GO
Loading...

Charting Asia with Daryl Guppy

More

  Monday, 15 Sep 2014 | 6:31 PM ET

Consolidation looms for Shanghai Composite

Posted By: Daryl Guppy

Chinese stocks stormed higher in recent months on the back of stronger economic data, easy monetary conditions and supportive policies from Beijing, recently touching an over one-year high, but charts indicate they may face a period of consolidation.

The Shanghai Index has developed a powerful rally that reached the longer-term targets near 2330 that we set several weeks ago. The pattern is very bullish; this is part of a long-term fan pattern trend-reversal breakout similar to the pattern in 2006. The typhoon flag pattern has been confirmed; the upper edge of the typhoon flag provides the first support level for a retreat from the resistance level upside target near 2330.

Read More 'Perfect storm' to hit China economy in 2016

Current index activity is contained between the long-term resistance level near 2330 and the value of the upper edge of the typhoon flag pattern near 2278. There is a high probability the Shanghai index will retreat from resistance and consolidate between 2278 and 2330. This consolidation activity has the characteristics of an up-sloping triangle pattern. This is a bullish chart pattern.

»Read more
  Monday, 8 Sep 2014 | 6:32 PM ET

As silver tests support, gold traders take heed

Posted By: Daryl Guppy
A one kilogram gold bar sits on top of silver bars.
Simon Dawson | Bloomberg | Getty Images
A one kilogram gold bar sits on top of silver bars.

Gold fell to its lowest level in nearly three months last week on concerns that a strong U.S. dollar and improving U.S. economy could damp demand, and silver charts suggest that bullion may not regain upward momentum anytime soon.

The downtrend in COMEX silver – shown in cents on the weekly chart – is well-established and prolonged. Technically silver is pounding out a support base near $18.70 and although there has been a reduction in downward momentum there is no technical or chart evidence of a developing rebound and reversal.

Read MoreWhy Goldman's gold man recommends shorting gold

Upside targets remain limited, while technical downside targets have yet to be tested by a fall below support near $18.70. Analysis of Silver is useful because the price behavior of silver has led gold prices since 2011. Understanding silver gives traders a leading advantage when it comes to anticipating the behavior of gold.

The significant feature in the silver chart is the retreat and retest of the support level near $18.70. A successful fourth retest of support near $18.70 would confirm a long-term sideways consolidation.

Read MoreWhy the crisis in Ukraine isn't saving gold

Silver has strong long-term resistance near $26.00. Resistance also developed near $24.00, which is the first target for any successful breakout above the upper edge of the long-term group of moving averages where the value is currently near $21.80.

»Read more
  Monday, 1 Sep 2014 | 8:42 PM ET

With ECB in focus, euro downtrend looks strong

Posted By: Daryl Guppy
The European Central Bank in Frankfurt, Germany
Getty Images
The European Central Bank in Frankfurt, Germany

Charts suggest that the downtrend in the euro/dollar is firm ahead of the European Central Bank's (ECB) policy meeting on Thursday.

A decline in euro zone inflation to a five-year low in August amplified dovish comments by ECB president Mario Draghi at the Jackson Hole central bankers' meeting. Draghi acknowledged that inflation expectations have been falling at the August meeting and said the ECB, "within its mandate, will use all of the available instruments needed to ensure price stability over the medium term."

The developments fueled speculation that the ECB will consider easing action as early as Thursday with some analysts arguing that a quantitative easing – or bond buying – is on the horizon.

»Read more
  Monday, 25 Aug 2014 | 8:39 PM ET

Don't lose faith, the Dow uptrend is intact

Posted By: Daryl Guppy

The Dow Jones Industrial Average posted its largest annual gain since 1995 last year and while momentum has slowed the index touched an all-time high in July and is up 3 percent year-to-date. Investors are questioning whether the rise has run its course but charts suggest the uptrend is intact.

The Dow's recent decline from 17,151 to 16,333 was only a minor retreat and is part of the trend consolidation pattern along the upper edge of a long-term trading channel. The index fell 4.8 percent; a technical correction is a fall of over 10 percent.

Read MoreAre Aussie dollar bears right?

Upward momentum has slowed a bit and consolidation is developing around the value of the uptrend line. There are two significant trend features on the Dow chart.

»Read more
  Monday, 18 Aug 2014 | 9:44 PM ET

Are Aussie dollar bears right?

Posted By: Daryl Guppy
peterfz30 | iStock/360 | Getty Images

As the war of words between Australian dollar bears and bulls continues charts indicate that the bears may have the right call in the short term.

Comments from Reserve Bank of Australia (RBA) Governor Glenn Stevens late last year that he would like to see the AUD trading at $0.85 against the U.S. dollar raised expectations that it would weaken significantly this year after. However, expectations for continued loose monetary policy by global central banks and continued Chinese reserve diversification limited downside momentum.

Read MoreWhy this carry trade remains 'best in the world'

Yet, growing expectations that the RBA may cut interest rates before year end to tackle the stubbornly high currency could see near-term downside.

The AUD is developing a long-term uptrend breakout pattern, but the breakout is not developing at this time. The weekly chart shows the classic Guppy Multiple Moving Average (GMMA) trend change breakout pattern. This starts with a test of the lower edge of the long-term group of averages in the GMMA Indicator. The breakout pattern is flowed by a retest of the upper edge of the long-term GMMA and completed with a breakout above the upper edge of the long-term GMMA. This signals the start of a new uptrend.

»Read more
  Monday, 11 Aug 2014 | 10:50 PM ET

Why more upside is in store for the S&P 500

Posted By: Daryl Guppy
Traders work on the floor of the New York Stock Exchange in New York.
Getty Images
Traders work on the floor of the New York Stock Exchange in New York.

Investors are beginning to question whether the S&P 500 can sustain its upward momentum amid worries that the rally in U.S. stocks may be testing its limits coupled with unease over geopolitical tension between Russia and the West, but chart analysis suggests that no trend change is imminent.

The S&P weekly chart shows a well-established habit of behavior. Starting with the uptrend development in September, 2010 the S&P 500 has consistently moved up in a series of trading bands.

Read MoreS&P 500 ends little changed near two-month low

This continues to be a strong uptrend with each upthrust target defined by the width of the trading bands. The market broke above the top of the consolidation band around 1850 and the trading band calculation set a target near 1990. This target level was achieved and is followed by the S&P 500's typical habitual behavior. Each time the upper edge of a trading band its reached the S&P 500 retreats to the upper edge of the long-term Guppy Multiple Moving Average (GMMA). And then the S&P 500 develops a strong rebound rally that moves above the upper edge of the trading band.

When the S&P 500 was near 1700 many analysts said the market would fall. Instead the index developed a rally breakout and moved to the next projected target near 1850. Again, at this level, many analysts said the market would fall but the index rallied above this level and went on to reach the next projected target. This is the habit with the S&P 500 index.

Read MoreWorst weekly drop for S&P 500 in more than two years

The key factor to look for is the consistent strength of the long-term GMMA. This is shown by the steady degree of separation. When the market does develop a dip it uses the long-term GMMA as a support level. The dips in June and October of 2013 and February 2014 all touched the top of the long-term GMMA before developing a new rally and breakout above resistance. The long-term GMMA did not show any signs of compression.

»Read more
  Monday, 4 Aug 2014 | 8:42 PM ET

Is the dollar-yen uptrend a false dawn?

Posted By: Daryl Guppy

The U.S. dollar rose to a four-month high against the Japanese yen last week leading investors to question whether a sustainable uptrend is at hand or if this is another false dawn. Charts analysis suggests the latter.

The down-sloping triangle pattern in the dollar-yen suggests a high probability of a retreat to 97;down-sloping triangle patterns are usually bearish. However, the dollar-yen has broken above the down-sloping trend line, which sets a weak upside target near 105.5.

Read MoreIs dollar-yen on the verge of a breakout?

This complex pattern development is best seen on a weekly chart. The pattern starts with a clearly defined down-sloping triangle pattern. The pattern has a well-tested support level near 101.5. The support level started in February, 2014 and has been tested frequently since.

The downtrend line starts from the high of 105.4 in January, 2014. This is a well-defined trend line and the dollar-yen has consistently reacted away from the line over the past six months.

»Read more
  Tuesday, 29 Jul 2014 | 2:13 AM ET

Correction coming for Chinese stocks, chart shows

Posted By: Daryl Guppy
Getty Images

The Shanghai Composite Index has developed an astounding rally breakout in the past week, rallying more than 6 percent to hit levels not seen since December, and bringing gains to more than 10 percent from year-lows reached in March.

But, chart analysis shows this rally breakout may not be sustainable. Here's why.

Read MoreWhy China can extend its 'dash for trash' rally

The breakout rally developed within the context of an up sloping triangle pattern. The triangle pattern is a long term bullish pattern developing over three months. The triangle pattern is created by the combination of the support resistance level near 2,060 and the up sloping trend line. This up sloping trend line starts from the low of 1,991 made on May 21. The second anchor point for the uptrend line is the open at 2,013 on June 20. The third anchor point of the uptrend line is the low of 2,018 on June 25. The fourth important anchor point is the low of 2033 on July 11.

»Read more
  Tuesday, 22 Jul 2014 | 3:09 AM ET

Is gold on the verge of a breakout rally?

Posted By: Daryl Guppy
AP

Gold prices have seen a rebound in recent weeks after hitting a four-month low in June and technical analysis suggests there is potential for this rally to develop into a genuine trend breakout.

The key feature of the weekly Comex gold chart is the downtrend line. This starts from the high near $1,799 notched in October 2012. Most recently the line uses the high of $1,392 in March 2014 as a confirming anchor point for the downtrend line. The current breakout above the trend line has the potential to develop into a genuine trend break, and here are three reasons why.

»Read more
  Monday, 14 Jul 2014 | 6:27 PM ET

As Dow breaks 17,000 uptrend may consolidate

Posted By: Daryl Guppy
Adam Jeffery | CNBC

The DOW closed above 17,000 for the first time in early July on the back of a strong U.S. jobs report. Sturdy upward momentum has seen the index post a series of fresh all-time highs this year but charts suggest momentum may be set to slow.

A few months ago we suggested the DOW had an upside target of 17,000. This target has been achieved, marking a continuation of an exceptional uptrend but chart analysis suggests this upward momentum may slow and consolidation may develop around the value of the uptrend line.

The strategic trend and the significant feature of the DOW is the up-sloping trading channel defined by three trend lines. The upper trend line is trend-line C; this will provide support for the DOW as it retreats from 17,000.

Read MoreDow 'could go to' 20000 by year end: Jeremy Siegel

Trend-line A forms the middle core of the pattern and is the most well-defined trend line. It starts in February 2011, acted as a resistance in July 2011, and again in April and September 2012 before the DOW broke above this level in February 2013. Starting from February 2013 trend-line A has acted as a support level. The general market environment has been bullish with the DOW staying above trend-line A. The breakout above trend-line C in January 2014 was an unsustainable rally.

»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.

Asia Economy