Our technical analysis expert, Jeffrey Tie, predicts the stock market for 2019, based on an analysis of trends from everything that happened this year.
The chart above is a weekly candlestick chart, and the green swing represents the trend pattern of the yearly time frame. As can be seen, the yearly time frame trend pattern is bullish, with higher highs and higher lows.
The direction of the current leg of the green swing is still pointing up. This suggests that lower time frames, (quarterly and monthly) should also be bullish, in line with the bias of the current green swing direction.
This second chart shows the quarterly time frame trend pattern (in black) and the monthly time frame trend pattern (in red).
The black quarterly time frame swing line is currently down, suggesting a bearish trend for the monthly red swing. But we can also see a sideway range pattern marked by the 2532 start, and the 2940 end.
At this point of time, this index has three possible scenarios:
The sideways trend pattern can continue, with the index travelling from 2532 to 2094, and then break above 2940 to embark on a bullish trend continuation.
The sideways trend pattern continues, with the index bouncing back and forth between start and end.
The index breaks below 2532, and the sideways pattern changes into a downward trend pattern.
Which scenario is most likely to occur? The following chart is based on daily candlesticks, and with blue weekly time frame trend, and red monthly time frame trend displayed, and can give clues as to what lies ahead in 2019.
The blue swing support at 2603 was decisively broken on Monday 17 Dec, on above daily average high/low range, and also above average volume.
This suggests that the selling forces are dominant, and that this index can break below 2532, which is a crucial support level. If sellers dominate below 2532, the resultant trend will be bearish for monthly timeframe traders, and can signal a change in the prevailing bullish yearly time frame green trend pattern. It will then not be a surprise if Dec 2019 ends significantly lower than the start of Jan 2019.
The current green swing direction is down, and the current trend pattern is a sideway rectangle, with expected buying support at 2531. The green swing is likely to trade lower to the 2531 support zone.
The green swing is signalling a continued downtrend in the red monthly time frame. The expected scenario is that 2019 Dec will probably end lower than the beginning of Jan 2019.
There are two possible scenarios for USDSGD.
The bullish scenario sees USD strengthening against a weakening SGD, with the chart tracking the green dashed line.
The bearish scenario calls for the USD to weaken against a strengthening SGD, with the chart then following the path outlined by the black dashed line.
Which scenario is more likely? The current trend pattern of the green yearly time frame swing suggests that this trend pattern is bearish, with defined lower lows and lower highs.
However, it is also possible that a move above 1.3998 can trigger an attempt to clear the 1.4546 Dec 2016 high, thereby laying the foundation for a yearly timeframe trend change from the current bearish stance.
A quick look at the monthly time frame red swing trend pattern, and the weekly time frame blue swing trend pattern can give some clue which scenario is more likely.
The red swing pattern is currently clearly in an uptrend pattern, suggesting bullish trend continuation under scenario 1.
This will become more likely if USD strengthens above 1.3873, the high seen on 9 Oct 2018. The bullish scenario comes under threat if USD weakens below 1.3525 seen on 9 July 2018, which is the lowest low within the complex sideway blue structure.
As can be seen on this chart, the rocket-like surge from 1000 to 19000 was followed by a sharp decline from the 19000 peak.
The current green swing direction is down, suggesting weakening of bitcoin’s price.
For the better part of 2018, bitcoin traded in a complex corrective pattern, but market action in Nov 2018 clearly punctured the corrective buying support established at 5806 in July 2018.
The overall trend pattern now reflects a lower lows, lower highs bearish trend, in line with the falling green swing. Expect the bearish trend pattern to continue in 2019 until bitcoin price displays some kind of bottoming price action, which is at present not yet visible.
The current green trend pattern is arguably in a lower lows, lower highs downtrend, although it can also be argued that the trend structure displays some sideway characteristics.
The current green swing is down, and this suggests that the bias on lower red time frame trend is likely to be bearish.
Sellers dominated trade action on Monday 18 Dec, and the trading range of Monday 18 was significantly above average. This suggests a bearish trend continuation, which is in line with the current green swing line in a southern direction.
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About the Author
Jeffery Tie lectures on Trading and Technical Analysis for AB Maximus & Co and the SGX Academy. He was previously from Kim Eng Securities, Refco Singapore, and CMC Markets. He is a registered instructor with the International Shinkendo Federation, and the author of Aiki Trading: The Art of Trading in Harmony with the Markets.