Based on the the Elliott Wave Theory, the Malaysian Ringgit appears to be heading for another round of weakening - meaning our Ringgit is going to buy less goods elsewhere. More expensive tech toys :(
The Ringgit has fallen to a low of RM3.7365 in early March from a high of RM3.13 in April last year. There was a clear and distinct 5-waves movement, which I have labeled A. Hence, it is now in correction mode with wave-a completed when the Ringgit hit RM3.4695. It has since rebounded to RM3.6005, just shy of its 50%FR level of RM3.6030.
In the near term, the Ringgit could strengthen towards 3.4355, where c is 0.618x of a. The 50.0% FR at 3.4333 is also nearby. Hence, there is a good chance that the Ringgit could head towards those levels in the coming weeks tom complete Wave-B. Whether it could strengthen further, we will have to see and take it wave by wave.
I have a BIG arrow at the end of wave-c of Wave B to show that the Ringgit is going to weaken to below RM3.7365 in the coming months. The Ringgit could falter to about RM4.00 (if wave-C is equal to wave-A) to the USD if wave-C stops near the levels mentioned above. If Wave-C is 1.382x of Wave-A, then the Ringgit could weaken to RM4.2737. This would mean that the Ringgit is going to be weaker (maybe a lot weakner) than it was when it was peg at RM3.80.
Be prepared for it as the weaker Ringgit could 'probably' cause the Malaysian stock market to fall as well, just like the Asian Financial Crisis in 1997/98. Is the KLCI heading back towards the 263 lows? That is another question for another day. Happy trading while it lasts.
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