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Wednesday, November 25, 2015

MYR: Poised for bullish reversal

MYR is on the verge of a bullish reversal. I will analyze the charts of USD-MYR & SGD-MYR to arrive at this conclusion instead of MYR-USD or MYR-SGD charts as I'm more used to the former charts.

From the USD-MYR daily chart (Chart 1), you can see that the uptrend has just been violated. Unless there is a strong recovery, this could signal a top for USD-MYR. In addition, we can see that MACD signal line has crossed below the MACD line. The ADX looks set to breach the 20-mark which means that momentum for a down slide can pick up pace.


Chart 1: USD-MYR's daily cahrt as at November 25, 2015_10.00am (Source: Investing.com)

The same technical set-up can also be seen for SGD-MYR. See Chart 2 below.


Chart 2: SGD-MYR's daily cahrt as at November 25, 2015_10.00am (Source: Investing.com)

Both charts show tentative bearish reversals for USD-MYR & SGD-MYR- which would translate to a tentative bullish reversal for MYR. If this reversal becomes full blown, all stocks that had benefited from the weakening of MYR would have to give back their gain. Thus, we may see a sharp reversal for exporters, such as rubber glove producers. On the opposite side of the coin, we may see a rebound for stocks that were adversely knocked down by the weakening of MYR, such as importers of cars. This could be the right time to take some profit for the gainers in the weak MYR play and take a position in the opposite play- the MYR recovery play.

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