Saturday, 21 May 2011

China and India weeklies on the brink

The weekly chart of the H-shares index (Chinese companies traded in Hong Kong) shows that the market is testing the trend line formed from the late 2008 lows. The market clearly considers this trend line significant as it has been tested half a dozen times now. Also of interest, a parallel line was in play for the pre-2008 bull market, and when the market broke that line, it declined by over 50% in subsequent months.

BTW, if the market believed in China's future economic prosperity even half as much as the Australian government and media do, I dare say this index would have exceeded its 2007 high by now. Who do you think is likely to be a better judge of China's future? The market? Or the Australian government?

The Indian market is trending down on the weekly chart, and looks likely to test the trend line which has supported all market action since late 2009. Note that the 18 week moving average has made a bearish cross below the 40. The last time this happened was mid 2008, following which the market dropped over 60% through the remainder of the year.

EUR/USD down trend continues

Daily chart.

Hourly chart.

AUD/USD triangle on hourly

Zzzzzzzz... sleep inducing. That said, it can be rewarding to stay focussed on such tedious markets, as when a breakout happens, it will likely be swift and sizeable, as per the previous triangle breakout on May 11.

Gold attempts resumption of up trend on daily

The Gold daily chart shows attempted resumption of the up trend. Rightly or wrongly, I am suspicious of this move, due to what I see on the following two charts. 

The Gold hourly chart shows that price is yet to challenge the down trend line drawn from the early May high.

The Silver daily chart shows no signs of a rally. 

ASX 200 in down trend on daily

The down trend on the daily chart looks likely to continue following the test of the 18 day moving average, and subsequent move lower.
A move through the lower trend line on the hourly chart would likely confirm resumption of the down trend on the daily chart.

S&P 500 in down trend channel on hourly

Speaks for itself, I think.