Charts – Weekly

Ploy has returned from her two week vacation and has graced us with her latest thoughts on the market. Enjoy!

While I was away, the US dollar index reached the Y-resistance in the chart and has backed down ever since. I stated previously that the breakout above the Y-resistance (which was above 82.20-82.40 then) would mean a threat to the global equity markets, and a fall would imply a positive outlook for the global equity markets as well.

The US dollar index may head down to test the barrier at 77.96-77.92. The fall below this support will lead the US dollar index to test the lower support at 76.60. This downside gap in the US dollar index implies that the global rally may continue, until the US dollar index rebounds significantly from one support line. The continual fall in the US dollar index will be less likely on the index’s rebound above 79.54 and 80.50.

Updating the chart I showed previously, the SET has breached significantly above the key barrier at 1,065-1,070, simultaneously with the Baht/Dollar exchange rate falling sharply from the blue resistance line in the chart. The Baht may continue strengthening and test the red support at 30.96. The down side is as low as 30.26-30.25, and the supports along the way down are at 30.68 and 30.44.

The strengthening Baht means that the SET may continue the rally and head up to test the resistance at 1,088-1,093. The breakout above 1,088-1,093 will lead the SET to test the next resistance at 1102.77. The support for the SET is at 1,070-1,065, and the critical support is as low as 1,049-1,047. Overall, given the downside gap in the US dollar index and the strengthening Baht, the SET may continue the rally and we may trade along that.

The chart below shows that the SET may out-perform the US dollar index, especially on breakout above the X-resistance in the chart. However, the volatility at the X-resistance may pull the SET  down. The situation will be watched and updated. 

Across the world, the Dow Jones is volatile nearby the barrier at 12,876, and is testing the support at 12,510-12,490. However, last night’s candlestick looks like a Hammer to me, and the Hammer candlestick usually indicates a reverse in the trend. That means, the Dow Jones may have finished its 3-day volatility, and may continue to rebound from the support at 12,510-12,490, heading up to re-test the barrier at 12,876. But, if I am wrong and the Dow Jones falls below 12,510-12,490, it may head down to 12,180-12,155.

Back to the Asia Pacific region, the Asia Pacific stock markets may continue the rally and the upside gap is quite large. This will help pull the SET up as well.

The US dollar index is now weaker than the equities and most commodities. Yes, the gold is making a strong comeback. It is now testing the barrier at 1,757-1,761.75, and the breakout above this barrier will lead the gold to test the barrier at 1,802.60. For those who are trading the gold, if it falls below the support at 1,727-1,723, the next support may be as low as 1,690-1,685.

Overall, while the US dollar index weakens against equities and commodities, we may enjoy the rally until the US dollar index rebounds significantly from one of its supports. The situation will be watched and updated.

Thanks again Ploy! You can contact her directly @ ploy@thaicapitalist.com

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