Throughout the first half of 2017, carry was a major theme in EM; however, given the recent turn in the ultradovish rhetoric from DM central banks, we look at which EM economies would be more vulnerable if liquidity were to deteriorate and how this would impact currency selection going forward. In order to assess relative value in EM FX, we calculate a risk-adjusted rate by stripping out the credit risk and inflation risk from the 5y sovereign yields and compare it to the fundamental characteristics present in each EM economy. Based on our analysis, we find that INR and IDR appear the most attractive given their relatively high levels of riskadjusted rates and high growth expectations. Meanwhile, BRL and ZAR rank at the bottom of the spectrum based on their weak fundamentals while TRY appears overvalued given that it has the lowest risk-adjusted rate.
Overall, the bias in prices is: Sideways.
Short term: Prices are stalling.
Intermediate term: Prices are ranging.
By the way, prices are vulnerable to a correction towards 13,343.94.
The projected upper bound is: 13,373.79.
The projected lower bound is: 13,276.93.
The projected closing price is: 13,325.36.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 7 white candles and 3 black candles for a net of 4 white candles. During the past 50 bars, there have been 25 white candles and 15 black candles for a net of 10 white candles.
A falling window occurred (where the bottom of the previous shadow is above the top of the current shadow). This usually implies a continuation of a bearish trend. There have been 8 falling windows in the last 50 candles–this makes the current falling window even more bearish.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 19.6970. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a sell 3 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 44.54. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 3 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -104.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a sell 3 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 1 period(s) ago.
Rex Takasugi – TD Profile
FOREX IDR= closed down -12.000 at 13,325.000. Volume was 10% above average (neutral) and Bollinger Bands were 44% wider than normal.
Open High Low Close Volume
13,300.000 13,329.000 13,300.000 13,325.000 116
Short Term: Oversold
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 13,367.70 13,324.14 13,314.11
Volatility: 2 2 4
Volume: 113 96 105
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
FOREX IDR= gapped down today (bearish) on normal volume. Possibility of a Runaway Gap which usually signifies a continuation of the trend. Four types of price gaps exist – Common, Breakaway, Runaway, and Exhaustion. Gaps acts as support/resistance.
FOREX IDR= is currently 0.1% above its 200-period moving average and is in an upward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. Our volume indicators reflect volume flowing into and out of IDR= at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on IDR= and have had this outlook for the last 15 periods.