Gold slump (2011-12-30 XAU analysis)

What a sudden plunge of Gold price (XAU=), it has reached the support zone I mentioned two weeks ago. Target is still around 1,325 if the price breaks below the zone.

On volatility (2011-12-29 VIX analysis)

The volatility index finally starts to become normal again.

Last week of 2011 (2011-12-28 HSI analysis)

A long holiday has ended. How's your Christmas? This is the last week of 2011, and 2012 is coming. It seems quite peaceful with no bad news from Europe these few days, but how long would this maintain before another trouble comes out again?

Nonetheless, in general, the market still isn't that poor. At least the ultimate support line on Hang Seng Index weekly chart is still valid.

Let's see how HSI would go this week.

Daily chart of HSI:















Once the index broke the lower bound of the flag, and it was confirmed that HSI was able to climb back above this line last week.

Therefore, we would have to admit that the breakdown might be a false one. The green line is still a valid support line to HSI.

Indeed, we can see that the index has moved to the end of the flag. Therefore, breaking might not be too meaningful it is way to near to the vertex for a breakout.

We would have to further observe and find out any other possible patterns on this chart.

Volume was low, which is normal at the end of year and especially under such kind of unpredictable volatile environment.

While daily chart looks not-too-helpful, let's move on to weekly chart.

Weekly chart of HSI:















As usual, HSI is still moving within the purple Pitchfork. The median line plus and 20-week simple moving average have successfully resisted the index for a few times these two months.

Green line still represents the index's long-term extremely-strong support. This line intersects with the lower bound of the Pitchfork at around 16,600, which is therefore a very strong support to the index in the coming three to four weeks.

The retracement is an important thing that I missed out last few weeks. We can see that it was the 50% retracement keeping the index above 17,800.

Not much information is given on weekly chart either. The only fact we know is that the index is pretty near the area with median line of Pitchfork, 20-week and 10-week SMA. These are all resistances, at least until now. This might not be a good sign.

However, if the index is able to breakout, and is confirmed, there will be a great chance for it to reach 20,000 again, which is at the upper line of Pitchfork.

If breakdown, strong support is at 16,600. I could not see other good supports before this level on weekly chart.

Good luck.

Involatile volatility (2011-12-21 VIX analysis)

It looks like the EUR was breaking out the green flag instead of continuing to drop. Currently it has reached 50-period Moving Average and would probably face some resistant. Support is at around 1.305, and next resistant will be at around 1.318.

Today's focus is Volatility Index (.VIX).
















The index will be strongly supported at 20. And it is more likely to move sideways in near future.

Bearish continuation (2011-12-20 EUR analysis)

Above is 4-H chart of EURUSD.

Look like a bearish flag has formed and that the EUR is going to plunge even lower.

Real or false breakdown? (2011-12-19 HSI analysis)

Last week the support line could not support Hang Seng Index anymore and the index dropped below the line. This was not a good sign, but this break down is yet to be confirmed. We will have to see whether HSI would be able to get back above the line today.

This week will be a typical data-oriented week, with lots of rate decisions and GDP data coming out before the Christmas holiday.

Daily chart of Hang Seng Index (HSI):















As mentioned, the index dropped below the lower red support line last Thursday, and was trying to get back to the line on Friday.

So today's spotlight will be on whether the index could close well above the line. If so, the break down will be treated as a false movement, and that the index has high probability of breaking upwards. Resistance will be at 20,000.

One thing which is worth mentioning is that the volume increased when the index plunged below the line. This is a sign showing that the market is not as bearish as we think.

If the index finally closes below 18,500, the breakdown is basically confirmed. By using the flag to estimate the drop, next support will be at around 16,800, which is 23.6% level.

Weekly chart of HSI:















On weekly chart, there is no obvious support currently. Interestingly, the green line and the lower line of Pitchfork crosses at around 16,700, which is the level suggested on daily cahrt as well.

So we can expect a very strong support at this level. If breakdown is confirmed, we can expect a strong rebound when reaching 16,700-16,800.

For resistance, the moving averages and median line of Pitchfork are still acting very well. We can expect strong resistant force at around 19,000.

Important Economic Data this week (2011-12-18)

20-Dec (Tuesday)
08:30 Australia Reserve Bank's Board December Minutes
15:00 Germany Producer Prices {Forecast: Slight drop}
17:00 German IFO - Business Climate
20:00 Canada Consumer Price Index

21-Dec (Wednesday)
Bank of Japan Rate Decision
17:30 Bank of England Minutes
23:00 Euro-Zone Consumer Confidence {Forecast: Slight more negative}

22-Dec (Thursday)
05:45 New Zealand GDP (YoY) {Forecast: Increase from 1.5% to 2.2%}
17:30 UK GDP (YoY) {Forecast: Unchanged}
21:30 US GDP (YoY) {Forecast: Unchanged}
22:55 US U. of Michigan Confidence {Forecast: Increase from 6.7. to 68.2}

23-Dec (Friday)
21:00 US Durable Good Orders {Forecast: Rise from -0.7% to 2.2%}
23:00 US New Home Sales {Forecast: Slight increase}

source: http://dailyfx.com

Bearish view on Gold (2011-12-16 XAU analysis)

Time to wait for chances to short commodities. Target is 1330 for Gold once the price breaks the support zone, with lower boundary of 1475.

False or real breakdown? (2011-12-14 Galaxy Entertainment analysis)

Soon after Fed's speech on US economy, the US markets pared all their gains in the early trading hours and turned to negative. This might be because Fed was not announcing any further policies regarding the poor economy, which could make investors fear.

Hong Kong market probably follows today, which means a further drop. Watch out the level 18,150 mentioned on Monday.

Today I am posting the chart for Galaxy Entertainment (0027.HK).
















The price tried to break down yesterday, we need two more days to know whether it is a false one or not. And if it is a real break down, the fibonacci projection is the estimation using the red flag, though the 100% level looks impossible.

We would have the targets of at least 11.30 and 7.70 once the break down is confirmed.

No reversal signal (2011-12-13 VIX analysis)

Another exciting week? (2011-12-12 HSI analysis)

Last week I predicted that Hang Seng Index would surge and break out because of the positive economic data revealed; however, obviously the bad news from Europe had a greater impact on the market.

Indeed, Europe's leaders agreed to boost the rescue fund which led to rockets in Europe and US markets last Friday. Today HSI probably follows this surge at opening, and we can do nothing regarding this already-known information.

For yet-to-be-known information, we will have to turn to technical analysis for hints.

Daily chart of Hang Seng Index (.HSI):















From daily chart, we can easily spot out an interesting phenomenon: the three Moving Averages converge and touch each other.

These three are 10-day, 20-day and 50-day respectively. When they are closed to each other, there will be big movements followed. We can confirm it by the similar situation in late July, during which the three MAs got closed to each other and the index plunged greatly.

This is indeed quite reasonable. When MAs get closed to each other, it means that the stock market has been moving quite flat, shares are well accumulated (either long or short positions) and it might be the right time for the rich guys to take actions.

Anyway, back to the chart, this week there might be some big movements. However, we are still uncertain whether it would be up or down.

From the chart, we can know that the bounds are 18150 and 18900. These are the first boundaries, if the volatility is going to boost, then these levels could not hold well.

Weekly chart of Hang Seng Index (.HSI):















Obviously the index was not able to break out the median line of the purple downwards trending Pitchfork last week. It stayed well within the lower area.

Therefore, the median line keeps on resisting the index, at around 19,000. This is somehow similar to the level suggested on daily chart. In addition to that, 19,700 is another short-term resistant too.

For the downside, an ultimate clear support is by the green line and the lower line of Pitchfork, at the area 16500-17000. The area seems to be too big, but it would be narrowing as time passes by as the two lines are converging.

Yet, these are levels we have to bear in mind.

Upside: 18900-19000, 19700
Downside: 18150, 16500-17000

Get prepared for another exciting week.

Important Economic Data this week (2011-12-11)

13-Dec (Tuesday)
17:30 UK Consumer Price Index (YoY) {Forecast: Slight drop}
18:00 Germany ZEW Survey (Economic Sentiment)
21:30 US Advance Retail Sales {Forecast: Slight rise}

14-Dec (Wednesday)
03:15 US FOMC Rate Decision {Forecast: Unchanged}

15-Dec (Thursday)
16:30 Swiss National Bank Rate Decision {Forecast: Unchanged}
17:00 European Central Bank Publishes Dec. Monthly Report
17:30 Bank of England Inflation (outlook)
18:00 Euro-Zone Consumer Price Index {Forecast: Unchanged}

16-Dec (Friday)
21:30 US Consumer Price Index {Forecast; Unchanged}

source: http://www.dailyfx.com

Resistant will be tested again (2011-12-09 DXY analysis)

The resistant on Hang Seng Index is so strong that it could hardly break out. Thanks to ECB and Germany, stock markets in US plunged greatly yesterday night. Today HSI would have to follow, so it would close below the resistant line. Will update further on the index next Monday.

Today let's look at the USD Index (DXY).
















Everything is on the chart. Looks like the US Dollar has a bit strength to test the resistant again.

Going to move big? (2011-12-08 Gold analysis)

Weekly chart of Gold (XAU=) showed that the price is converging. It seems like there will be larger movements in Gold price, probably accompanied by big news which also causes huge movements in stock markets.

Watch out.

Not much from Volatility (2011-12-07 VIX analysis)

Not much hints from Volatility Index. But still we have to keep an eye on any possible gap up these two days which make it form a nice Island.

Good week coming? (2011-12-05 HSI analysis)

After the crazy over-1000 points surge last Thursday, Hang Seng Index finally got back above 19,000. No bad news is good news these days.

While the economy might appear to be better this month, with good figures from Consumer Confidence and Sales, the underlying sovereign debt crisis has yet to be solved before a concrete decision and consensus are made within EU. Even if they do, the economy could take years to recover the whole world could be under recession for a pretty long time.

Nevertheless, stock markets are not too bad, but not too good either. At least in Hong Kong there are quite a lot of IPOs coming and investors could pick one to two with good potential to develop, given that they have done their homework. IPOs are not my main focus but I have to admit that it is quite interesting after trying several times to analyze the companies.

Anyway, let's take a look at this week's Hang Seng Index (HSI).

Daily chart of HSI:















The chart looks quite plain, but I guess given such messy days with high volatility, not making the chart looks more complicated that it should is a wiser way to predict.

The index is currently facing a resistant provided by the red down-trend line, and it looks quite strong, HSI could hardly break this.

However, if it does, the next resistant level will be at around 20,300 as suggested by the retracement level.

On the other hand, the green line keeps on supporting the index. So if it does not break out, we could expect it to move in the narrowing range between 18,000 - 19,000.

Weekly chart of HSI:















As usual, the Pitchfork currently dominates the chart. The index moves quite beautifully within this fork.

It reached the median line last week, and faced strong resistance. It looks like that the index could hardly break out.

However, if breakout really happens, the next resistant level suggested on weekly chart is 19,500, as compared with 20,300 as suggested on daily chart.

Downside support is at around 17,900, not far from 18,000 on daily chart. So we could expect strong support at 18,000.

BUT one important thing is that this week there are several Economic data releasing, and most of them show good signs to the stock markets.

For example, interest rate cut from Australia and Europe, rise in GDP in Australia, and drop in CPI and PPI in China. These could lead the stock markets upwards, and possibly break the red line as well. So this week we are looking at 19,500 and 20,300.

If it does happen, this is a good example of looking at both economic data and technical.

Important Economic Data this week (2011-12-04)

5-Dec (Monday)
18:00 Euro-Zone Retail Sales (MoM) {Forecast: Rise from -0.7% to 0.1%}

6-Dec (Tuesday)
11:30 Reserve Bank of Australia Rate Decision {Forecast: Drop from 4.50% to 4.25%}
18:00 Euro-Zone GDP (YoY) {Forecast: Unchanged}
22:00 Bank of Canada Rate Decision {Forecast: Unchanged}

7-Dec (Wednesday)
08:30 Australia GDP (YoY) {Forecast: Increase from 1.4% to 2.3%}

8-Dec (Thursday)
04:00 Reserve Bank of New Zealand Rate Decision {Forecast: Unchanged}
08:30 Australia Unemployment Rate {Forecast: Unchanged}
20:00 Bank of England Rate Decision {Forecast: Unchanged}
20:45 European Central Bank Rate Decision {Forecast: Drop from 1.25% to 1.0%}

9-Dec (Friday)
07:50 Japan GDP (QoQ) {Forecast: Drop}
10:00 China Consumer Price Index {Forecast: Drop from 5.5% to 4.5%}
10:00 China Producer Price Index {Forecast: Drop from 5.0% to 3.3%}
15:00 Germany Consumer Price Index {Forecast: Unchanged}
22:55 US U. of Michigan Confidence {Forecast: Slight rise}

Commodity (2011-12-02 Silver analysis)

HSI well reached 19,000 as mentioned on Monday, though such movement was kind of unpredictable. Will further update how the index would go next week on Monday.

Today let's take a look at Silver (XAG=).
















From the daily chart, the price has reach the red downwards trending line. This might tell us that the price is going to plunge further, especially after it has crossed lower the previous green upwards trending channel.

50% retracement appears to be a strong support, so the price might consolidate one to two days there. If it keeps on dropping, then previous low at around 26 will be its ultimate support.

For the upside, if it successfully breaks the red uptrend line, its previous peak at around 35.6 will be strong resistant.

So keep an eye on these levels.