Uncategorized Archives | Page 13 of 38

US DOLLAR/KENYAN SHILLING

May 19, 2014/0 Comments/in FRONTIER MARKET CURRENCIES, Uncategorized/by Aksel Kibar

In 2011, USD/KES (U.S. Dollar/Kenyan Shilling) cross rate experienced a strong breakout to all-time high levels. Breakout from the low volatility period was followed by a sharp rally that pushed the cross rate from 82 levels to 106 levels in less than a year. Central Bank of Kenya reacted by raising the benchmark interest rate from 6 pct to 18 pct over the course of sharp currency depreciation. Shilling recovered in the last quarter of 2011 and fell back to the support level at 82.

Kenya Interest Rate (Benchmark Interest Rate)Source: www.tradingeconomics.com / CENTRAL BANK OF KENYA

Since then the cross rate has been forming another base formation with a clear horizontal resistance at 88 levels. Cross rate might be preparing for another strong breakout. A decisive close above 88 levels can put pressure on the local currency once again.

BRENT CRUDE OIL

May 17, 2014/0 Comments/in COMMODITIES, Uncategorized/by Aksel Kibar

Over the past few months I wrote several updates on Brent Crude Oil . I think energy sector will be the “hot” topic in the second half of the year. The likelihood of a strong breakout is increasing as the consolidation resumes in this tight trading range. Breakouts from low volatility periods are usually very powerful. United States Brent Oil ETF (BNO) trades in NYSE (New York Stock Exchange) and ETFS Brent (OILB.L) trades in LSE (London Stock Exchange). Both charts are due for a strong breakout. Breakout above 45 levels on (BNO) and above 73 levels on (OILB.L) will be very bullish for the energy sector. Another chart that is likely to follow the same trend in the energy sector is BP (BP.L). BP trades in LSE. Breakout above the strong horizontal resistance at 510 levels will be bullish for the stock. These are the charts and levels that I’m watching closely to understand what is next for the energy sector.

What is your view on this? Are there any other supporting factors/developments that suggests a strong directional move any time soon? You can share your views with other followers.

U.S. GOVT BONDS

May 14, 2014/2 Comments/in ECONOMICS, Uncategorized/by Aksel Kibar

Long-term base formations are powerful and breakouts from these chart patterns should be taken seriously. In April, the 30 year U.S. government bonds broke out of an inverse head and shoulder pattern. Breakout above 135.3 levels confirmed the bullish chart pattern which was followed by a pullback. Now we are seeing the continuation of the earlier strength.

Another bullish chart pattern, falling wedge is developing on the 10 year U.S. treasuries. Breakout above 126 levels will confirm the bullish chart pattern on the 10 year T-Note. Technical outlook remains positive for both instruments. (Earlier analysis on the U.S. governments bonds is here)

INDIA BSE SENSEX

May 13, 2014/4 Comments/in EMERGING MARKET EQUITIES, Uncategorized/by Aksel Kibar

Markets that breakout to all time high levels usually don’t look back. Price enters the uncharted territory where it doesn’t meet any resistance. Some breakouts fail and fall back below the resistance they breached earlier. At that point we know that something was wrong with the earlier breakout. However most of the breakouts to all time high levels are so powerful and decisive that they don’t leave the price action in question. India’s breakout has been one of those set-ups where breakout to historical high levels from low volatility period is now being followed by a strong upward trend. This is extremely positive for Indian equities and suggests higher prices in the medium-term. I attached below similar breakouts to all time high levels on South Africa All Share index and S&P 500 index. (For earlier analysis on India you can refer here)

U.S. DOLLAR INDEX

May 11, 2014/4 Comments/in DEVELOPED MARKET CURRENCIES, Uncategorized/by Aksel Kibar

Friday’s move on the U.S. dollar index could be a major medium-term reversal for some of the cross rates out there. I’ve discussed the U.S. dollar index chart in my earlier updates and drew attention to the importance of the strong medium-term support at 79.5 levels. (Earlier update is here) During last week U.S. dollar index breached the support level at 79.5 but failed to close below it. Instead the weekly close was at the highest level of the weekly bar. The low levels in March-April and May formed positive divergence on the MACD. Positive divergence on MACD is a bullish technical development. Following the same thought process on my earlier analysis, I will focus on two levels in the following weeks. 1) 200-day average at 80.50 levels which will act as resistance. 2) Medium-term support area between 79 and 79.50.

Do you see other bullish developments favoring U.S. dollar strength in the coming weeks? How would emerging market currencies react to possible strength in the U.S. dollar index? You can share your views with other followers. Have a very good week.

U.S. Dollar Index (Daily scale)

U.S. Dollar Index (Weekly scale)

UK FTSE 100

May 5, 2014/0 Comments/in DEVELOPED MARKET EQUITIES, Uncategorized/by Aksel Kibar

If markets are going to move higher, especially in Europe, UK’s FTSE 100 index is my top candidate for a strong breakout. Index is testing 13 year-long horizontal resistance at 6,850 levels. The fact that the market hasn’t pulled back from the resistance area shows its strength and possibly its willingness to clear the multi-year resistance. Of course, this has to be seen in the form of a decisive close above the strong resistance. In the medium-term index formed a bullish ascending triangle. Breakout above 6,850 levels will have long-term implications. Breakdown below 6,500 levels can change the bullish outlook to neutral/negative.

COTTON

May 2, 2014/0 Comments/in COMMODITIES, Uncategorized/by Aksel Kibar

Long-term charts are usually very powerful and reveal important information. Over the past four decades cotton price fluctuated between 95 and 30 levels with the exception of two occurrences in 1995 and 2010. Breakouts from long-term consolidation ranges are usually followed by strong trend periods. Breakout above 95 will push Cotton price outside of its long-term consolidation range. Such breakout could trigger another sharp rally on the upside. Earlier short/medium-term analysis on cotton is here.

AUD/NZD

April 30, 2014/6 Comments/in DEVELOPED MARKET CURRENCIES, Uncategorized/by Aksel Kibar

Long-term charts usually reveal important information. Historical price levels are widely followed by investors and traders. Australian Dollar/New Zealand Dollar cross-rate is now at a historical support level. This long-term support was tested for the 5th time over the past three decades. 1.05 acted as support and each time the cross rate reversed from this level and moved higher.

Similar technical action can repeat itself as we are also seeing a bullish base formation in the short/medium-term. Double bottom chart pattern suggests higher prices if the neckline at 1.095 is broken on the upside. A decisive break above 1.095 will favor Australian dollar against the New Zealand dollar in the short/medium-term.

SILVER and COPPER

April 25, 2014/2 Comments/in COMMODITIES, Uncategorized/by Aksel Kibar

Both metals avoided sharp sell-offs by holding above critical support levels. Silver tested the strong support area between 18.3 and 18.8 for the 3rd time over the past year. Copper managed to hold above 3 levels which acted as strong support since 2012. Copper and Silver can rebound towards their long-term averages. 200-day average for Silver remains at 21.25 and for Copper at 3.2. Before we see decisive break downs of the strong support areas (Silver: 18.3-18.80, Copper: 2.85-3.0), we should expect neutral/positive technical action on Silver and Copper.

INDUSTRIAL METALS

April 16, 2014/1 Comment/in COMMODITIES, Uncategorized/by Aksel Kibar

Industrial metals remain to be an emerging market story. 3 year and 5 year weekly rolling correlations show high correlation between the MSCI Emerging market index and most of the industrial commodities. As expected there is also high correlation between the industrial metals. Zinc, Copper and Lead are high correlated industrial metals.

3 YEAR WEEKLY ROLLING CORRELATION

5 YEAR WEEKLY ROLLING CORRELATION

Since mid-2011, most of the industrial metals had lackluster performance. Sideways/downwards price movements were similar to the MSCI Emerging Market index. Charts are suggesting that we are getting closer to the end of the medium/long-term consolidation periods. Lead, Zinc and Tin are completing their contracting ranges and breakouts should occur in the following months. Over the past few weeks Nickel had a strong run but it is still below its downward trend resistance. Both Aluminum and Nickel performed worse than Lead, Zinc and Tin. Breakouts on these industrial metals could result in a 3-4 year-long directional movements. Global growth and emerging market performances will depend on the direction of the breakouts in these industrial metals.