Saturday, 2 July 2011

Another Year Half Over, What Do The Weekly Candlestick Charts Show?

At the beginning of each month I like to review the weekly candlestick charts for all of the markets that I follow, to see which ones are showing up trends, or down trends, or no clear trends.

As I have stated previously, as a trader I take entry signals from the hourly candlestick charts. I like to take signals on the hourly chart which align with the trend on the daily chart.

So why am I interested in the weekly charts? Simply, they tell me which way the tide is headed for each market.

If there is a clear trend at weekly chart level, I know (1) to position myself with that trend when planning trades at daily and hourly time frames, and (2) that I must not trade against that weekly chart trend.

If there is no clear trend at weekly chart level, I can look at the daily and hourly charts for trends to trade in either direction, using reduced risk capital on those trades compared to trades on markets that are trending on the weekly chart.


Ideally I will commit all my risk capital to trades on markets that are trending in the same direction on their weekly, daily, and hourly charts, in which case I can simply watch the trendless markets, without commiting risk capital to them. At times though, there are few enough strongly trending markets that I will trade the markets that are trendless on their weekly charts.

What do the weekly charts currently show?

- S&P 500 no clear trend
- ASX SPI 200 no clear trend
- China H-shares no clear trend
- India Nifty 50 no clear trend
- Nikkei 225 no clear trend
- FTSE 100 no clear trend

- EUR/USD up trend
- AUD/USD up trend
- GBP/USD no clear trend

- Gold up trend
- Silver no clear trend but bubble finished

With only three of the above markets showing weekly chart trends, and with none of those markets currently trending in the same direction on all of their weekly, daily, and hourly charts, I know to be cautious coming in to July. I also know that trendless periods give birth to trending periods, as surely as night follows day. The markets will be more easily tradeable at some point in coming months than they currently are, so I must keep as much powder dry as possible, til clearer opportunities arise. My inclination is to continue trading and acting on trading edges, but with reduced risk capital per trade, until the trends are aligned on the weekly, daily, and hourly charts.

S&P 500 Weekly Chart No Clear Trend


The moving averages indicate no clear trend. The green candle last week is bullish, as is the market position above the trend line. The market must move higher to invalidate the possible Head and Shoulders top. Add those factors together, and I must conclude that there is no clear trend.

ASX SPI 200 Weekly Chart No Clear Trend

The moving averages indicate that the trend is down, however the long green candle and the weekly market close back within the prior trading range are both bullish signs. Also the market has traded broadly sideways for almost two years. The market is now testing the trend line drawn from the 2009 low.  

China H-shares Weekly Chart No Clear Trend


The moving averages and market position below the trend line both indicate that the trend is down, however the failure to break below 12000 and the recent green candles are bullish signs. also the market has moved broadly sideways for almost two years. A break below 12000 would confirm trend as down.

India Nifty 50 Weekly Chart No Clear Trend

The moving averages indicate a down trend, while the market position above the trend line indicates an up trend. So I must conclude that there is no clear trend, although the recent green candles are bullish signs. A move above the 40 week moving average and the down trend channel would turn the trend to up, in my view.

Nikkei 225 Weekly Chart No Clear Trend

The moving averages indicate that there is no clear trend, however the long green candle of last week, and the break above the trend line, are both bullish signs.

FTSE 100 Weekly Chart No Clear Trend

Moving averages indicate that there is no clear trend, however the long green candle of the past week is bullish.

EUR/USD Weekly Chart Up Trend

Trend is clearly up.

AUD/USD Weekly Chart Up Trend

Trend is clearly up.

GBP/USD Weekly Chart Trendless

No clear trend.

Gold Weekly Chart Shows Bull Market

The weekly chart shows the market returning to the area of the 18 week moving average. Since early 2009 the zone between the 18 and 40 week moving averages has supported the market, and each foray in to that area has seen a subsequent move to new highs.

Silver Weekly Chart Shows Post-Bubble Target

Silver's bubble price behaviour began in August 2010, and now appears complete, ending with a blow-off top. Typically, a post-bubble market will return to levels below where the bubble started, in Silver's case, below $20. The moving averages indicate that there is no clear trend, with the 4 week moving average pointing lower and positioned between the 18 and 40.