Technical analysis

Week 11 data: GBPUSD and Tencent in the short term

By Antreas Themistokleous

12 March 2024

wk11 data TNT and GBSUSD

Both China and the UK are dominating the news with their economic controversy this week, and from all the market noise, two stocks are emerging as worthy candidates for your attention. Let’s put a spotlight on Tencent and GBPUSD.

Tencent Music Entertainment Group

Tencent Music Entertainment Group (TME) saw its share price rise by more than 35%, performing extraordinarily in the last quarter of 2023. The company's earnings report for the fiscal quarter ending December 2023 is expected to be released on Tuesday, 19 March 2024, before the market opens. The consensus EPS forecast is $0.13 (USD), up from $0.12 in the same quarter last year.

The enviable performance of the company in the fourth quarter of 2023 is also reflected in its latest published financial statements. As of 30 September 2023, the company had a current ratio of more than 245%, indicating that it could easily handle any short-term financial difficulties with its current assets.

Additionally, in the last seven quarters, the company experienced declining revenues, but net profit in these same quarters consistently rose. This suggests that the company successfully reduced its costs, particularly operating costs, thereby substantially increasing its net profits. These reduced costs also correlate directly with a decline in long-term debt, resulting in fewer interest payables.

Technical analysis shows that the price has reacted to the resistance of the upper Bollinger Band and is currently correcting downwards at the time of this report. The Stochastic Oscillator does not indicate any overbought or oversold levels, while the 50-day moving average is trading well above the 100-day moving average, validating the overall bullish momentum in the market.

Today's session has already covered the recent price gap, with the $10 price area being the first level of potential support. This is a psychological support area due to the round number, as well as the price reaction observed last week.

GBPUSD

British wage growth was weaker than expected, possibly easing the Bank of England's concerns about inflation and impacting market bets on interest rate cuts. Despite recent data and concerns about external balance, the pound has performed rather well, supported by its status as a high-yielding currency and broad risk appetite. Investors will closely monitor the upcoming UK inflation figures next week to gauge their impact on market expectations for future central bank decisions.

From a technical standpoint, an evening star formation and a bearish reversal pattern are clearly identifiable on the daily chart. This three-candlestick formation typically features a bullish first candlestick, a second with a small body, and a third bearish candle. This pattern often signals a build-up of bearish momentum, indicating that the bulls are losing leverage to the bears, leading to a downward price movement.

The targets of this bearish move may vary, depending on previous support areas, Fibonacci levels, and round numbers. At the moment, the price area of $1.27500 represents a major technical support level, corresponding to the 50% Fibonacci retracement of the last major swing. Additionally, the Stochastic Oscillator is moving away from extreme overbought levels, further supporting the bearish narrative.

Both TME and GBPUSD are available on the Exness Terminal, with competitive spreads and several unique trading features helping you to trade more efficiently.


This is not investment advice. Past performance is not an indication of future results. Your capital is at risk, please trade responsibly.


Author:

Antreas Themistokleous
Antreas Themistokleous

Antreas Themistokleous is a trading specialist in Exness. He is a Certified Financial Technician since 2018. As a member of the Society of Technical Analysts, Antreas is implementing advanced use of indicators and patterns to conclude in an action plan for different trading strategies.