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Charting Asia with Daryl Guppy

Daryl Guppy

Contributor

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. He is a special consultant to AxiCorp.

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  • The classic charting methods simply do not apply to IPO trading. There is not enough price history to apply a moving average, or any of the technical indicators that are based on moving averages.

  • In the murky world of accounting, balance sheets, company announcements and company denials, chart analysis provided traders and investors with clear exit signs in the shares of Sino Forest, says Daryl Guppy.

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    The movement in the copper price is used as a leading indicator of economic development because it reacts more quickly to changes in industrial demand.

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    Drawing accurate trend lines lies at the heart of chart analysis. It looks easy but accurate trend line placement is more difficult than it appears at first glance. Accurate trend line placement, based on well-defined rules is the foundation of more complex analysis techniques. It is also the foundation of stop loss and risk management

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    The current IEA intervention is a body blow to the price uptrend, which has been in place since June 2010. It drives prices back towards $87/barrel.

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    The long-term fundamental factors like talk of a technical default in the U.S., a weakening Dow index and insipid economy, which have contributed to US dollar weakness, have not disappeared, so long-term downward pressure remains.

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    The Nasdaq China Index is moving towards the upper edge of the historical trading band near 190. This is a well-defined support level. Aggressive traders will look for a rebound development from this level.

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    A new head and shoulder pattern has developed in the Dow. The rapid falls of last week confirmed the right shoulder of the pattern. The depth of the pattern puts the downside target near 11,600.

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    Oil remains on a bull run. The fall from near $114/barrel to below $100/barrel is a correction, but not a change in the trend. This behavior sets a higher price target for oil as the uptrend continues.

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    The Euro/Dollar is at a significant point with the potential to prove the placement of trend line B and thus signal a continuation of the up trend. Failure of support at trend line B signals a change in the trend and a move towards $1.29.

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