There has been an inconsistency in the behavior of the Dow and that of the S&P 500 and Nasdaq over the past few weeks.» Read More
Technical analysis has signaled there is about to be a big change in the direction of China's key Shanghai Composite Index, with a high probability the market will next find support at 3400 points.
The Shanghai index has developed a significant change in the trend, with key support levels at 4600 and 4200 and 3800 failing.
The NYMEX oil price remains bullish and could be headed for $63, technical analysis shows.
It's developed a double bottom pattern near $45 as the downtrend consolidation developed. When the height of the double bottom is measured, this value is projected above the peak of the double bottom pattern near $53. This pattern is also called a W trend reversal pattern.
The upside target for the double bottom rebound is near $63. This target has not been achieved as the price has consolidated between $58 and $61.
But this remains a bullish chart pattern because support at $58 is consistent. The consolidation behavior is a pause in the full development of the double bottom pattern so the $63 target remains achievable.
The gold price has moved sideways for the two years to June.
Between June 2013 and January this year the sideways movement was below the long term trend line. In January the price move above $1,220 was also a move above the long term downtrend line. The first technical upside target was near $1,390. However the breakout rally reached $1,300 and then failed. The gold price fell and used the long term downtrend line as a support level.
There is not any evidence that a new uptrend can develop for gold. There is also a strong support band that has developed between $1,180 and $1,115.
The historical support level is near $1,180. When the price dropped below this level last November many traders expected the price to continue falling towards the next support level near $980. This did not develop and gold rebounded.
Again in March gold fell below $1,180 and traders waited for a further fall in price but it rebounded again.
The Shanghai Index has developed a new pattern of trend behavior.
It develops in a step-and-stairway trend pattern as shown by the thick black lines on the chart. This pattern is defined by trading bands that are all around the same width. This is around 400 index points.
The key feature of this pattern is how easily the market moves rapidly above the first resistance level – (4600 in the Shanghai index) and reaches the next resistance level (5000 in the Shanghai index). This is followed by a rapid retreat and rally consolidation that uses the full width of the trading band. It creates the first 'step' in the stairway pattern.
The Nikkei's relentless bull-run has raised concerns if a correction is on the pipeline. Chart analysis, however, suggests otherwise.
There are two significant features on the Nikkei weekly chart. The first feature is the long term up trend line. The second feature is the application of trading band analysis.
The long term up trend line on the Nikkei chart starts from the low of 11,805 in 2013 April. This line acts as a support line from 2013 April until 2014 February. The fall below the uptrend line in 2014 April changes the nature of the trend line from support to a resistance feature. From 2014 April until 2015 March the uptrend line acts as a resistance level. The Nikkei continues to move up but the line provides resistance to the up move.
The move above the trend line in 2015 March means the trend line again acts as a support level. This is an additional bullish feature of the uptrend. When the Nikkei retreats there is a high probability it will test the trend line as a support level and then develop a rebound rally and a continuation of the uptrend.
The euro-dollar rally has continued in recent weeks, hitting a peak of 1.14 last week. While the breakout initially looked like a short-term move rather than a trend change, the situation now is different and that impacts on long term positions.
The fast and decisive breakout above the historical resistance level near 1.10 has encountered short term resistance near 1.14. This has the potential to develop a inverted head and shoulder trend reversal pattern. The pattern is completed with a small retreat from short term resistance near 1.14 followed by a rally that moves above 1.14 and tests resistance near 1.16. In this case it's the confirmation of the inverted head and shoulder pattern that is more significant than the historical resistance near 1.16.
Confirmation of an inverted head and shoulder pattern sets an upside breakout target near 1.22. This is well above the value of the downtrend line. This confirms a new uptrend rather than just a rally and retreat pattern.
With Nymex rebounding 40 percent since its lows of the year hit in March, many are asking if the uptrend is here to stay or whether this is a mere short-term bounce.
Technical analysis suggests that a new trend change emerged earlier this month when the price closed above $58 and the trend will be confirmed if the price manages to stay above that resistant level.
The current uptrend is fast moving so there is a high probability of a consolidation pause developing around the $58 level before the up trend continues. There are three significant resistance levels above $58 ($68, $78 and $88) and these will influence the nature of the developing uptrend.
The euro may have rebounded more than 6 percent from its lows of 1.05 against the U.S. dollar, but chart analysis shows that rally may be shortlived and the downtrend remains intact.
There are two dominant analysis features in the euro-dollar chart. The first is the obvious downtrend. Although the downtrend is easy to see, it is a little more difficult to define with a single downtrend line. The chart shows what we think is the best fit for the trend line as it captures the majority of the extremes in the rebounds. The position of this line captures the largest number of high points and excludes the least number of high points. But it still remains a judgement call.
The Nasdaq's move above 5132 for the first time since 2000 has sparked concerns the new high would signal the end of an uptrend. But chart analysis suggests otherwise.
There are distinct differences between the rapid rise from 1998 to 2000 and the current situation. In 2000, the very rapid rise of 247 percent from 1475 to 5132 over seven months was unsustainable from 1999 November until the crash in 2000 March the NASDAQ trend was almost vertical. This is not the situation today.
A period of consolidation has investors worried that the Dow Jones Industrial Average's long-term uptrend has finally run its course, but charts suggest the uptrend remains strong.
Following last year's 7.5 percent increase the Dow index is up just over one percent year to date. The index has consolidated near 18,225 since early March amid concerns that a stronger U.S. dollar could negatively impact earnings at U.S. multinational firms.
But the weekly chart shows the Dow remains within a well-defined trading channel and exhibits a consolidation pattern consistent with a continuation of the uptrend.
Daryl Guppy is an independent technical analyst who appears frequently on CNBC Asia.