Interesting charts
Comment of the Day

February 25 2014

Commentary by David Fuller

Interesting charts

David Fuller's view

Price chart action is important because nothing else reflects an up-to-date combination of fundamental expectations, against the background of liquidity and market fashion, determining the weight of supply versus demand for financial instruments.  These factors are a constantly changing and often self-feeding influence, not least because seeing is an important part of believing in market trends. 

Chinese Renminbi (CNY) per 1 USD (historicweekly & daily) has weakened the most since mid-2012 and broken its 200-day MA in the process.  This is a policy change since the Renminbi is a managed currency.  In a guess, since China’s targets are unlikely to be announced, it may not come down again anytime soon as it had almost regained the entire 1994 devaluation, as you can see on the historic line chart above.  A significant weakening of the Renminbi this year would eventually cause problems for some of Asia’s developing economies, as we last saw in i997/1998.

China’s Shanghai Composite Index (weekly & daily), which is heavily weighted by banks, has fallen back sharply over the last four days, retracing most of the mid-January to mid-February rally.  An upward dynamic is required to check this slide beyond a brief pause.

Vietnam (weekly & daily) remains in form this year and has one of the best overall chart patterns in terms of V-bottom with extensive right-hand extension base formation, as taught at The Chart Seminar.  A close beneath 560 would be required to check upward momentum beyond a brief pause.

Ukraine (weekly & daily) – You may want to keep an eye on this chart, as a significant loss of form could indicate political as well as economic problems.  While it is going up, it is generally good news all around.   

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