Australia's S&P/ASX 200 tock index has developed a remarkable recovery starting in June 2012. This was a classic Guppy Multiple Moving Averages trend breakout. It included three tests and retests of the long term group of moving averages.

This gave early warning of the change in investor sentiment so traders were ready to position themselves when the breakout was confirmed in July.

The upper trend line is an extension of the previous uptrend and this is now acting as a strong resistance level. The lower trend line defines the current trend breakout starting from July.

The fall below the lower trend line signals a significant change in the trend. This is the first break of this uptrend line. The retreat from the upper trend line confirms the strength of this line as a resistance level and this caps the rate of rise in the index.

The weekly chart of the NYMEX oil price is going nowhere. It remains largely impervious to the endless crisis in the Middle East and even the gusting winds of Sandy, one of the biggest storms to hit the United States.

Major disruptions do have a short-term impact on price, but these remain relatively small. It reflects a market that is slowly catching up to the changed reality of oil markets.

The changed reality is that U.S. is no longer as dependent on oil from the Middle East as it was in the past. With oil tapped in shale oil deposits the U.S. is now a net exporter of oil – a far cry from the days of oil dependency.

This new found freedom is partly what drives the more aggressive U.S. approaches to Iran, and its lower levels of concern about Middle East political disruption. Events that in the past had an oil dependant nation putting itchy fingers on the trigger are no longer as significant.

The long term fan reversal pattern on the dollar/yen chart is pointing towards a breakout from 79 with an upside target near 84 and 87 yen. A new support base has developed near 78. This was a previous resistance level. The compression of activity between support near 78 and the value of downtrend line D increase the probability of a fast breakout.

The fan pattern consists of a series of trend lines, all starting from the same high point. These lines first act as a support level, and then later as a resistance level.

The price activity is contained between these trend lines. When a breakout occurs the rally is capped and this creates the location point of a higher trend line. The fan pattern starts from the August 2008 highs near 110 yen.

Technical analysts are often accused of drawing meaningless lines on charts on the grounds that the market knows nothing about these lines. The gold chart shows how useful these lines can be in determining the limits and behavior of future price activity. The long term up trending trading channel continues to define the price activity in gold.

The projection of support and resistance lines helps to define where future price action may pause, develop a retreat, or develop a trend continuation. his allows traders and investors to prepare appropriate trading responses.
Gold has significant resistance features that cap any rapid change in the trend.

There are three important trend lines on the Dow Jones Industrial Average. These trends lines are most easily seen on a weekly chart. The first is trend line A. This trend line was created by the neck line in the head and shoulder pattern that developed in the Dow between the low point in March 2011 and the second low point in June 2011.

The neckline of the head and shoulder pattern is extended to the right hand side of the chart. Trend line A acts as a strong resistance level. The line acted as a resistance level in March 2012. In the future trend line A will continue to act as a resistance level. This limits the upper target for the Dow.

The Shanghai Composite Index made anew lownear 1,999 on September 26 and then developed a good rally rebound. There is a high probability the rally will continue after the Golden week holiday that ends Friday.

This development has the potential to establish the conditions for a trend reversal. This type of trend reversal is first shown with the Relative Strength Index (RSI) Divergence reversal signal.

RSI divergence occurs when the trend line using the valley lows on the RSI moves in the opposite direction to the trend line for the same time period applied to the valley lows on the Shanghai index . RSI divergence signals will appear first on the daily chart.

The first low in the RSI indicator appears at the same time as the index low near 2,040 shown as point A on the Shanghai index. Investors wait for the Shanghai index to make a new valley rebound low.

Quantitative easing is really another word for currency wars. A weak U.S. currency puts continued pressure on the Japanese Yen, the Chinese Yuan, the South Korean Won, the Australian dollar and other currencies.

Cheap money also fuels speculation and this money quickly drifts into commodity markets and the ETFs that help propel commodity market speculation. This is inflationary for food prices.

The lower the U.S. dollar the greater the intensity of currency wars. The break below the key uptrend line on the Dollar Index chart was an early warning of the third round of quantitative easing (QE3). The most important question now is to use the chart to examine the potential downside limits of a QE3 weakened U.S. dollar.

A strange thing is happening on the way to the commodity collapse. It’s the most powerful rally that has been seen for months. This is occurring across the London Metal Exchange (LME) metals complex.

The breakout patterns seen with aluminum reflect the same patterns seen in lead, zinc, copper and tin. The breakout in aluminum is the most developed. Many LME metals are moving in a similar way, but aluminum is most advanced so it gives guide for other developments. It has these three features.

First is the change in the relationship in the components of the Guppy Multiple Moving Averages (GMMA) indicator. This indicator tracks the implied behavior of investors and traders. The short term group of averages in blue track trader behavior. Compression shows agreement about price and value and hints at a change in trend.

The continued weakness in the European economy is reflected in the weekly euro-dollar chart. The euro-dollar exchange rate is an indication of what investors think about the health of the European economy. Expectations of change or decisive action to deal with growing debt problems result in short-lived rallies followed by a resumption of the long-term downtrend.

The dominant feature on the weekly euro-dollar chart is the downtrend line. The market has consistently reacted away from this downtrend line, using it as a powerful resistance feature.

While gold prices have been on the rise on expectations of further monetary stimulus from both the U.S. Federal Reserve and the European Central Bank, the recent uptrend could be limited.

The breakout in gold has gold bugs in a frenzy but gold has significant resistance features that cap any rapid change in the trend. Before traders get too excited they should note the small up sloping triangle which has formed in the downtrend.