Saturday, 18 June 2011

ASX 200 and Asia Break Lower

The ASX 200, China H-shares index, and Nikkei 225 have broken below trend lines formed from the lows of late 2008 and early 2009. The India Nifty 50 Index is on the verge of breaking below a key trend line formed from multiple intermediate lows from 2009, 2010, and earlier this year. Bearish crosses of the 40 and 18 week moving averages for those indexes argue that their trends are down at the weekly chart time frame, indicating probable lower prices in coming months.

ASX SPI 200 has broken the trend line formed from the March 2009 low, and has also broken below the trend channel that contained its price action for the past year.

China H-shares index has broken the trend line formed from the late 2008 low. Note that the market broke the parallel trend line in 2008, subsequently trending down hard, falling  more than 50% in six months.

Nikkei 225. The trend line break and bearish cross of the moving averages indicates a down trend at this time frame.

India Nifty 50 index is testing the trend line formed from multiple intermediate lows over the past two years. The market's position below the 40 and 18 week moving averages, indicating a down trend at this time frame, raises the odds of a trend line break

S&P 500 Fat Lady Hasn't Sung

The S&P 500 is riding the trend channel lower on the daily chart, clearly trending downwards. The market has twice rejected the lower trend channel line this week, a sign that it is attempting to bounce higher. Any move higher would encounter resistance at 1300.

At weekly chart level however, the trend has not yet turned down, with the market still trading above the trend line formed from the March 2009 lows. Hence the title of this post.

The monthly chart shows a possible Head and Shoulders scenario. Possible, but not yet probable. The moving averages are crossed bullishly. A move above the high of the right Shoulder would be a strongly bullish sign.

EUR/USD No Clear Trend On Daily Chart

While the hourly chart provided a clear bearish edge earlier this week, followed by a swift move lower, the market has since risen and there is no clear trend on the daily chart.

AUD/USD A Waiting Game

A break below this week's lows, back in to the previous trading range, would likely lead to a trend toward the bottom of that range. Unless that happens, I expect more broadly sideways trading between current levels and 1.08, perhaps 1.10.  

Gold Consolidates

I expected Gold's trend line break to lead to a down trend developing. Instead the market spent the week riding up the under side of the trend line. The trend at this time frame is sideways, with both the 40 and 18 day moving averages pointing sideways.

Silver Trending Down

Silver is trading below both the 40 and 18 day moving averages, both of which are pointing down, indicating that the immediate trend is down at daily chart level, though we didn't see any follow through on yesterday's trend channel break at hourly chart level, which raises questions about the strength of the trend.  If lower prices don't arrive early next week, we'll likely see a period of broadly sideways movement between 35 and 40 before the next up or down trend begins.