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Charting Asia with Daryl Guppy

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  Monday, 21 Apr 2014 | 8:45 PM ET

Playing gold? Keep an eye on silver

Posted By: Daryl Guppy
Getty Images

Gold prices fell to a near-three-week low on Monday amid sharp exchange traded fund outflows, continuing to erode mild gains posted in the first quarter of 2014. For those with an eye on silver the erosion of gold's recent gains should come as no surprise.

Comex silver has led gold prices since 2011 and it's not about to give up that leadership role. The lag between silver and gold prices has been reduced but silver continues to lead price developments. Looking at silver gives traders a leading advantage when it comes to anticipating the behavior of gold.

Read More Gold extends losses to fourth session; fund outflows continue

I offer no explanation as to why this relationship exists. What is more important is the trading advantage conferred by the relationship.

The peak price in Silver in April 2011 appeared before the peak in Gold in September 2011. The collapse following these price peaks showed the same behavior for silver and gold. Traders who followed silver had clear warning of how gold would behave once the peak price was established.

»Read more
  Tuesday, 8 Apr 2014 | 9:13 PM ET

Shanghai stocks shake downtrend; three paths possible

Posted By: Daryl Guppy
Investors looking at stock prices on screens in a securities exchange in Shanghai.
Peter Parks | AFP | Getty Images
Investors looking at stock prices on screens in a securities exchange in Shanghai.

As worries about a potential slowdown in Chinese economic growth wan, the Shanghai Composite Index has shaken the downtrend that started in December 2013. But a successful breakout pattern and new uptrend are yet to emerge – recent chart activity indicates three possible patterns lie ahead for mainland shares.

The Shanghai Composite has a strong support level near 1980, which has provided the foundation for a double bottom pattern. The first test near this support level was at point A on the chart, with the second test at point B.

Read More Hackerspaces breathe new life into China innovation

While it's too early to tell how the index's future activity may develop there are three possible development patterns.

»Read more
  Tuesday, 1 Apr 2014 | 7:00 PM ET

Bullion set for further retreat, charts show

Posted By: Daryl Guppy
Getty Images

Gold prices have fallen about 7 percent since its 2014 high last month, but brace for further losses as the downtrend remains intact, according to technical analysis.

The Comex gold chart developed a strong rebound from support near $1180 in late December, but that was not a double bottom rebound so there was a low probability of an imminent uptrend.

Read MoreGold ends March with a whimper; 1st monthly loss of 2014 looms

The fact is, that the support level rebound pattern (see chart) is a temporary rally within the downtrend environment. It shows a weakening of the downtrend, but not a trend change.

»Read more
  Wednesday, 26 Mar 2014 | 1:06 AM ET

For Nikkei, 14,000 remains the critical level

Posted By: Daryl Guppy

Come April, when Japan's sales tax rises to 8 percent from 5 percent, a large cup of Starbucks green tea in could jump to 572 yen from 550 yen. The price will fall to 530 yen with the sales tax completely excluded. And of course, retailers can choose to absorb none, some or all of the tax.

In the same vein, the Nikkei chart has well-defined upper limits and downside targets.

(Read more: Is the BOJ at its limits?)

The chart is dominated by two features. The first feature is the uptrend line that defined the rising trend which started in April 2013. This trend line acted as a support level until January 2014. The fall below the trend line signaled a change in the nature of the uptrend. After January 2014 the uptrend line acted as a resistance level. This caps any future index rises with the current upside target near 15500.

»Read more
  Monday, 17 Mar 2014 | 10:51 PM ET

Shanghai Composite eyes potential rebound pattern

Posted By: Daryl Guppy

Chinese Premier Li Keqiang confirmed at the National People's Conference last week that China's gross domestic product growth target for 2014 was set at 7.5 percent. However, he indicated that there is some tolerance for slower growth, which made world markets shudder.

The Shanghai Composite Index was also uncertain by this indication as it moved to potentially complete a broader strategic reversal pattern. The retreat from the February 2014 high of 2177 is now near the 1980 support area, indicating that the index is developing double-bottom behavior near the 1980 level.

The double-bottom pattern develops rebound activity; this behavior is shown by the thick lines on the chart. Traders and investors should wait for a retreat and rebound within the environment of a double-bottom trend reversal pattern.

(Read more: Chinese Premier hints at tolerance for slower growth)

»Read more
  Monday, 3 Mar 2014 | 8:40 PM ET

Ukraine tensions boost oil but resistance is strong

Posted By: Daryl Guppy

As months of protests in the Ukraine come to a head following the recent ousting of President Yanukovych and Russia's occupation of Crimea, geopolitical tension has accelerated the rally in Nymex oil prices that started in the week of January 18.

While crude continues to edge higher, with prices touching a five-month high on Monday, charts indicate that this is a short-term rally in the environment of a slow longer-term uptrend, and suggest the upside for the current rally is around $110.

(Read more: US oil ends shy of $105; Ukraine risk feeds rally)

»Read more
  Monday, 24 Feb 2014 | 6:17 PM ET

Standby for a dollar-yen rebound rally

Posted By: Daryl Guppy

As investors continue to question the long-term effectiveness of Abenomics before a sales-tax hike takes effect in April, where the yen's headed is anyone's guess. However, if chart patterns are anything to go by a further weakening of the safe-haven currency is in store.

The yen fell to its lowest level against the U.S. dollar in three weeks early last Tuesday after the Bank of Japan extended three special loan facilities by one year and boosted the maximum amount of the loans – a move the market interpreted as a "mini ease." However, the Japanese currency remains off of recent multi-year lows above 105 per dollar touched in late December.

(Read more: The most important indicator in the world: The yen)

While uncertainty over how investors may react to the April sales-tax hike could keep the yen from weakening further in the short term, charts indicate a test of 110 may be in the cards.

»Read more
  Monday, 17 Feb 2014 | 8:47 PM ET

Reading gold – double bottom or support rebound?

Posted By: Daryl Guppy
AP

Worries about weak economic data in the U.S. and China have seen gold gather pace, with bullion rising to a three-and-a-half month high on Monday after posting its best weekly gain since August last week. However, with sentiment towards the yellow metal mixed following last year's dismal performance charts could provide some guidance.

The NYMEX Gold chart appears to have formed a classic double bottom pattern near $1,180, a level that has been tested three times.

(Read more: Gold's rally may struggle towards $1,350)

However, there are two significant problems with calling this a double-bottom pattern. The first is that double-bottom patterns are found at the end of prolonged downtrends and usually appear near long-term historical lows. Not so with gold; on a monthly chart, the $1,180 level appears in the upper third of the long-term gold uptrend that started near $600 in 2006.

The second problem is that a double bottom usually forms on a historical support level. The historical support level for gold is near $1,150.

»Read more
  Monday, 10 Feb 2014 | 8:44 PM ET

Daily, weekly market charts–how are they different?

Posted By: Daryl Guppy
Getty Images

Chart patterns occur in all time frames. The same types of patterns can appear on one-minute charts, daily charts and weekly charts, yet the appearance of a pattern in one time frame does not foreshadow the appearance of the same pattern on a larger time frame.

The head and shoulder pattern we identified on the S&P 500 last week used a daily chart. In this context the head and shoulder pattern usually indicates a short-term pattern; more often than not this is a trend correction rather than a trend change. This was consistent with a technical trend correction of less than 10 percent.

(Read more: Tuesday's trade will be all about Janet Yellen)

The market falls and then rallies. The rally moves higher than the peak of the right shoulder and the uptrend continues.

»Read more
  Monday, 3 Feb 2014 | 11:38 PM ET

As S&P drops, keep an eye on head and shoulders

Posted By: Daryl Guppy

One month into the New Year U.S. stocks look the worse for wear. With the S&P 500 down 5.7 percent year to date, investors are beginning to wonder – should we expect a rebound or is a reversal in trend at hand?

The S&P 500 fell below the much-watched 100-day moving average at 1770 on Monday as weak manufacturing data sparked concerns about slowing momentum in the U.S. economy. The data heightened concerns about Friday's payrolls report, which could play a key role in determining when the Federal Reserve next tapers its asset-purchase program.

(Read more: Markets now fear U.S. economy chilled by more than weather)

»Read more

About Charting Asia with Daryl Guppy

  • 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.

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