FX ticker

Monday, 26 December 2011

Copper triangle awaits breakout



We have some clear boundaries now in March 2012 copper futures. the converging pattern since October invites patience for a clear breakout. More likely a continuation of the previous downtrend but let the market show. A good strategy could be to use options either side of the boundaries.

Sunday, 25 December 2011

Newscorp channel break unconvincing


In an earlier blog I suggested the downward sloping channel in Newscorp should be watched for reversals at channel boundaries or a break through the upper boundary for a change of trend. Well Newscorp has pierced the upper line on the weekly chart above. However the move is unconvincing. Note the lack of increase in volume on the breakout and the fall off in volume in general as Newscorp rallied from its June low. I'd like to see a significant pick-up in volume of shares traded on any new advance to be convinced this is the start of any major move.

Friday, 23 December 2011

Sugar Wedge forming


After its triple top break in September the Sugar continuous chart has been forming a neat downward sloping wedge. Volume has dropped off and trading boundaries have converged. Watch for a break out of the top line of this wedge. Until then the trend remains down with the horizontal support line in Nov/Dec indicating where a further down-leg would commence if broken.

Saturday, 17 December 2011

S&P 500 marking time but still bearish


The S&P 500 is still in bear mode after its fall from a head and shoulders top in August. The rally back the the neckline was classic charting. The oscillations in narrowing ranges since then also fit within what is becoming a channel or flag. So there are some clearly defined levels to watch now. ON the downside the uptrend line from the 1073 low in early October.There is also the support line linking that August low with a slightly lower low  back in July 2010.

On he upside there are several important levels of interest. A signal another upleg is coming would start with a break above the down-sloping line linking the right shoulder in July with the recent test of the neckline. The next resistance level to overcome would be the right shoulder and head themselves.

The most likely scenario still seems to me to be we will test the 2009 lows.

Spot Gold bullish short term, bearish long-term

View my video of spot gold action since making its top. I expect a short-term bounce after Friday's outside range day and strong close but there is no sign that a major uptrend is about to emerge any time soon. I think it is more likely recent lows will be taken out with a retracement back to the 1000 level. But I'll wait for the break.

Wednesday, 30 November 2011

Dow bear market rallies


Everything points to us being in an equities bear market now. The October rally failed neatly at the head and shoulders neckline after which it formed a symmetrical triangle. The downside break from that confirmed the bear bias now gripping the market. The rally of he past couple of days is unconvincing although a test of the traingle breakout at around 11700 is a possibility. Only a rise above the recent traingle top would negate the bearish outlook.

Wednesday, 23 November 2011

Qantas reverses


Well qantas looked promising but I did say $1.80 might stop it. It barely made that level and has now failed by falling back inside the neckline of the head and shoulders bottomand also reaking a small uptrend line. Disappointing but not all technical patterns come to pass. There was some money in this one but I'd call it a failure really. Waiting for the next pattern to emerge now.

National Australia Bank in middle of channel


After hitting the top of the channel as shown above NAB has moved to the middle of the channel. The important levels are plain to see and the next trading opportunity will eventuate when either the lower boundary is reached or an upside breakout occurs.

Friday, 18 November 2011

Cotton futures make a break for it


I'm not really interested in what the news is or what the fundamentals are. All I know is that this chart is telling me if I was long I'd be very afraid. This continuous cotton futures chart shows a break down out of a head and shoulders continuation pattern with increasing spread and closing near its lows. The only saving grace could be the lack of volume but given this is a continuous chart that may just be a factor of he December contract petering out. I'd expect at least an 18.00 fall from here to around 77.00. If it can regain that lower boundary line shown on this chart and move above 105.00 I'd reconsider. But for now the path of least resistance is down.

Thursday, 17 November 2011

S&P500 index coiled and ready


The S&P500 index is tightly coiled in a small triangle poised for the next major move. After stopping near the neckline of the August breakout activity has slowed as the bulls and bears battle for supremacy. My preference would be for a downside break from this triangle but lets let the market show us.

Apple (AAPL) Broadening Top?


Is Apple forming a broadening top? The horizontal lower boundary at 353-354 represents a crucial level for Apple. An island reversal signalled the third top in this pattern in October followed by a small triangle formed on dercreasing volume. The measuring formula from this type of patten should Apple break clearly below 353 is minimum around 280. Unwise to pre-empt this move. To me charting is all about breakouts. But people sometimes do on this pattern.

Tuesday, 15 November 2011

Euro FX - fails again


Since breaking down out of a channel in early September the Euro has now made two attempts to push back inside that channel - just after the breakout and near the end of October. Both rallies were rejected giving this channel line some importance. We also now have a sort of broadening wedge from the April top and the most logical next move would seem to be a test of the lower boundary line of that near 1.3000. That should now be support. A break of the upper line of this broadening pattern would be significant. So short -term and medium term down but watch for a breakout.

Gold


Gold has certainly rallied more than I expected having breezed through what I expected would be stiff resistance at $1700. Until it makes a new all-time high I'd have to remain bearish. We now have a channel pattern having formed with the lower boundary, to me, looking like it wants to be revisited around the $1700 level. It just feels like a lot of space needs filling there. On the other side A push through $1800 would see a swift test of the all-time high around $1900 I suspect. Watch for the breakout of this channel and the $1800 level.

Silver


Spot silver has some clearly defined boundaries to contend with. Sitting within a rising wedge within a larger downward channel the breakout points to watch are obvious. These situations demand a wait and see approach. I'm always looking for breakouts, not trying to anticipate them.

Saturday, 12 November 2011

FTSE 100 Long-term chart


The Footsie (FT100 - UK stockmarket) shows similarities to the 2007 top. Watch this video to see the important support and resistance points to watch out for.

Thursday, 10 November 2011

Dow Downside risk severe


The US equities markets sit on a knife edge still. The downside risk now is emmense. I feel it could traverse to the 10500 level  in a very short space of time even within a day. The global debt uncertainty has created the environment for a total absence of buyers. Technically the market has tested the neckline a couple of times and been forced back. Certainly if the high of the past 2 weeks is taken out I would turn mildly bullish but I prefer the downside. Beware!!!

Wednesday, 9 November 2011

Silver Wedge bear setup


Finally silver is exhibiting some recognisable patterns and clear boundaries for traders to trade on. Notice the downtrend channel from the April top with an internal little wedge. Watch a break of both these patterns for an indicator of the next medium-term and major trends. The wedge feels like we need to see a downside test of the channel even if an upside test of the smaller wedge comes first.

Aussie Danger



The Australian dollar is in big trouble here. Possibility of a rally back up to 1.0200 but 96.000 is the next target count from this hourly chart showing a head and shoulders. The feeling isn't great across all financial markets and some "freefalls" in equities as well look to be setting themselves up. The end game has only just begun unfortunately.

Tuesday, 8 November 2011

Newscorp - same channel


Newscorp is exhibiting a similar channel pattern to National Australia Bank and is testing the upside of that. Any upside break from this should be watched for increasing volume and a good clearance for this to be a change of trend. More likely at the moment this trendline touch will prove stiff resistance. Note the decreasing volume on the recent rise indicating a reduction in buying power. If this trendline  upper boundary holds the bottom of the channel would be the next likely target.

NAB channel-bound


National Australia Bank has formed a clear downward sloping channel now and could well test the upside again in the next week or two. Should it fail at this line again we could well see a retest of the lower boundary in the 18-20 range. Watch for a clear breakout of this channel on the upside on increasing volume before considering NAB bullish. So far the upmoves have been on decreasing volume which isn't a positive sign.

Thursday, 3 November 2011

Euro far from clear but downside more likely



Pretty hard picking the Euro from day to day or even medium term. But it is hitting some important marks. It stopped right at the underside of a trendline stretching back to 2010 and also at the breakout of a very messy triangle. a big drop from there with a quiet inside day suggests another move down is the most likely. I'd seriously think about big upside potential if the Euro can manage a decent break above the down trendline shown starting in April and touching again in August. Until then the trend is down.

Dow poised at crossroads



The Dow is at a dangerous juncture. On an hourly chart above it looks like the common head and shoulders pattern again. A clear break below this neckline would signal a 1000 -1100 fall at least. It can also just be seen on he daily chart below. I'd rethink my immediate bearish scenario if the recent 12280 level were to be taken out by a good margin.

Tuesday, 1 November 2011

Qantas makes a move



Interesting to look an individual stock/share for a change. Qantas has been in the news for all the wrong reasons lately with strikes and the grounding of its fleet. Despite being in the depths of despair Qantas actually took on a positive look on the charts. A clear head and shoulders bottom has formed since August with a break up through the neckline on very good volume. That's what you want to see on a break. The minimum upside count is $1.80 with the possibility of a retest of the neckline first. Given the exhaustion gap in August this could well be a major bottom for Qantas. I temper my enthusiasm with a warning that I believe global equity markets are in the last throes of a bear market rally.

Monday, 31 October 2011

MarktCharts Bank of Japan warning timely



As I warned only a couple of days ago the recent low for the USD/JPY was a critical juncture. A close below last week's low would have triggered a wave of selling. The Bank of Japan obviously realised this and as warned the intra-day attempt to move lower was met by BOJ intervention and a massive move up. These interventions are nothing new though and historically have only been temporary before the downtrend resumes. I'd expect the dollar to retrace over the remainder of the week to test the 76-77 level and the BOJ's resolve. There is nothing yet to suggest this is the final botom but attention should be given to the downtrend line on a weekly chart should this be breached on the upside.

Sunday, 30 October 2011

Things looking up for Copper







A couple of weeks ago I blogged that I saw no sign that copper was about to rally. That changed this week with a move up through the neckline of a little head and shoulders bottom. The minimum target for this move is only 380 for December Copper so we are almost there. The 380 to 390 level also coincides with previous support levels which should now become resistance.

Wheat marking time




















December retested its June breakout level in August nicely and the subsequent fall has temporarily halted with a month-long little triangle. The next most likely move is to the downside to fulfill what should be a target of around 550. Watch for a break of the converging trendlines shown above.

Cotton downside beckons


December Cotton has retested its neckline on declining volume before resuming the downtrend. Short-term a rally looks likely but the head and shoulders target around 84 still hasn't been reached so I'd expect that to be the next major move.

Saturday, 29 October 2011

Gold makes a comeback



I have to admit that like the equities markets and other financials, Gold has recovered more than I expected. I had thought the 1700 level, being a previous support level, would now provide heavy resistance.

However it powered through that and in doing so tossed my idea of a rising wedge out the window. The move still looks corrective to me and rather than a contracting pattern it looks more like a flag type pattern with parallel boundaries. The next major move should still be down out of this pattern but only a break of the line will confirm.

US stockmarket rally tests resistance and bears resolve


S&P 500



The impressive rally in equities of the past 4 weeks will have tested the resolution of any bears. Certainly it's had me reviewing the charts for signs the minimum head and shoulders count from the August top was all we are going to get on the downside. The rally has certainly gone further and happened more quickly than I expected.

But the S&P 500 chart still shows the neckline being only just surpassed and this is totally acceptable. The same thing happened at the 2007 top and the no-one will forget what happened next as financial meltdown was only just avoided. The two patterns are eerily similar. A case could also be made for this latest rally forming the right shoulder of a much larger H&S.

Tuesday, 25 October 2011

Dollar/Yen Precariously Placed

USD/JPY has dropped down out of a large contracting triangle and at the same time pierced support around the 76.00 level. For now the dollar is holding back just above the important 76.00 level but the prospects don't look great.

A breach of last week's low of 75.74 would be a sign that it wouldn't be wise to be long dollars. The only warning is threat the Bank of Japan could be lurking to give yen buyers a bit of a smack to remind them of their presence.

Also, triangles at this late phase of a downtrend tend to be less reliable on breakouts. Nevertheless at least a 2yen fall should result if 75.44 gives way. As always never trade without stops. Especially with the BOJ watching!

MarktCharts World Report - October 2011

Equities


An important top was completed in July 2011 with a break down through the neckline of a head and shoulders formation on August  1st. The chart below shows this also coincided with the break of a trendline stretching back to the February 2009 major low. The minimum downside move suggested by this pattern was fulfilled in short order with a 1000 point fall to the 11,000 level.







Where to from here? It has always been my view that we will revisit the 2009 lows and in fact go much lower before another bull market of major proportions resumes. Robert Prechter, the guru of the Elliotwave principle , has long espoused that we will see the Dow below 1000 (yes one thousand not ten thousand) before the bear market ends. I can’t rule that out either. If the 2009 lows are breached then this becomes a very real possibility.
It also fits in with my view that most major market tops of a mania nature ( which the Dow has been) lose 80- 90% of their value. Don’t believe me? Take a look at the chart of the US technology laden NASDAQ index from a high of 5132 in October 2000. When the dot com bubble burst it took the NASDAQ down to 1108 – fall of over 80%. From its high of near 39,000 in Dec 1989 the Japanese stockmarket still doesn’t seem to have reached a bottom having reached just below 7000 – an 82% drop.

The conditions which I think will contribute to this catastrophic fall in the US stockmarket would lead to a depression, not just the double dip recession some are talking about. Despite inflation being the fear of markets for decades, it will be deflation which this time erodes asset values. We have already seen the precursor to this with the credit problems being experienced worldwide. With that deflation will come  falling commodity prices, further debt defaults, and social unrest. It won’t be pretty.

The good news is that those with cash at the bottom will have the chance of a lifetime to purchase assets at bargain prices.

Social Mood
The recent “Occupy Wall Street” protests and other copycats around the world are only the beginning I believe of what will be increasingly violent demonstrations. The main target seems to be corporate greed although it has become a focus for a melting pot of protest groups, particularly in Europe. It’s really just a new outlet for socialist and communist groups and their perverse assumption that the productive in the economy have somehow got there by stealing, cheating and greed rather than innovation and hard work.

The picture below takes a slightly cynical view of the protesters.

However, there is some truth to the argument that the economies of the US and Europe have been mismanaged and the people deceived. The trouble is the targets of the protests should be the governments not the corporations or wealthy individuals. It is the decades of easy money provided by the Federal Reserve and ECB, along with increasing welfare dependence and government subsidies which has created the current unsustainable debt/credit crisis. Those economies have been living beyond their means for far too long and the result shouldn’t be a surprise.  As with an individual, you can’t continue tomorrow more and more money beyond your ability to service that borrowing. Eventually you must either  increase your income, sell off assets or declare bankruptcy.

Particularly in Europe there is a reluctance on behalf of the public to swallow the bitter pills being offered as solutions by the IMF and more stable countries. They have only themselves to blame for years of government squandering of money and handouts. In some ways I agree with them that the bail-outs of some corporations and economies are immoral, but you can’t blame the businesses and individuals being handed the money. The real villains are the Federal Reserve. Even here in New Zealand it was the Reserve Bank largely responsible for creating and sustaining the property bubble before it burst by keeping interest rates artificially low.
I predict the social unrest will escalate and the darkest days will coincide with the last desperate climax selling in the equities markets. It will be very ugly I fear. Hopefully it will result in a final realisation that government overspending and central banks free money policies were the problem, not the solution and stronger economies will emerge from it.

FTSE 100
The pattern in the Dow is repeated  in the UK sharemarket with the important levels represented by the 3 trendlines drawn. I can’t rule out a retest of the neckline at about 5700. The initial target  from the head and shoulders top has already been reached but I suspect this is only the very beginning. A drop below recent lows at 4790 would almost certainly see a swift retracement to 2009 lows.


Australia
It’s been a confusing picture in Australia for the past 2 years. Two broadening tops ( one failed) are testament to the uncertainty in the market. However, things have become a little clearer with the second broadening achieving its downside target, a trendline break going back to 2009, and a downside break of what could be a double top. There could well be a rally back up to the lower trendline of the last broadening pattern, before the downtrend resumes. I would be concerned for my bearish scenario if the market makes too much of an inroad back into the broadening area.


New Zealand
A small H&S  top in may signalled the top in the NZ market around June of this year. The rally since August looks corrective completing an ABC Elliot Wave type rally to resistance ( previous support) near 3400. I can’t say I would have predicted the start of the August rally but the count from the larger March to August H&S top had already been reached around 3150. The larger picture on a monthly chart shows the New Zealand market is in bear mode having dropped out of a large falling wedge which should see a return to 2009 lows. I’d expect one final rally on the daily chart to fall short of 3400 again before the bear trend resumes with a vengeance.


One of the largest components of the New Zealand market is Fletcher Building. A profit warning last week shocked the market and saw Fletchers gap down on large volume. Should the market have seen this coming? Well there hadn’t really been any bottoming pattern although the 2 weeks beforehand did break one or two small resistance levels but volume was very low. On the longer-term chart Fletcher Building has really only just broken the uptrend since 2009. So while there might be a short-term rally back to the edge of the recent gap down, more downside seems more likely after that.


Currencies

USD/YEN
The trend in dollar/yen is undoubtedly still down but the contracting nature of the very large wedge on the weekly chart shows the momentum has slowed on the downside. The inevitable Bank of Japan interventions to sell Yen have had only short term effect .
Certainly a break up above the upper line of the wedge ( if you can call it that)would be a sign the downtrend could be over but as yet there is nothing on the daily chart to suggest this is about to happen. The daily chart looks more likely to test recent lows at 76.00. I breach of that level will be very telling. If the dollar is reluctant to drop sharply it may be a sign a bottom is building.


EUR/USD
The Euro has certainly not been easy to read lately. The weekly chart still looks to be corrective from 2008 and I had thought a break upwards through a trendline from that high in April 2011 had signalled a resumption of a long-term uptrend in the Euro against the dollar however subsequent pull backs below that line have invalidated that move. I had been puzzled by the formation from April to August on an ordinary barchart. It wasn’t until I looked at the weekly line chart below that It became a clearer triangle.

On a daily chart the recent rally looks to have almost run its course, and given I haven’t seen any bullish reversal pattern yet the next medium-term move looks likely to be lower for the Euro.

GBP/USD
The weekly consolidation pattern of the Pound is clear to see from the sideways triangle pattern. The recent break of a wedge within that pattern suggests it wants to revisit the lower boundary. A break of that would be a danger  signal for the downside but the 1.4000 level has been consistent support for the pound going back two decades. Conversely of course a significant upside move should ensue from an upside move out of this triangle. Such is the nature of triangles. They are a wait and see pattern.


AUS/USD

The Aussie dollar has taken a year to play out a major top with the break of the trendline and H&S shown below. The neckline was tested soon after the breakout just over 1.0000. The Aussie has regained the 1.0000 level by a small amount but the 0.9000 level still beckons as a first target. The recent fall also coincides with the break of a trendline stretching back to early 2009.


NZD/USD

Commodities

Silver

A small double top announced the recent April high in spot silver. Double tops usually take a little longer to form than this though so it makes me think a more complex top pattern will emerge. The recent triangle consolidation should be watched for a breakout.


Gold
My bullish call from December 2009 below has come to pass and more.

Gold has presented a great trading opportunity with a breakout from a large symmetrical triangle which is also part of a larger consolidation pattern. The breakout looks clean and suggests a minimum upside target of $140/oz higher to about $1115 to $1120. An even more bullish case could be made that the head and shoulders continuation pattern since the beginning of 2008 suggests a $630 rise from the recent breakout to the dizzying heights of $1600. Market Charts – December 2009.

Now though it looks like the game could be up. A nice double top in clear territory broken at 1700 triggered 2 days of the biggest single day falls for many years. The rally since looks laboured and should meet resistance at 1700. I’d be watching for the next break down from the little flag forming with just below 1500 the next target. Note the two tops each contained an outside range day – normally a sign of at least a short term counter-trend move.
Sugar

A head and shoulders top from the beginning of this year has provided resistance at the neckline of that formation, culminating in a type of triple top and almost a H&S which broke down in September. The market retraced to the breakout on low volume and has now resumed the downtrend which has more to go yet.

Copper

A diamond top in Jan to April this year moved into a flat bottom triangle which finally gave way in September. The bottom of that triangle should now provide resistance to any rally. The minimum downside has already been achieved but no reason to buy. Copper is seen as a barometer of world economic growth so not a good sign.

Crude Oil
The long uptrend channel from 2009 finally broke in August. The ensuing rally stopped nicely at the lower boundary of that channel. Note the H&S top in March-May but with a disturbing rally back above the neckline. However the right shoulder remained intact. Where to from here? I expect a bit more work around this area before crude retests the 2009 lows around $30 to $40 per barrel coinciding I suspect with the coming meltdown in equities and world economic growth going negative.

Cotton

I keep mentioning hem but they do keep appearing at major tops and bottoms. A classic H&S top in the continuous cotton chart early in 2011 has had devastating consequences – a 50% fall in under a year.. Two failed rallies have ensued and there still looks to be more downside

Interest rates

US Bonds
On a weekly chart US Bonds are in fresh territory with no sign the move is over. While investors shun European bonds, their US equivalent is enjoying safe haven status propelling long-term yields lower. My longer-term view is that US Bonds will also be dumped mercilessly once the US debt also becomes unmanageable. But I should let the charts show that. In the meantime neither the dailies or weeklies show anything but a bull market in US bonds.

   US Ten Year Notes

I’m happy to call Ten year notes at least a short-term sell ( interest rates higher) on the basis of this break . Not a huge minimum target on the downside but 126 l0oks likely and is a previous resistance point. The weekly chart however has only just broken out upwards from a very large symmetrical triangle which suggests an eventual 140 target.