Category: Japan & Korea

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Asia monthly charts

Monthly charts help fit the current market action into a long-term perspective. The Nikkei 225 index broke support at 9000 and is likely to test the 2009 low of 7000*. 63-Day Twiggs Momentum respecting the zero line (from below) confirms the primary down-trend.

Nikkei 225 Index

* Target calculation: 9000 – ( 11000 – 9000 ) = 7000

The Seoul Composite found (primary) support at 1650/1700, followed by a reaction to 1900. Declining 13-week Twiggs Money Flow warns of selling pressure. Respect of resistance at 1900 is likely, which would indicate another test of primary support.

Seoul Composite Index

* Target calculation: 1700 – ( 1900 – 1700 ) = 1500

The Shanghai Composite index is testing support at 2400. Failure would confirm the strong primary down-trend signaled by declining 63-day Twiggs Momentum.

Shanghai Composite Index

* Target calculation: 2500 – ( 3500 – 2500 ) = 1500

The Hang Seng index is retracing to test resistance at 20000. Declining 13-week Twiggs Money Flow warns of selling pressure. Respect of resistance, would indicate another test of 16000.

Hang Seng Index

* Target calculation: 16 – ( 20 – 16 ) = 12

India’s SENSEX is headed for a test of resistance at 17500/18000 after a small bullish divergence on 13-week Twiggs Money Flow indicated buying pressure. Respect of 18000 would warn of another test of 16000.

SENSEX Index

* Target calculation: 16 – ( 18 – 16 ) = 14

Singapore’s Straits Times Index is in a similar position. Respect of resistance at 2900 would signal another test of 2500. Failure of support would confirm the strong primary down-trend signaled by declining 63-day Twiggs Momentum.

Singapore Straits Times Index

* Target calculation: 2500 – ( 2900 – 2500 ) = 2100

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Forex overview

The euro is consolidating above $1.365; failure of support would re-test $1.315, warning of another primary decline. A 63-day Twiggs Momentum peak below the zero line would confirm a strong primary down-trend.

EURUSD

* Target calculation: 1.32 – ( 1.40 – 1.32 ) = 1.24

The pound retraced to test resistance at $1.59/1.60 on the weekly chart. Declining 63-day Twiggs Momentum, below zero, suggests a strong down-trend. Reversal below $1.53 would offer a target of $1.46*.

GBPUSD

* Target calculation: 1.53 – ( 1.60 – 1.53 ) = 1.46

Canada’s Loonie resembles the Aussie dollar: reversal below short-term support at $0.975 would test $0.94. Respect of the descending trendline would also warn of a decline to $0.88*.

CADUSD

* Target calculation: 0.94 – ( 1.00 – 0.94 ) = 0.88

The Aussie dollar is testing support at $1.28 against its Kiwi counterpart after completing a double bottom. Respect of support would confirm the target of $1.32*.

AUDNZD

* Target calculation: 1.28 + ( 1.28 – 1.24 ) = 1.32

The greenback is ranging in a narrow band above ¥76, supported by the Bank of Japan. 63-Day Twiggs Momentum holding below zero confirms the strong down-trend.

USDJPY

The greenback recovered above R8.00 on the weekly chart against the South African Rand. Expect another test of R8.50. Upward breakout would warn of an accelerating up-trend that is likely to lead to a blow-off.

USDZAR

* Target calculation: 8.50 + ( 8.50 – 7.70 ) = 9.30

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Japan & South Korea buying pressure

Japan’s Nikkei 225 Index retreated Tuesday, but has completed a small double bottom, indicating a test of 9000. Bullish divergence on 13-week Twiggs Money Flow flags strong buying pressure. Breakout above 9000 would indicate an advance to 10000.

Nikkei 225 Index

* Target calculation: 9000 + ( 9000 – 8400 ) = 9600

The Seoul Composite Index shows a weaker divergence on 13-week Twiggs Money Flow. Breakout above 1900 would offer a target of 2150, while respect would re-test primary support at 1650.

Seoul Composite Index

* Target calculation: 1900 + ( 1900 – 1650 ) = 2150

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Euro rallies on hope of bank rescue

The euro is headed for a test of $1.40 against the greenback, on the hope that European banks will be re-capitalized after taking a haircut on the PIIGS bonds. There still appears to be some confusion — I suspect deliberate — as to who will pay, with German Finance Minister Wolfgang Schaeuble suggesting that banks first attempt to raise money from investors. Given the current state of financial markets, private investment will be scarce and European taxpayers are likely to end up with sizable stakes in a number of banks. Expect resistance at $1.40 to be followed by another test of support at $1.30*.

EURUSD

* Target calculation: 1.40 – ( 1.50 – 1.40 ) = 1.30

The pound is similarly headed for resistance at $1.60. Respect would signal another test of $1.53.

GBPUSD

* Target calculation: 1.53 – ( 1.60 – 1.53 ) = 1.46

Canada’s Loonie and the Aussie dollar both benefited from a surge in commodity prices. Expect the CADUSD to find resistance at parity, followed by another test of support at $0.94.

CADUSD

* Target calculation: 1.00 – ( 1.06 – 1.00 ) = 0.94

The Aussie will find resistance between $1.02 and the descending trendline. Respect is likely and would indicate another test of $0.94.

AUDUSD

* Target calculation: 1.02 – ( 1.10 – 1.02 ) = 0.94

The Aussie has formed a broad double bottom against its Kiwi counterpart. AUDNZD breakout above $1.28 would signal a primary advance to $1.32*.

AUDNZD

* Target calculation: 1.28 + ( 1.28 – 1.24 ) = 1.32

Support is holding firm on the dollar-yen cross — with assistance no doubt from the BOJ. Expect a narrow range between 76 and 78.

USDJPY

The South African rand is testing support at R7.70 against the greenback, after penetrating its rising trendline. Probably because of all the visitors returning early from the Rugby World Cup. 🙂 Apparently they have invited the referee to run a series of clinics in South Africa on his novel interpretation of the forward-pass rule. I suggest that he decline — it could get violent. Failure of support would offer a target of R7.00*

USDZAR

* Target calculation: 7.70 – ( 8.40 – 7.70 ) = 7.00

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China and South Korea

The Shanghai Composite Index is testing support at the 2010 low of 2350. 13-Week Twiggs Money Flow below zero warns of selling pressure. Failure of support is likely and would offer a long-term target of 1800*.

Shanghai Composite Index

* Target calculation: 2400 – ( 3000 – 2400 ) = 1800

Hang Seng Index rallied off support at 16000 and 13-week Twiggs Money Flow above zero indicates short/medium-term buying pressure. Expect a rally to test 19000, but the primary trend remains down and respect of resistance would indicate another test of 16000*.

Hang Seng Index

* Target calculation: 19 – ( 22 – 19 ) = 16

South Korea’s Seoul Composite Index is headed for a test of its upper trend channel. Bullish divergence on 13-week Twiggs Money Flow suggests a bear market rally. Expect another test of 1900. But the primary trend remains down and failure of support at 1650 would warn of a decline to 1500*.

Seoul Composite Index

* Target calculation: 1700 – ( 1900 – 1700 ) = 1500

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DJ Asia update

Dow Jones India 30 Titans index displays a bullish divergence on 13-week Twiggs Money Flow, suggesting reversal to an up-trend. Breakout above 166 would complete a double bottom.

Dow Jones India 30 Titans

Dow Jones Singapore Index advanced cautiously towards the first line of resistance at 218. 21-Day Twiggs Money Flow holding below zero indicates medium-term selling pressure. Expect the primary down-trend to continue. Reversal below 202 would confirm.

Dow Jones Singapore

Japan is closed but South Korean buyers also displayed caution with narrow gains while 21-day Twiggs Money Flow again holds below zero.

Dow Jones South Korea

Dow Jones Shanghai index edged lower after resuming trading Monday. Declining 13-week Twiggs Money Flow indicates strong selling pressure.

Dow Jones Shanghai

Dow Jones HongKong index formed a doji star indicating hesitancy. Reversal below 340 would warn of a down-swing to 300. 63-Day Momentum declining below zero suggests a strong down-trend.

Dow Jones HongKong

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Japanese Yen

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The dollar is testing support at ¥76, continuing its long-term bear-trend against the yen. Failure of support would signal a decline to ¥72*.

USDJPY

* Target calculation: 76 – ( 80 – 76 ) = 72

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Japan, South Korea selling pressure

Dow Jones Japan Index broke support at 4900, warning of another primary decline. 63-Day Twiggs Momentum holding below zero confirms a strong primary down-trend.

Dow Jones Japan Index

* Target calculation: 51 – ( 58 – 51 ) = 64

Dow Jones South Korea Index gapped sharply lower at the open, prompting a brief trading halt on the Korean exchange. 21-day Twiggs Money Flow holding below zero warns of strong (medium-term) selling pressure. Failure of support at 360 would test 330 in the short-term, but the calculated target is 290*.

Dow Jones South Korea Index

* Target calculation: 360 – ( 430 – 360 ) = 290

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Japan & South Korea

Bullish divergence on Japan’s Nikkei 225 index (13-week Twiggs Money Flow) warns of a bear market rally. Breakout above the upper channel of the broadening wedge pattern would confirm. The primary trend, however, remains downward; breakout below the lower channel at 8400 would warn of a down-swing to 7800*.

Nikkei 225 Index

* Target calculation: 8400 – ( 9000 – 8400 ) = 7800

The Seoul Composite is weaker on Wednesday after a sharp rally earlier in the week. 13-Week Twiggs Money Flow continues to threaten a break below zero. Breakout below the lower border of the broadening wedge formation would signal another primary decline.

Seoul Composite Index

* Target calculation: 1650 – ( 1900 – 1650 ) = 1400

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