Saturday, 18 May 2013

ASX 200 still wrestling parallel trend line resistance

The ASX 200 continues to test parallel trend line resistance. The parallel trend lines are best shown on the weekly chart, which includes after hours trade through to the end of the week. Repeating what I wrote last week "in 2010, 2011, and 2012 the market made marginal new highs in April or May, then declined powerfully, anywhere from 10% to 25%. How about 2013? We've got a marginal new high in May. The latest in the series of parallel trend lines may also be significant. Will history repeat and give us a decline from nearby current levels?"

Daily chart zooms in a little. The lack of advance in recent days is remarkable, given the S&P's 500 strength and the AUD/USD's weakness. Often / mostly the ASX 200's performace is a direct function of those two factors. If (if) trend line resistance is broken, the ASX 200 might make up for lost time.

S&P 500 accelerates upwards, still arguably yet to escape its long term trading range

Daily chart shows the S&P 500 accelerating upwards. Repeating what I wrote on Wednesday, the S&P 500 futures have launched upwards out of a 6 month old trend channel. While the market stays above the upper trend line, we must respect its potential to accelerate (!) perhaps launching a blow off top. It intrigues me that everything seems to be weakening against the US dollar except for stocks, and I'll be surprised if such a glaring intermarket divergence lasts indefinitely, but you've gotta trade what is happening rather than hypotheticals (coulds or shoulds). If you can't get over the conflict between what you see and what you think, find another market to trade.

Zooming out to the monthly chart, illustrates what we all know. The market is trading at record highs.

Repeating what I have said in recent weeks, I don't trust the break above the 2007 highs by the S&P 500.
I think the market needs a move over 1785 or so to escape the gravitational pull of its long term trading range. Why 1785? The monthly chart illustrates that in 2009 the market dropped 100 points below the low from 2002, then snapped back within the range. That 100 points was a move of just over 13%. An equivalent percentage move above the 2007 high would take the market to 1785. I think the market has to beat that level to escape the potential for another snap back in to the monthly chart range.

AUD/USD breaks lower from multi year triangle

Weekly chart shows the AUD/USD breaking lower from a multi year triangle. A measured target for such a break is around 0.80, calculated by subtracting the tallest height of the triangle from the breakout price. The illustrated support zone should act as little more than a speed bump if this bearish scenario is playing out.

AUD/JPY setting up for a 20% decline? This week's low is key

Weekly chart begs the question, is the AUD/JPY setting up for a 20% decline toward the lower trend channel line? If so, is the decline beginning now or will the market pop up to meet the upper trend line one more time?

Daily chart shows the market has broken below the recent up trend channel. A move below this week's low and the illustrated support shelf, if such occurs, would favour an immediate bearish resolution of the weekly chart scenario.

EUR/USD breaks down through trend line drawn from lows of 2012 and 2013

Daily chart shows the EUR/USD breaking lower through the trend line drawn from 2012 and 2013's lows, and arguably forming a bearish Head and Shoulders top. A move below the April low would indicate completion of the pattern.

Weekly chart shows that the market is in the area of the 40 week moving average, which often coincides with commencement of strong trends, either up or down. Needless to say, completion of the Head and Shoulders setup would favour down.

GBP/USD decline targets a move below 1.30

Weekly chart shows the GBP/USD trending lower following a bearish break from a triangle. A measured target of below 1.30 is calculated by subtracting the tallest height of the triangle from the breakout price.

Daily chart offers a good explanation of why the pencil and ruler are my symbol!

USD/JPY long term target is > 120

The USD/JPY wedged in to a bottom over a number of years, as shown on the monthly chart. The measured target for a rally from such a wedge / ending diagonal, is the point where the wedge began, so above 120. Last weekend I suggested that the noughties lows around 1.02 could provide resistance, but that level fell easily this past week.

Gold bursting lower from down trend channel on weekly chart

Gold is bursting lower from the illustrated down trend channel on the weekly chart, indicating an acceleration (!) of the down trend.

Silver channeling lower or falling from descending triangle on weekly?

Repeating what I wrote last weekend, is Silver simply channeling lower, or falling from a descending triangle? If the latter, then a break lower through the nearby down trend line is likely, and the measured target would be 1350ish.