Latest thoughts from our resident chartist Ploy!

Nothing has been changed much while the market is testing its Previous High.

The US Dollar index is stalling at the X-support, as shown in the chart below. We have to wait and see whether the index can make a strong rebound from the support. Key resistance is at 79.20-79.40. Meanwhile, the Baht/Dollar exchange rate has fallen below the support 30.50-30.45, given last week, but it is making a rebound, with the same support becoming its resistance. If the rate can stay above 30.51-30.54 baht/dollar, it may head up higher and the weaker baht will push the SET down.

The SET has been highly volatile at the key resistance at 1,148.28, which is also its Previous High. If the SET falls below the red channel, as shown below, and below the support at 1,129, the downside may be steep. The similar pattern is shown in the SET50, with the support at 795. Trading at this 1,148.28 resistance is extremely hi-risk-hi-return, given that the baht has become weaker and the US dollar index is lingering at its X-support. Therefore, use both 1,129 in the SET and 795 in the SET50 as a signal to cut back a part of your portfolio.       

The good news is, if the SET and SET50 can stay well above their support at 1,129 and 795 this week, they are likely to continue a rising zigzag. Another factor that may help pushing the SET up is the oil price. It is shown below that the Brent oil price has made a breakout and may continue heading higher. It is also shown that the Asia Pacific region, which moves in positive correlation with the oil price, is poised to test the Y-resistance. The upside gap seen in the Asia Pacific region signals that the SET and the region may be able to head up higher, though at the slower pace. But, the outlook will turn negative if the US dollar index can make a strong rebound from its X-support and breach above 79.20-79.40.

In sum, ease off buying as the market is testing its Previous High and the situation is hi-risk-hi-return. A signal to sell a part of your portfolio will occur on SET’s falling below 1,129 together with the SET50’s falling below 795.

Thanks Ploy! If you have any questions you can contact her directly at ploy@thaicapitalist.com