The Thailand SET index had a nice 2.12% rally this week as the emerging markets are now pricing in a 100% possibility of a QE announcement by ECB President Mario Draghi at the next ECB policy meeting on January 22. 

The QE announcement becomes increasing urgent as Greece’s snap elections on January 25 could decide wheather Greece will stay or exit the Eurozone. Mr. Draghi should be aware that any QE announcement after Greece’s snap elections could be seen as a Greek bailout by the ECB.

Some Asian markets, including the Thailand SET, ran up ahead of the U.S. nonfarm payrolls report on Friday. The U.S. nonfarm payrolls for December surged by 252,000, beating economists’ forecasts of 240,000. The unemployment rate dropped to 5.6%. 
Although the headline number looks very decent, the underlying fundamentals of the U.S. job market are still weak, meaning hourly wages increased just 1.7% from a year ago, still lower than the wage inflation target of 3% that economists think the U.S. Federal Reserve would start hiking benchmark interest rates.

The U.S. labor force participation rate dropped from 62.8% to 62.7% last month, a fresh 37-year low. That means over 90 million Americans, aged 16 and older, did not have a job or gave up looking for one in December. 

Chicago Fed President Charles Evans, a voting member on the U.S. central bank's policymaking committee, told CNBC on Friday that prices and wages need to rise to the Fed targets before he would feel better about the possibility of increasing rates. 

From Mr. Evans’ comments, one would expect that the first interest rate increase would take place by midyear at the earliest. Nonetheless, the European and U.S. markets got harpooned and the Asian markets, including the Thailand SET, could follow when they open for trading on Monday. 

There are bearish warning signs for the Thailand SET bulls. The trading volume on Friday was heavy, twice the 50-day average trading volume, but the up/down volume ratio was about 1 to 4, meaning people were selling stocks. The buyers appeared to lose momentum as the Thailand SET opened at 1529.50 and closed at 1529.42, practically at the same price, on Friday. 

Technically, when a stock opens and closes at almost the same price, a “doji” (童子 – Japanese for boy, kid or child) candlestick, having a cross, inverted-cross or plus-sign shape, emerges in the chart pattern. One should pay very close attention when the doji appears at a support or resistance line, as it is signaling that the current trend could be over and a potential trend reversal is coming. 

A doji is confirmed as sign of reversal when the candlesticks, following a doji, form in the opposite direction to those before the doji emerged. Therefore, it could be a warning sign of a downtrend if the Thailand SET closes below or near 1522.75 on Monday.

In the bullish event of falling wedge breakout, the next head resistances are 1548, 1515 (50-day SMA) and 1557 (100-day SMA). In the bearish case of the trend reversal event, the technical supports will be at 1478, 1459.22 and 1451, or 38.2% Fibonacci retracement. One should pay attention to the 1459.22 support level as a breakdown could lead to a bearish, lower-lows chart pattern.