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Asia-Pacific Markets Charting Asia with Daryl Guppy

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  Tuesday, 16 May 2017 | 10:45 PM ET

Op-Ed: Euro-yen breakout targets loom on the upside

Posted ByDaryl Guppy
Euro Yen banknotes
Tomohiro Ohsumi | Bloomberg | Getty Images

The most significant feature on the euro/yen chart is the breakout above resistance near 123.5. This signals an important sustained change in the trend. The euro/yen retreated from resistance near 123.5 in 2017 January.

The euro/yen found support near 114.5 which was the short-side trade target we set in February. The rebound rally from 114.5 creates a variation of the double-bottom pattern and this pattern is used to set new long-term upside targets for the euro/yen near 131.

The defining features of the euro/yen chart was the down sloping trading channel that starts in mid 2015 and the support level trading band between 113 and 114.5. A channel is defined by parallel trend lines. A trading band is defined by parallel horizontal support and resistance levels.

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  Monday, 8 May 2017 | 8:05 PM ET

Op-Ed: Shanghai Stock Exchange trading has its own timing logic

Posted ByDaryl Guppy

Why does the Shanghai market rise and fall so rapidly? It's a question I have been asked many times in the past week in the face of the rapid fall in the Shanghai index.

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  Monday, 1 May 2017 | 9:31 PM ET

Op-Ed: How safe is the euro? This chart says everything you need to know

Posted ByDaryl Guppy

How safe is the euro? Well, that's tied to another question: Who will win the French presidential election? There are two methods to arriving at answers.

One method of polling remains exceptionally accurate. It's taken almost every day and the participants back their opinions with cold, hard cash. These are the major market indexes and they show that the French market was not particularly worried about the outcome of the first round of French election. Nor are they worried about the outcome of the next round and this suggests a Macron victory — although, like many recent elections, the margin may be very narrow.

It was clear several weeks ago that the markets did not expect any significant change and that a presidential runoff between Marine Le Pen and Emmanuel Macron had already been baked into the cake — factored into market activity. The index behavior of the CAC suggested the markets were comfortable with this outcomes. The current index behavior confirms the market is comfortable with either candidate, although there are other factors which suggest the market anticipates a Macron victory.

The French CAC chart shows a strong well-supported trend with good Guppy Multiple Moving Averages (GMMA) indicator behavior. Investors are not worried, according to the long-term group of averages. The wide separation shows strong trend support.

The traders — as shown by the short term group of averages — are also very confident it will be business as usual after the elections. The short-term group of averages is also widely separated, showing strong confidence in a non-disruptive election outcome.

The breakout above resistance near 5,250 is very bullish and does not indicate a euro exit. This breakout is a relief reaction, so there is a good probability the market will retreat and use 5250 as a support and consolidation level prior to a continuation of the uptrend.

Although Le Pen talks of leaving the euro, the French market suggests this is unlikely to happen. The French public also apparently believes this is a low probability. If they thought otherwise, then we would already see a run on the banks as people took their money out before it was threatened with devaluation by a euro exit.

Investors would not wait until the calling of a referendum on leaving the currency. Once it became clear that Le Pen was the next president, there would be a run on the French financial system. The French banks would be essentially insolvent the next morning.

None of this has happened, and this suggests that Macron will be the next president of France. The euro is not dead but the euro short trade is.

The CAC chart signals strategic trading opportunities that can be exploited using the ANTSSYS method to trade the consolidation behavior.

Daryl Guppy is a trader and author of Trend Trading, The 36 Strategies of the Chinese for Financial Traders, which can be found at www.guppytraders.com. He is a regular guest on CNBC Asia Squawk Box. He is a speaker at trading conferences in China, Asia, Australia and Europe. He is a special consultant to AxiCorp.

For more insight from CNBC contributors, follow @CNBCopinion on Twitter.

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  Monday, 17 Apr 2017 | 12:18 AM ET

Op-Ed: The Australian dollar is trapped, and there's little sign of a change

Posted ByDaryl Guppy

The Australian dollar has remained trapped in a sideways trading band for one year and there is little sign of a strong change in the trend.

The upper edge of the trading band near $0.775 was established in April 2016. The lower edge of the trading band near $0.715 was first tested in June 2016. The trend behavior since that month has been weak, with the Australian dollar essentially moving sideways.

In November 2016 the Australian dollar retreated strongly from resistance near $0.775 and by December 2016 was testing the support level near $0.715. The rebound rally from this level confirmed the strength of the trading band.

The sharp fall from $0.775 to $0.715 and the sharp rallies from $0.715 to $0.775 offered good trading opportunities, but they do not indicate strong trend changes.

We use Guppy Multiple Moving Averages indicator analysis to identify trend strength and trend changes. In these situations it is a powerful analysis tool, but the GMMA is not the best indicator to apply to understand a sideways market. The GMMA relationships simply show that investors are not strongly bearish or bullish on the Australian dollar. This is shown by the narrow separation in the long term GMMA and its horizontal behavior.

This non-trending environment shows no signals of trend change and GMMA analysis is not a useful strategic analysis tool. However, trend-line and trade-band analysis allows the trader to identify the significant trend break points and establish targets.

The Australian dollar weekly chart has a well-defined resistance level near $0.775. The $0.77 to $0.775 resistance level has been tested eight times in the past 12 months. This level is again acting as a successful resistance level with the Australian dollar developing a retreat to $0.75. A breakout above this level can move rapidly to the next resistance feature.

A second resistance feature on the chart is the upsloping trend line starting from the low of $0.68 in January 2016. The second anchor point is the low of $0.715 in June 2016. The uptrend line acts as a future resistance feature. The line is projected forward and gives a current value near $0.80. This is also near an historical resistance level, so this acts as a double resistance feature. This combination of features indicates a limited upside for the Australian dollar.

The strength of resistance near $0.775 suggests there is a low probability an upside breakout, so traders look for a continuation of the sideways trading band.

A fall below minor support near $0.75 has trading band support near $0.715.

This is not a trending market, so traders apply short term trading methods to capture the rally and retreat behavior. We use the ANTSSYS trade and analysis method to identify the opportunities as the retreat rebound develops.

Daryl Guppy is a trader and author of Trend Trading, The 36 Strategies of the Chinese for Financial Traders, which can be found at www.guppytraders.com. He is a regular guest on CNBC Asia Squawk Box. He is a speaker at trading conferences in China, Asia, Australia and Europe. He is a special consultant to AxiCorp.

For more insight from CNBC contributors, follow @CNBCopinion on Twitter.

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  Sunday, 9 Apr 2017 | 9:04 PM ET

Op-Ed: Dollar rallies from trend line support, Syria missile strike helps

Posted ByDaryl Guppy
Adam Drobeic | EyeEm | Getty Images

Is the U.S. dollar sailing north with the U.S. fleet? It is tempting to draw a direct correlation between the missile strike on Syria and the dispatch of the U.S. Navy strike group to waters off Korea and China. There is no doubt that these assertive actions have impacted on the US dollar.

The rally on the U.S. dollar highlights one of the conundrums with the application of technical analysis. Does the chart move the market or the market move the chart? Just two weeks ago we applied chart analysis to the U.S. dollar chart. In this analysis we identified support and rebound levels.

We noted the dominant feature on the weekly dollar index chart was the broad trading band between $0.93 and $1.005. This trading band has dominated dollar index behaviour since 2015 January. The move above $1.005 was very important because it is a breakout from this prolonged 22 month sideways trading pattern.

The failure of this support level showed short term weakness, but not trend weakness. It's the second dominant feature on the dollar index chart that explains why.

The dollar index chart has a well-established up trend line. It starts from the low near $0.92 in 2016 May. This is a well-established and tested up trend line that shows consistent bullish pressure.

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  Monday, 20 Mar 2017 | 9:20 PM ET

Op-Ed: Shanghai index consolidation uptrend stronger than expected

Posted ByDaryl Guppy
Qilai Shen | Bloomberg | Getty Images

The Shanghai Index consolidation retest of the uptrend was stronger than expected. However the dip to the low of 3193 followed by a close at the high of 3237 is typical of a market re-correction. Investors saw this pattern on 2017, January 16 with a dip to 3044 followed by a higher close at 3105. This panic low signaled the start of the uptrend from 3105 to 3260.

The current dip and rapid rebound rally has the same characteristics as 2017, January 16 so investors wee this as a bullish signal. This is confirmed with the behavior of the long term Guppy Multiple Moving Averages group of averages. These remain widely separated. This group of averages absorbed the dip and selloff and this shows strong investor support for the uptrend. The long term GMMA did not show any compression during this week's market retreat and this further confirms investor confidence.

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About Charting Asia

  • Daryl Guppy is an independent technical analyst who appears frequently on CNBC Asia. He runs training, analysis and resource workshops for retail and professional financial market traders involved in stocks, CFDs, warrants, derivatives, futures and commodities in China, Malaysia, Singapore and Australia. He has his own trading company, guppytraders.com.

 

  • Daryl Guppy is an independent technical analyst who appears frequently on CNBC Asia.