The market will again pause and consolidate around this level for several weeks before continuing the uptrend breakout, says Daryl Guppy. » Read More
Seeing there's been quite a bit of interest in my recent comments on CNBC about the historical parallels between the Great Depression and the recent financial crisis, I thought it may be appropriate to elaborate further on the chart technicals behind the observation.
The causes may have been different, but the collapse of the U.S. markets in early 2008 followed the same behavioral patterns as the collapse in 1929. The recovery pattern seen in 2010, is also very similar to that developed in 1930.
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.
Daryl Guppy is an independent technical analyst who appears frequently on CNBC Asia.