$USDZAR might see some short term reprieveThe Rand / Dollar exchange rate has consolidated for a couple of sessions below the previous highs seen last in September 2018. Should the rand bears decide to take further profit, two short term levels to watch out for are 15.00 and 14.60. However, should the rand weaken past the 15.46 closing print from Monday the 19th of August, this should put the rand in a very precarious position with further downside expected. For now, the fact that the previous highs seen in September 2018 have held together with the fact that we are starting to see Divergence develop on the RSI (Higher highs in price - lower highs in RSI), gives me a clue that momentum is waning and we could expect a very short term correction back to my levels indicated. However, the medium/longer term trend on the USDZAR pair is still very much in favor of much higher levels, so i would trade this very short term view with a high degree of caution.
Emergingmarkets
USDZAR ShortWe have seen ZAR very weak recently due to heavy RISK OFF and some weak zar data.
I'm anticipating a RISK ON week which will see ZAR gain some strength, we, have weak PMI data during this week which will give us our prime level to sell
I have 3 TP's set for this trade
TP 1 - 15.17456
TP 2 - 15.02576
TP 3 - 14.64768
China Breakdown Imminent.Be prepared. China looks as though it is about to break down VERY HARD and VERY FAST as my Fibonacci price amplitude arcs suggest recent price rotation is setting up for a deep downside price move. My estimate is that this will happen on or after my Aug 19th projected breakdown date.
My opinion is that Asia/China are about to crush the market with a complete price collapse that may lead the rest of Asia and some of Europe into chaos.
Plan and prepare. BUY GOLD.
$EEM - Emerging Markets Under PressureAs volatility has come back to the global markets with a vengeance, one headwind that continues to blow even stronger continues to be the US-China trade war. On August 2nd, the US unexpectedly imposed additional tariffs on Chinese goods, with the Chinese now threatening to retaliate in kind. As a result of this renewed volatility, Emerging Market stocks ($EEM) have been rattled heavily over the past few trading sessions.
On a technical basis, $EEM prices are below all three of its EMAs, with a death crosses forming on i) the 10-Day and 50 & 200-Day EMAs, and ii) the 50-Day EMA and the 200-Day EMA, something that has not been seen since May. Further, its RSI continues to fall, indicating that momentum is quickly increasing to the downside as global investors lose faith in Emerging Markets. Lastly, $EEM prices seem to to be in a downward trend since July 25th, with the EEM/SPY price ratio continuing its march lower, as global investors (continue to) invest in the US over Emerging Markets.
Given the increase in rhetoric between the two economic giants, Emerging Market stocks are currently under heavy bearish pressure, with no end in sight. If these pressures continue on the space, we see $EEM heading lower to $38.45 as its next stop.
$EEM Emerging Markets - Dead MoneyAfter a breakout first half in 2019, Emerging Market equities ($EEM as a proxy) have begun to loose some steam.
Since February, Emerging Market stocks have been treading water, in relation to their US equity counterparts, trading in an established range of $44-$40 since then.
On a technical basis, $EEM weekly chart is showing that Emerging Market stocks are not in trend at the moment, with its ADX below 20, and an RSI remaining flat since June 1st, despite the increase in moment in late May.
On a fundamental basis, despite their cheap valuations relative to their Developed Market peers, and accomadative global central bank policies, Emerging Market stocks seem to still be weighed down by economic weakness in China, the US-China trade war, weak global PMIs, and the overall slowdown in global growth.
Going forward, we see this trend persisting over the next few weeks and months, unless their is a positive shock to the global economy and financial markets.
For looking investors who are adventurous, we recommend investors to drill down within Emerging Market stocks and be selective on a regional and sectoral/industry basis.
Additionally, investors should take a look at Frontier Markets ($FM as a proxy), which has performed much better year-to-date in relation to their Emerging Market peers.
Take advantage of how sensitive the market is!We currently live in a world where media has major sway in the psychology of investors, including ones who do their homework. After watching $EEM closely, I see that at each major event over the past few months (tariffs placed on China, Federal Reserve doesn't reveal a rate cut at June 18-19th meeting, G20 meeting) the ETF spiked before cooling down as more information became available. I see an opportunity that can be taken advantage of regarding the upcoming FOMC July 30th date. Short term profits although as history has shown they can be short lived, so take profits early I would suggest.
The rising wedge suggests a potential spike but an inevitable drop as more data is made available.
PS: I forgot to add some indicators to further support my argument, but feel free to comment and give your own opinion, also this is my first post so I'm open to any constructive criticism you have too.
USDCLP Weekly ABCD LongH&S has failed but structure is still to the top side (hl's hh's), bias is for upside continuation to 760 with a stop below 660 swing low (if aggressive can dial up RR using a median line stop), if 660 is given would favour a broader double top formation and usdclp for lower.
For now weekly Mas are supporting price action.
But remember, anything can happen! :)
EWZ: Viking is back in townI've been working for 5 hours to estimate the trend turns for the next six months. To gain the knowledge to do those five hours are countless.
Now, it will not be 100 % accurate in timing. I still have a lot of cycle work to be completed to fine-tune. But it will be quite accurate as I have gone back in time and checked out what EWZ has done in the past. And since the past tells us about the future as history repeats, confidence level is high. Please allow a day or two on each side of the green bars.
Price is a different story. I have no clue how to deal with that. But its better to know when price can turn than how high it can go, if you catch my drift?
$USDBRL $EWZ $BVSP - Brazilian Real Under PressureAs market volatility has come back with a vengeance and the US Dollar continues to remain strong, one EM currency that has been hit particularly hard this year has been the Brazilian Real ($USDBRL).
Sluggish growth forecasts, coupled with waning support for the Brazilian President has sent the Brazilian Real to its lowest level of the year thus far. The sharp declines have also been fueled by uncertainty over the US-China trade talks on the macro level. The combination of the two forces, the external macro headwinds and feeble domestic economy, have been a perfect storm for the under-performance of the $USDBRL in 2019.
Further more, on a technical basis, the $USDBRL continues to show deterioration within the Brazilian Real, with the 10-day EMA being a strong support for the currency pair.
We believe if this continues, $USDBRL 4.25 is the next stop.
Malaysia - Still Waters Run DeepAs Q2 2019 is underway, global financial markets have experienced a melt-up in assets prices, with some markets up over 20 percent year-to-date. However, despite the run in global asset prices, there is one country that has missed out on the rally, and that is Malaysia.
Malaysian equities ( EWM ) (INDEX:KLSE) have declined -3.77% in 2019, taking the mantle as the worst performing equity market this year so far. To further complicate matters, the yield on the Malaysian 10-year government bond has risen to 3.932% as of this post, up from 3.81% in March. Lastly, the Malaysian Ringgit has weakened by 1.92% percent in April 2019, loosing 0.08% against the US Dollar for the year, and forecast to fall further.
Under-performance in Malaysian assets in recent trading sessions can be attributed to the fact that global investors are worried that Malaysian bonds may be removed from the FTSE Russel, a key global bond index for international investors. If this were to occur, Malaysian credit markets would see billions of dollars in outflows, in conjunction with a spike in yields, as investors flee the market en masse.
However, the under-performance of Malaysian assets in 2019 can be attributed to recent downgrades in Malaysian gross domestic product (“GDP”) by the International Monetary Fund (“IMF”). The IMF downgraded the country’s GDP to 4.5% for 2019, down from 4.7% as stated in their prior forecasts. Growth is expected to slow this year as uncertainty stemming from the US-China trade war is expected to put further pressure on Malaysian exports. Furthermore, on a micro level, the threat of elevated household debt among Malaysian households is also lurking in the background. With household debt-to-GDP levels hovering around 83% in 2018, some of the highest in South East Asia, there is worry that leveraged households who have taken large sums of debt for real estate investment and consumption may have difficulty servicing their existing debt. This is especially worrisome in the midst of a slowing economy. Thus, there is risk that elevated household debt could add further pressure to future economic growth, and threaten economic stability within the Malaysia, if it continues on its current trajectory.
As a result, due to these ongoing internal macroeconomic and financial headwinds, we are bearish on Malaysian assets and caution investors to tread lightly within this space.