A Stronger Dollar
GBP is heading towards 177, the chart does not have day high/lows ie why you see a different picture. Even with this line chart, 182 is the minimum.
CAD chart is a few days old since I forwarded it to a friend for his reference to short CAD. It has an inverted multi bottom and looks set to clear resistance at 1.07, 1.10 and hit 1.14. Read chart above.
Hang Seng Index
Most readers are familiar with multi tops esp with HSI, read post on HSI early 2008 in this blog.
HSI is now extremely ugly and the chart indicates it will hit 10000 after falling through neckline 21000.
A lot of investment banks are already offering private bank clients derivatives [similar to accumulators] to hedge their own positions [or that of their biggest clients] against its fall although it hasnt broken out of the multi top formed. I suspect there will be a lot of struggling before breaking out to the south. Two reasons - first, the really big/prestigious clients have to hedge their bets with the investment banks and this takes time, second, retail investors think it is cheap now so they will buy on big one day declines limiting the fallout for a while.
This is the first time I question the chart's predictive power as 10000 hasnt been seen for a long while, would it really hit 10000? Other indicators do not point to such lows:
- 50% of 32000 is 16000, 30% [falling 70% from top] of 32000 is 9600 [close to 10000], but
- 17000 and 14000 are strong supports.
- the present rally started from 9000 and rose to 32000, retracing 50% means it will hit 20500, 68% means 17050;
- The 10 yr chart tells a different story, it indicates the rising trend is intact, whether the fallout will hit the trend line or stay well clear [above] of it is still to be observed.
- The year before 1995, it also formed a multi top and there is no breakout below the neckline by much and started rising again,
The few possibilities that 10000 will be hit are - there is a war close to China/HK, a bird flu pandemic or oil price hitting 200 above.
The time frame from the 1 yr chart says it will hit bottom in about 6 months or less after breakout. Even if it does hit 10000, it will be a long and winding road [not likely to be 6 months], there will be many false rallies before that.
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