Nymex oil may have a prolonged sideways consolidation between $38 and $48 but charts suggest that, long-term, it has further to fall.» Read More
The debate over where gold prices are headed has been a active one, with the bulls maintaining that fears of a slowing global economy will keep demand for the safe-haven investment strong; while the bears argue that the current price of gold, which has limited industrial use, is unsustainable in the long term.
From a chartist perspective, we're looking expecting a bullish scenario in the long term, but not without some selling pressure in the short term.
The Japanese yen has been back in favor in recent months, as continuing worries over the outlook of the global economy boosted demand for the currency.
The yen is hovering at an eight-week high against the dollar, and trading at its strongest level against the euro since 2001.
But a look at the performance charts suggest it may be time to pick up the dollar-yen trade, which is showing a very strong support level between 87 and 88 yen.
China's stock markets are known for their volatility and not for the faint-hearted investors. Their movements can be rapid in either direction and hard to predict. But a close study of their performance charts have revealed some trading opportunities and the likelihood of a strong recovery.
Oil prices have been on the rise, in tandem with the improving global equity markets, as investors shift their attention from euro-zone debt problems to the generally positive economic indicators coming from the U.S. and Asia.
But an analysis of the oil charts suggests that the rebound is also technically driven.
The oil market usually shows a pattern of trending behavior between well defined historical support and resistance levels.
It's just a few weeks since my last note on the euro-dollar but I think an update is appropriate given the continued battering of the single currency.
I mentioned in the previous chart analysis that the euro could fall quickly to $1.03 once the $1.19 mark (a particularly significant support level in 1998 and in 2003) has been breached, which happened on Monday.
The fall towards $1.03 may feel like a freefall plunge, but it is constrained by other technical features.
The euro is defined by a series of support and resistance bands. The positioning of these bands is important from an analytical perspective because it provides a method to project the future downside targets.
When the Australian dollar stumbles, it often stumbles badly. This makes the AUD/USD a difficult trading situation because when a collapse occurs, the AUD tumbles quickly.
Investors hoping for a rebound of the Aussie to beyond the $0.90 level may be disappointed. Chart analysis shows this is unlikely to happen for awhile.
The dollar's recent strength has been explained by most market analysts as a result of the euro weakness rather than any fundamental support for the greenback. In fact, a closer look at the dollar's chart - particularly the dollar index - suggests the currency may be primed for a collapse.
The dramatic dollar index rise from 81 to 87 in recent weeks shows the chart's developed a dramatic and possibly dangerous parabolic trend. This trend has four important features.
The rapid rise in gold prices has pushed the precious metal toward a target of $1,250/oz -- a level discussed on CNBC two weeks ago.
As gold moves towards this target, the momentum has begun to slow in the rapid breakout, indicating a higher probability of a trend reversal or the development of a consolidation pattern.
George Soros and other hedging masters must be rubbing their hands with glee. Statements like “we will do whatever it takes” to protect the euro is an open invitation to short. The relief rally in the euro following the $1 trillion emergency package announced by the EU and IMF is a collective exhalation. Still, it does not make the underlying problems disappear.
It is useful to step away from the clamor of fat finger errors on the Dow, Greek riots and the euro slide and focus for a bit on strategic analysis, which is as important as tactical responses to these events.
Walloped is a good old Australian word which defines a cowardly attack or beating. Originally it applied to a beating at the hands of the police, or ‘wallopers’ who were recruited from the ranks of ex-convicts during the 1850’s gold rushes. Their favorite targets were the small gold miners on Victorian gold fields.
The term has been given new currency, but with the same original meaning Sunday, when Australia's Prime Minister Kevin Rudd unveiled a 40 percent resource “super profits” tax that would take effect in 2012 and would give the country one of the highest mining tax rates in the world. This reflects the Australian tradition of persistent persecution of success and gives new meaning to the term ‘sovereign risk’ because the terms of business have been so radically altered by Government decision.
There are three questions of particular interest. First, did investors see this coming and is it shown in the price charts? Second, what are the immediate downside targets for any price retreat. Third, what are the chart conditions which suggest the immediate reaction is an over-reaction?
We use Rio Tinto Australia as a proxy for large Australian miners.
Daryl Guppy is an independent technical analyst who appears frequently on CNBC Asia.