Hong Kong Dollar (HK$) ⇨ US Dollar ($)(HKDUSD) Collapse

Hong Kong Dollar (HK$) ⇨ US Dollar ($)(HKDUSD) Collapse

The Hong Kong dollar is getting clocked. Last January 2016, there was speculation that the peg to the USD would end. That sent the HKD downward sharply. The dollar recovered for a period but has begun collapsing again sharply over the past few sessions. More will continue. There are mounting problems in China and this is endemic of what is going on. At the same time the HKD is falling, Hong Kong government interest rates are heading lower which will serve to exasperate the problem. If the peg is ended, if the government allows the HKD to free-float, the move lower in HKD will pale in comparison.

  • HKD peg has been broken from flows of money into HK.
  • Chinese economy pushing breaking point with exodus of funds.
  • Interest rates in HK and CN diverging.

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 7.78.

The projected upper bound is: 7.81.

The projected lower bound is: 7.79.

The projected closing price is: 7.80.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 35 white candles and 14 black candles for a net of 21 white candles.

Momentum Indicators

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.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 70.7321. This is not an overbought or oversold reading. The last signal was a sell 1 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 66.09. 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 22 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 129.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 10 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 4 period(s) ago.

Rex Takasugi – TD Profile

FOREX HKD= closed up 0.001 at 7.798. Volume was 11% below average (neutral) and Bollinger Bands were 73% wider than normal.

Open   High    Low     Close   Volume
7.797    7.801   7.797   7.798   6,682

Technical Outlook
Short Term:                Overbought
Intermediate Term:  Bullish
Long Term:                 Bullish

Moving Averages: 10-period  50-period  200-period
Close:                       7.79            7.78            7.77
Volatility:                0                 1                  0
Volume:                  8,613          7,930          7,361

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.

Summary

FOREX HKD= is currently 0.4% above its 200-period moving average and is in an upward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. Our volume indicators reflect volume flowing into and out of HKD= at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on HKD= and have had this outlook for the last 94 periods.

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John Heffernan

John Heffernan is a Junior Analyst at HEFFX. John is studying Economics and is a contributor on equities at Live Trading News.

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