date therefore was delayed, and corporate investors made good use of this news to narrow the plunge of US markets yesterday.

However, I do not think this has a long-lasting effect. In fact, after HSI reached 22,800 yesterday and showed a false breakout, we can expect the index to drop in remaining of this week. Around 22,150 is the next support.

So today let's see how the increased debt limit could possibly affect the US Dollar.

Above is the daily chart of US Dollar Index (DXY). The index broke down the red flag two weeks before, and the overall trend has turned to even more bearish.

Indeed, the red flag could be treated as a bearish flag when we look at the big picture. At first, US Dollar slid along the orange down-trend channel. Then a bearish flag appeared and told us that the trend would continue.

After looking at the big picture, we can try to investigate some smaller waves. The purple flag is possibly another bearish flag, following the bearish movement in July 2011.

The index beautifully moved along this purple channel. If it breaks down, then another big downward wave should show up. Therefore, Euros, Pounds, Yen so on and so forth are anticipated to strengthen.

On other hand, if DXY breaks out instead, the lower red line will be the resistant. The level is currently at around 15, but it will be increasing.

Personally I carry a more bearish view on DXY. While USD is depreciating, HKD is following as well. We will be having a hard time to convert the currencies for traveling or trips...

Bearish Trend (2011-08-01 HSI analysis)

2011-08-01T09:03:00.003+08:00

Last week I expected that the Hang Seng Index plunged due to poor economic data; however, the data seemed to be surprisingly good (except US GDP whose effect on HSI had faded out after the weekend).

0621.HK which I wrote on Wednesday slumped over 20% on Friday and NZD unexpectedly went upwards after my thread about it (which I anticipated a drop) on Friday. Seems like my analysis is all wrong. Too bad...

Anyway, let's learn from failure. And check out charts of HSI.

Daily chart of HSI:

The red and green solid lines are what were drawn on last week's chart as well. We can see that the index broke the green solid line, which is the short-term down-trend line, last week.

After breaking this, HSI faced another strong resistant, which was the red down-trend line. Therefore, it seemed to be unable to go any higher, and started to consolidate.

This week, my view is non-bullish again. Red line will be the resistant (which is at around 22,500-22,650).

For the downside, the green line gives support at around 22,200, which gradually becomes as low as 22,050 five days later.

Weekly chart of HSI:

Seeing the picture, we can recognize the bearish trend of Hang Seng Index. The pitchfork is the main indicator for such trend.

Last week the index reached the upper line of the pitchfork, and was resisted and then retreated.

This week it should be falling. The 10-day SMA gives some support to the index. If HSI breaks the SMA, it is more likely to drop quite a lot.

23.6% fibonacci level is the first support (on the big picture). The index is expected to rebound at around 21,900.

Strong support will be found at the middle line of pitchfork. But the index is less likely to reach this level this week.

To conclude, this week we have to be extremely aware of any rebound at 22,200. If it breaks the green line on daily chart, then the index will drop to 21,900.

Important Economic Data this week (2011-07-31)

2011-07-31T11:20:00.000+08:00

1-Aug (Monday)
09:00 China PMI Manufacturing
16:30 UK Purchasing Manager Index Manufacturing {Forecast: Slight drop}
17:00 Euro-Zone Unemployment Rate {Forecast: Unchanged}
22:00 US ISM Manufacturing {Forecast: Slight drop}

2-Aug (Tuesday)
12:30 Reserve Bank of Australia Rate Decision {Forecast: Unchanged at 4.75%}
17:00 Euro-Zone Producer Price Index {Forecast: Slight drop}

3-Aug (Wednesday)
17:00 Euro-Zone Retail Sales (MoM) {Forecast: Big rise}

4-Aug (Thursday)
06:45 New Zealand Unemployment Rate {Forecast: Slight drop}
12:00 Bank of Japan Rate Decision
19:00 UK BOE Rate Decision {Forecast: Unchanged at 0.50%}
19:45 European Central Bank Rate Decision {Forecast: Unchanged at 1.50%}

5-Aug (Friday)
19:00 Canada Unemployment Rate {Forecast: Unchanged}
20:30 US Change in Non-farm Payrolls {Forecast: Big rise}
20:30 US Unemployment Rate {Forecast: Unchanged}

Short Kiwi? (2011-07-29 NZD analysis)

2011-07-29T09:33:00.002+08:00

Out of my expectation, the data announced was surprisingly quite positive. Most stock indexes were stable and HSI broke the first down-trend resistant. The next resistance is at around 22,750.

Today I will talk a bit on Forex.

4-Hour chart of New Zealand Dollar (NZD):

NZD has been moving along the red upwards channel for two weeks, and just broke the lower up-trend line to a lower level.

Besides the red channel, 20-day Simple Moving Average well supported New Zealand Dollar several times, but was not able to do so yesterday.

The break down means a change in general trend from bullish to bearish. Next support should be the 50-day Simple Moving Average which is at around 0.864, but its relatively weak.

And then by identifying more trend-lines, I found strong support at 0.85, and ultimate support will be at around 0.82 (currently, it is rising obviously).

It is a good time to short kiwi. Even there might be some rebound at 50-day SMA, the trend has changed and it is quite likely to drop to 0.85.

Profits in short period (2011-07-27 Wing Hing International (Holdings) Ltd. analysis)

2011-07-27T07:37:00.007+08:00

Above is the daily chart of Wing Hing International (Holdings) Ltd. (0621.HK). The group's main works are the operations of coal mines and leasing of mining licenses in the People's Republic of China (the "PRC") and sale of mineral products. (from http://aastocks.com)

Starting from few years ago until 2009, the stock had been moving sideways and had extremely low volatility. In 2009 to beginning of 2010, the price boosted. Especially in 2010, it is quite obvious there corporate investors were trying to lift the price.

Nevertheless, when the price reached 0.50, the stock started to move sideways again. This was because 0.50 is an important boundary, spread widens and it takes more time and money for those rich investors to bring the price up.

While we might suspect that shares were being dumped after the rise in early 2010, recent movements proved the opposite.

In April 2011, the price rocketed to as high as 0.81. Obviously, rich investors were still holding their shares, and they would like to find out how large the selling force is at the high. This is to prepare another crazy surge in near future.

This time the price will break 0.81 and could reach 1.0, which is another spread boundary. And this stock is good to buy as it would probably give you more than 40% profits in less than one month.

But again, remember to set stop-loss for such kind of stock.

US Dollar? (2011-07-26 DXY analysis)

2011-07-26T09:20:00.004+08:00

Above is the daily chart of US Dollar Index (.DXY). Thanks to ease of debt concerns in Europe, and worries about debts in US, the Euros have been strengthening, leading to fall in USD Index.

We can see that the index was moving in a narrowing range last two months, before breaking down last week.

The break down was confirmed as DXY remained below the flag for three trading days. It will undergo another bearish trend again.

Next support is undoubtedly the previous low at around 72.8. This is definitely a strong one as many investors might try to buy at bottom.

However, using technical analysis tells us that the bottom should be somewhere lower. The flag started at this level, and break down means that the index will plunge to levels under the flag. So I will be even more pessimistic on the dollar.

Purple line is the resistance, a very short-term and not-too-strong one. DXY has reached it and should probably start to fall.

Ironically, slumps in Dollar usually mean surges in stock markets, which are exactly the opposite of what I expected (or what I wrote yesterday)... we got to see the economic data this week...

BIG Drop! (2011-07-25 HSI Analysis)

2011-07-25T08:36:00.000+08:00

Last week Hang Seng Index (HSI) jumped on Friday and reached the down-trend line at around 22,450. Also, on Tuesday post I talked about drop of VIX and the global stock markets appeared to be quite flat last week. This coming week will be another boost of Volatility and the indexes are expected to be moving quite fast.

Daily chart of HSI:

Due to the ease of debt concerns in Greece, and some excellent profits announced by large companies like Apple, HSI surged. The rise stopped at the red down-trend line.

Reaching this level, the index is more likely to fall again as there are no signs of extremely good news popping up this week.

In fact, some important economic data will be revealed, and so far the experts did not have positive expectation on such data.

For example, UK GDP (QoQ) announced on Tuesday is expected to have dropped compared to that last time. Such bad news will definitely pull the stock markets down.

US Durable Goods Orders and US GDP announced on Wednesday and Friday are other examples that should keep dragging global indexes to lower levels.

Together with the analysis on VIX last week which showed that the volatility should surge again this week, we can conclude that this week's HSI should be bearish.

Green line is the support, which is currently at around 21,300. This is expected to be the first stop of plunged of HSI.

Weekly chart of HSI:

The green line is obviously that one on daily chart, and the next support is 21,000 given by the middle line of pitchfork.

One more support that worth talking about is the fibonacci level. Taking the orange flag into consideration, I applied a fibonacci projection using the high and low which first touched the two lines, and the 0% was set on last level that touched the orange line before breakout.

Interestingly, the 100% was exactly at the high in late 2010. 23.6% appeared to be a strong support to the HSI currently. 0%, which is at around 20,800, will definitely be another support. So the index will face huge buying power at 20,800 - 21,300.

If HSI slumps, we can expect it to reach around 21,000. So my thought about this week's Hong Kong market is around 1,400 points down.

Watch out guys.

Important Economic Data this week (2011-07-24)

2011-07-24T10:02:00.001+08:00

26-Jul (Tuesday)
16:30 UK GDP (QoQ) {Forecast: Drop by more than half}
22:00 US Consumer Confidence {Forecast: Slight decrease}

27-Jul (Wendesday)
Germany CPI {Forecast: Unchanged}
09:30 Australia CPI (QoQ) {Forecast: Drop by more than half}
20:30 US Durable Goods Orders {Forecast: Great drop}
20:30 US Durables Ex Transportation {Forecast: Slight drop}

28-Jul (Thursday)
05:00 Reserve Bank of New Zealand Rate Decision {Forecast: Unchanged}
07:50 Japan Large Retailers' Sales {Forecast: Less negative}
15:55 Germany Unemployment Rate {Forecast: Unchanged}

29-Jul (Friday)
20:30 Canada GDP (MoM) {Forecast: Slight increase}
20:30 US GDP (Annualized) {Forecast: Slight drop}

Time to turn (2011-07-21 GBP analysis)

2011-07-21T18:46:00.003+08:00

Singamas Container (0716.HK) which I analyzed on Tuesday finally broke down and closed at 3.21 today. It was supported well by 150-day Simple Moving Average. Whether it could climb higher depends on the power of resistance at 3.50.

Today let's see the British Pounds.

4-Hour chart of GBP:

After dropping to below 1.578 due to the low interest rate in UK, GBP started to climb again following the green up-trend line which is quite steep.

It retraced back to around 38.2% fibonacci level and faced resistance there. We could see 1.62 seemed to be a strong resistance level.

Other than the fibonacci, longer-term red down-trend line is also an extremely strong resistant to sterling.

Therefore, it is more likely that the pounds would drop or consolidate after having reached the red line. It could be back to 1.60.

Stocks' consolidation (2011-07-20 VIX analysis)

2011-07-20T09:48:00.002+08:00

Above is the daily chart of Volatility Index (.VIX). With the consecutive large black candles last week, the Index inevitably sparked, reaching as high as 21.93.

Still it was resisted by the red down-trend line, and turned its direction after touching the line. This was what I have predicted on the thread on 8-July.

Now the index is more likely to fall back to the level of 15.5, which has been an extremely strong support to VIX from last Dec 2010 (although the index once broke down in April 2011, we could see its power from May to Jun).

Falling in VIX signals a consolidation of S&P500. This makes sense as it is time for it to take a rest after a week full of bad news. There aren't many important economic indicators revealed this week so the global stock markets are less likely to be influenced heavily by bad figures.

Once the index drops to 15.5, something gonna happen again, which should be at least after this week. So be prepared for next week's fight.

Look more bearish (2011-07-19 0716.HK)

2011-07-19T09:09:00.002+08:00

Above is the daily chart of Singamas Container Holdings (0716.HK). It primarily focuses on manufacturing containers and providing logistic services.

Recently the stock price has been surging greatly along the green up-trend line which is quite steep. This line provides support to the price.

On the other hand, the red solid line is the resistant stopping the price from going any higher.

Now we can see that the price has moved to the interception of the two lines, which means that it would have to break either side.

Support is at 3.30 and resistant is at 3.42. If it breaks out, then of course we can buy this stock. If it goes down instead, then we can short it.

Apart from the flag shape, the stock price was resisted at 3.50 twice. This might possibly be a bearish flag signaling bearish continuation. So going downside is more likely then rising this time.

Bearish week (2011-07-18 HSI analysis)

2011-07-18T07:30:00.001+08:00

Filled with lots of bad news and scandals, global investors were not looking too good on the stock markets. Italian bonds rose greatly due to concerns on financial debt problems. US was talking about raising debt ceilings. Regarding these, it is more likely that stock markets this week would not be too bullish.

Daily chart of Hang Seng Index (HSI):

HSI was still in the middle of the red and green lines, showing no breaking pattern. I have drawn a few down-trend lines that possibly affect the movement of the index.

For the downside, the green down-trend line will help support HSI at the level of around 21,400. Once this support breaks, the next support would be so far away, possibly at around 20,500.

For the upside, the red lines are all resistances. A short-term one is found at around 22,350. Then 22,500 will be a very strong one (that's why I drew the line in solid).

MACD is moving downwards below zero, but it is still not too negative, it doesn't provide much information.

Weekly chart of HSI:

The red and green lines are the same as those on daily chart. Besides that, a pitchfork was used to predict the movements.

Other than 22,500 as predicted using red down-trend on daily chart, the upper line of pitchfork at around 22,900 is treated as an extremely strong resistance to the index. Once break, HSI could surge greatly.

Last week, HSI was well supported by the green down-trend line. If this line breaks, then we can expect another strong support at 21,000, provided by the lower line of pitchfork.

To conclude, given the bad conditions and investing environment, I carry a more bearish view on the index this week. 21,000 is a strong support so there should be a bounce at that level.

Important Economic Data this week (2011-07-17)

2011-07-17T09:32:00.002+08:00

19-Jul (Tuesday)
17:00 Germany ZEW Survey (Economic Sentiment) {Forecast: Drop}
21:00 Bank of Canada Rate Decision {Forecast: Unchanged}

20-Jul (Wednesday)
16:30 Bank of England Minutes
22:00 US Existing Home Sales {Forecast: Slight increase}
22:30 Canada Monetary Policy Report

21-Jul (Thursday)
15:30 Germany Purchasing Managers' Index
16:00 Eurozone Purchasing Managers' Index

22-Jul (Friday)
19:0 Canada Consumer Price Index {Forecast: Slight drop}

Gold price due to QE3 (2011-07-15 Gold analysis)

2011-07-15T09:21:00.003+08:00

Above is the daily chart of Gold (XAU). While Bernanke said that currently Fed had no plan for launching QE3.0, the public believed the stimulus program was quite likely. Gold price soared as a result.

Gold price has been within the the green flag for a few months. In general, this green area could be treated as a bullish flag which indicates further surge of gold price.

The flag broke few days ago. XAU surged and recorded new high. I tried to use fibonacci projection to predict resistance levels, and found that 1,613 should be a strong resistance. 100% level is at 1750, whether it can be reached depends on the progress of QE3.

Currently we can see that RSI and MACD are at high levels. Gold price would take a little rest before moving higher. There might be a little drop like that in March 2011. Support is at around 1540.

Normally if Gold is climbing, other commodities such as silver and platinum would follow as well. We can expect crazy rise of them.

Break down ? (2011-07-14 ICBC analysis)

2011-07-14T09:19:00.002+08:00

HSI was well supported at around 21600 two days ago when it plunged over 3%, as I have mentioned in Monday's thread. Yesterday, the index bounced a bit but the strength seems weak.

After China raised its interest rate and bank reserve rate, almost all of the Chinese Bank stock prices slumped hardly. It is reasonable though. Today let's see one of the leading banks.

Daily chart of ICBC (1398.HK):

ICBC has been staying well above the red up-trend line until this week. We can see that it broke down the line two days ago. Break down pattern is yet to be confirmed, but it is quite likely that the stock price is under bearish trend.

The purple pitchfork is a short-term channel for the bank. After reaching the middle line, the price rose a bit yesterday. But in general, I think it will slump even further.

Resistance is undoubtedly the red up-trend line (around 5.75).

For the downside, the pitchfork acts as a tool restricting extremely high volatility drop (although the slope of this pitchfork itself is quite steep). Strong support will be at around 5.3 and 4.4. The latter one sounds too far away, but it isn't impossible given current poor investment atmosphere and concerns over debts (not only PIIGS, but also US).

Weak break by USD Index (2011-07-12 DXY analysis)

2011-07-12T09:29:00.001+08:00

Due to Europe debt concern (this time Spain), EUR has plunged greatly. Relatively, US Dollar Index gained. Today we are going to investigate the chart of DXY.

Above is the daily chart of USD Index (.DXY). With the concerns yesterday, we could see that the index broke the green down-trend line (the upper one), but the break was so weak and its rise wasn't considered a break out.

This might be due to the purple pitchfork. DXY dropped below the fork in last June, and is currently testing the bottom line of the fork. This could be a resistance to DXY.

Also, RSI is reaching a very high level. The index has probably lost its momentum to go any further, and it should start slumping back below the upper green line.

The support level is at around 74.5, which is the lower green up-trend line. After that, we have to see whether the debt concern is that bad which leads to another big surge of DXY.

Start dropping? (2011-07-11 HSI analysis)

2011-07-11T08:13:00.001+08:00

Last week's stock market was moving side-way within a certain trading range. China raised its interest rate and bank reserve rate again, leading to slump of banks from Mainland China. But the globe market in general was quite stable, so Hong Kong did not plunge hardly.

In this week, it looks like the index will turn its head downwards again. Let's see the charts.

Daily chart of HSI:

The longer red line is longer term trend line that has been resisting the index. HSI reached this line last week and was not able to break out.

As we can see, there is another shorter term trend line above. Therefore, even if HSI breaks the first red trend line, there will be another resistance waiting it. I am not optimistic on breaking.

Instead, I think it is time for drop. The consolidation last week somehow suggests topping of the index.

Huge volume on Wednesday was due to Temasek Holdings selling CCB and BOC, which further led to investors selling shares of banks from Mainland China.

Therefore, resistance is at 22800-23000. Strong support is found at below 21600.

Weekly chart of HSI:

Basically, weekly chart didn't tell more information than daily chart did. I have further drawn a pitchfork which confirms that there will be a strong resistance at around 23000.

MACD is turning its direction, suggesting that the bullish force has come to an end and hence the index lost its momentum to further surge.

The index is not expected to break out. It is more likely to fall again this coming week.