Scratch the Greenback

July 5, 2010 § Leave a comment

USD 2nd July 2010

If there is anything positive about the market gloom, it is the US Dollar.

The correction in June has more or less come to an end.

Chart pattern shows the formation of an equilateral triangle. A breakout on the up or down side is possible.

GMMA shows that the red and green moving averages are converging and about to cross over.

However, Momentum is turning up from a low, adding to the possibility that the price will rebound from the base of the uptrend line.

Further inspection of the Stochastics shows a bullish divergence :

1. This is discerned from the small trend line formed in the oversold region.

2. In contrast, the us dollar index is making a lower low in the same period.

This divergence indicates that the fall in the index is just a false break. Any rebound that follows is going to be a strong one.

This is the same divergence that hints at the recovery in November last year (left edge of the chart).

This time, the divergence is much clearer.

STI Support to Be Broken?

July 5, 2010 § Leave a comment

Straits Times Index 5th July 2010

STI proved resilient at 2835 for the past few sessions.

Four sessions ago, it went as low as 2783 during intraday trade before recovering all its losses to close at 2835 support level.

This level also coincides with the merged 50 and 100 day moving average, further adding to support.

However, taking a step back, looking at the overall chart pattern, the downtrend line formed by the 2 peaks and the support line has formed a penant.

This has bearish implications as lower highs are being made.

The trading range is narrowing and a break out is bound to occur soon.

GMMA shows that the green and red groups of moving averages are merging.

Momentum is still turning down, implying the fall of the index is far from over, if not, only the beginning.

Stochastics is still mid way down, suggesting that a major sell off has yet to occur.

From a technical perspective, bears are favourite to win this bout.

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July 5, 2010 § Leave a comment

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