Uncharted-FX
Short

Hong Kong Dollar Showing Exhaustion

FX:USDHKD   U.S. Dollar / Hong Kong Dollar
USDHKD looks good on both the 4 and 2 hour charts.

We have had an uptrend with higher lows and higher highs and then we stopped making new higher highs. This range and even double top here shows us the trend may be exhausting.

From here, we need to see a break and close below 7.8360 zone. First target would be 7.8300 zone.

Also want to share some information from hedge fund manager Kyle Bass. He has come out saying in a recent interview that he still expects things in Hong Kong to get worse. He used the term "bloody".

October 1st is the Communist Partys 70th anniversary. Big celebrations planned. Military parade too of course.

Kyle Bass has said that the CCP cannot afford to have protests in Hong Kong for this celebration. He has said that he thinks the CCP will do something about it. Let us see what happens in the next 24 hours.

Comments

Hi
I too was expecting the CCP to take some action on Oct 1st on the HK saga but they did not. Then I spoke to a China friend who enlightened me. Now, we must understand China values the importance of "face saving" and for them to make a move now into HK would make them look bad when the world at large are raining their criticisms at the way how they handled this crisis. So, the smarter way is to wait. Wait for how long, you might asked?

When the locals in HK are fed up and angry and frustrated (like now) for their lives are inconvenienced daily by these rioters/protesters. MTRs are shut down, taxi drivers get beaten up, malls got defaced , protests every weekend. How can a normal person lead their daily lives in HK ? Expats with renewable contracts would leave once their contracts are due. The rich locals are already scouting for overseas properties. It is the large influx of middle income and/or those who still believe in the HK government that choose to stay. The 5 demands that the protesters are asking for is meant to humiliate the government ; according to PM Lee of Singapore Government in a recent interview.

The government is now pulling up their socks to resolve the housing matter, (a little too late imo), hoping to appease the locals. Hang Seng Index has seen a near triple bottom at 25230 range and is now moving upwards. We must not forget there are many Chinese companies that are listed in HK as well, thus their share price can help to support the local market.

As a trader, I would avoid this USD/HKD pair as it is a long drawn battle between the central government and one needs patience in order to make money, if any on it. Hedge fund managers like Kyle Bass has the time and money to wait out the tide and has a reputation to maintain if his call is right. For retail traders, there are too many good opportunities like the recent few hundred pips move on the pound pair, etc.

P/s : This view is strictly in accordance to analysing the stock market/forex and shall not be taken to represent any political view between HK and China.

Peace out.
+1 Reply
@dchua1969, Hey Great comment! Yes there was another interview on Real Vision Youtube Channel between Kyle Bass and General Robert Spalding which you should definitely check out. They talk about the one thing preventing the army from marching in is the fact that there are camera's everywhere in HK lol. China would receive criticism from the world, and nations may stop receiving Chinese goods. However, Bass and others believe the Chinese do not really care about this anymore since the world really depends on them. They know the middle class in the West is hurting and if all their goods that are produced in China disappeared and left in the short term, there would be higher costs as supply chains would have to re-position else where.

I agree too about the trade. It is definitely a long term trade. I still believe a peg break is happening but you cannot time it. Hedge funds have the time and money to hold on since they are getting adequately compensated too.

Will definitely be more interesting to see what occurs now. The US were considering taking a stance on HK after China said they need demands to be met before trade talks.
Reply
Very nice call, the technicals all look very bearish and it looks like it has broken to downside on the trend line on the 480, though that is a bit fuzzy. Am going short tonight so will see what happens in the next 24 hours.
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