In the last two weeks we have seen sharp sell-off in commodities and equities. Some asset classes were hit harder than the others. I’ve adjusted my trend channel on the commodity index. 200 day moving average is now short/intermediate term resistance at 660 level. On the weekly scale the commodity index rebounded from the lower boundary of the last 2 year’s trend channel and closed the week at the highest level. Uptrend is still intact and for the intermediate term uptrend to resume in the following weeks GSCI should hold above 600-650 range. It is important to note that RSI is still above 40 level (positive).
Here is a chart of US 10 Year Treasury Notes. The chart is plotted on a weekly scale and analyzes the past decade. Long term trend lines worked perfect. In the second half of 2007 T-Notes broke out of a four-year long downtrend at 108 level and rallied towards 120 and then towards 130 level. Since the beginning of 2009, 10 YR T-NOTES price has been consolidating in a long-term range. We are now close to the upper boundary of this range which is at 126 level. This is a strong resistance and should stop the treasury rally for some time. We will keep a close eye on this long-term pattern and watch for a possible breakout. What we need to know for now is: “strong resistance is ahead…”
This chart shows the Dow Jones Industrial Average on a weekly scale. I’ve been reading analysis of the US indices forming a possible H&S top or going through a distribution phase that could reverse the uptrend. I believe Dow Jones Industrial Average is forming a sideways consolidation range. Symmetrical triangle or a contracting range should be regarded as a bullish set-up for the index. It is important to note that DJIA is still holding above its 200 day moving average (red-line). I believe the uptrend is still intact and the 5 month-long consolidation could resolve with an upward breakout. Strong support is at 11,900 level for the Dow Jones Industrial Average. A break below this level will breach both the 200 day moving average and the lower boundary of the intermediate term consolidation range.
The chart above shows the Goldman Sachs Commodity Index for the past 5 years. Different from other updates on this post I wanted to show that the uptrend in commodities is still intact and continues in a clear parallel trend channel. In the last few months we have seen commodities pulling back to their 200 day moving averages and finding support. This was a mean-reversion and it might be over. 650 level will be strong support in the following months (lower boundary of the trend channel and the 200 day moving average). Uptrend is still intact and could target 800 levels.
In Association with:
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- Is Classical Charting Still Valid? – September 2023 Tech Charts & Factor WebinarSeptember 24, 2023 - 10:45 am
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