Charting Asia with Daryl Guppy

The Australian dollar challenged a long-term resistance level near 81 and then failed to develop a new uptrend. The retreat took the Australian dollar back to test the long-term support level near 7.75.

Australian exemption from the new U.S. steel tariffs had caused a new jump in the currency and raised the question of whether the Australian dollar could break above the long-term resistance level near 81.

The very best technical analysis helps us to put aside our hopes, dreams and assumptions, so that we can get a more objective view.

The defining feature of the gold price chart is that it has taken so long to go nowhere. Gold appears to have slipped into a zombie state, largely unmoved by a weaker dollar, or interest rate predictions or any world crisis.

Take your pick — $52, $75, $82.50 or $100 a barrel? The outlook for West Texas Intermediate on the New York Mercantile Exchange seems particularly confused with some analysis calling for a fall in contrast to wildly optimistic targets near $100.

All prices are possible, but some are more probable than others.

Markets have focused on the sudden drops in the Dow Jones Industrial Average and the Shanghai composite index. For many, the Dow fall had a benign inevitably — no need to panic. The fall in the Shanghai market, however, was seen as a warning sign, but it could actually turn into a fresh opportunity.

The Dow retreat, high-to-low, was a little over 12 percent. Let us call the move past 10 percent an overshoot, so this retreat is seen as a correction rather than a trend change.

The Shanghai index decline was 14 percent. Given the higher level of background volatility in the Shanghai market, it's fair to call the move past 10 percent an overshoot.

But that is where similarities end. The fall in the Shanghai market is not the same as the fall in the Dow, although the increasing exposure to, and integration into the global financial system has exacerbated the fall.

We know every good horror movie has a nasty ending, but that doesn't stop us from flinching, or screaming, when it happens.

The Dow retreat is the same. The focus on interest rates in the United States has been a topic of discussion for more than a year. Like a good horror movie the clues have been piling up, but markets like to pretend they have been caught by surprise.