Expectations that the Fed will raise interest rates in early 2015 coupled with growth headwinds in Europe have pushed the U.S. dollar index higher.» Read More
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.
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.
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.
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)
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)
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.
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.
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.
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.
U.S. equity markets had a stellar 2013, posting their best performances in years, and while they've gotten off to a lackluster start in New Year not all hope should be lost.
The S&P 500 rose 29.6 percent in 2013, while the Dow Jones Industrial Average gained 26.5 percent, marking their strongest performances since 1997 and 1995, respectively. However, their 2014 performances have been lackluster thus far; as the first month of the New Year draws to a close the S&P 500 is down 3.5 percent, while the DOW is down nearly 4.4 percent. Still, investors should not lose hope.
(Read more: 'Freaking out' about emerging markets may be wrong)
While the DOW's retreat is sudden and large, it is not unexpected. A 10 percent correction in the DOW is consistent with a continuation of the long-term uptrend, and a test of technical support near 15,000 would present a buying opportunity.
Starting in the 1970's the U.S. government prohibited the export of its oil. However, U.S. shale oil reserves have since changed the structure of the oil market and now there is talk that the export ban may be lifted.
The export of U.S. shale oil would change the pricing structure of oil. Investors' expectations for how price activity would develop if the export ban is lifted are already reflected in the weekly NYMEX oil chart.
(Read more: Energy industry voices decry move to export US oil)
Daryl Guppy is an independent technical analyst who appears frequently on CNBC Asia.