US DOLLAR/INDONESIAN RUPIAH

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 USDIDR

Indonesian rupiah had its share from the weakness in emerging market currencies. Over the past two years Rupiah weakened against the U.S. dollar similar to earlier price depreciation that took the cross rate from the lower boundary of its long-term consolidation to test the upper boundary. Fluctuations were between 8,300 and 12,400 levels. It is now the 4th time that the USD/IDR is testing its decade-long trend resistance. Price chart suggests Rupiah strength against the U.S. dollar, should the history repeats itself. Until we see a decisive breakout above 12,400 levels, we should expect reversion to the mean – a breath-taking period after the sharp depreciation in IDR.

ITALY MIBTEL & SPAIN IBEX 35

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ITALY FTSE MIBTEL INDEX II

SPAIN IBEX 35 INDEX II

Since July 2012 both indices respected their 50-day moving averages. Over the past 5 months MIBTEL and IBEX 35 rebounded twice from their 50-day moving averages. Given that the latest uptrends formed clear trend channels with their lower boundaries overlapping with the 50-day moving averages, we can conclude that any breakdown below these critical support levels could deepen the short-term corrections. Until we see a violation of the current uptrends, we should expect both indices to move higher with 18,500 levels acting as support for Italy’s MIBTEL and 9,500 levels for Spain’s IBEX 35.

TECH TRADE

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Here are some of the charts that I shared on twitter.

Compass Group had a strong breakout. Stock should move higher in the following days. This was a 7 month-long consolidation range.

I posted the long-term chart on IP GROUP last week. Stock had a strong breakout today above 160 levels. Looks very bullish.

Both Soy Meal and Cocoa stay strong with further upside potential. These are updated charts related to my earlier blog post.

An important chart that should be on everyone’s watch list. Massive long-term base formation could resolve on the upside. This chart will look extremely bullish above 1,675 levels.

NIKKEI 225 INDEX

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NIKKEI 225

16,000 level becomes more important for Japan’s Nikkei 225 index as the benchmark reaches the decade-long trend resistance. In May 2013, Nikkei 225 had a spike and tested the long-term resistance area. Sharp pullback to the 200-day average followed right after the strong rally. Now, the index is trying to reach the same trend resistance.  To be more bullish in this overextended market we should wait for confirmation and this confirmation should come with a decisive break above long-term trend resistance at 16,000 levels. Before that happens we should expect more consolidation between 13,500 and 16,000.

COCOA & SOY MEAL

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COCOA

I analyzed Cocoa prices in October and drew attention to the strong horizontal resistance at 2,800 levels. That study needs an update now as the price is challenging the strong resistance for a possible breakout. Higher prices could be seen in the following weeks once this base formation completes with a similar breakout that took place in the beginning of 2007.

SOY MEAL

Soy Meal is another commodity that could move higher in the following weeks as the price finds support between 380 and 390 for the 5th time over the past two years. Last one year’s trading range has been between 380 and 550. A buy signal on weekly MACD, similar to earlier reversals, will confirm the bullish outlook for the short/medium-term. Price could target 550 levels once again.

GBP/CHF

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GBPCHF

GBP is gaining strength against major currencies. This is a bullish chart pattern that has been forming over the past year on GBP/CHF. Cross rate tested 1.48 levels for three times over the past year and a break above this resistance could send the cross rate towards 1.51-1.52 area resulting in further GBP strength. Chart pattern can be classified as a double bottom or cup with handle . In both cases a breakout on the upside will generate a bullish signal for GBP in the short/medium-term.

TECH TRADE

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EUR/USD & GBP/USD

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EURUSD

GBPUSD

If you think that currencies have been volatile, you haven’t seen anything yet. We are likely to see more volatility and read about “currency wars” in the following months. These two charts are extremely powerful and suggest both cross rates are at an extreme low volatility period when compared with the past few decades. Volatility is cyclical and low volatility is usually followed by high volatility and vice versa. Both EUR/USD and GBP/USD are getting closer to a major breakout that will be followed by multi-month trend periods. These are very long-term charts and are presented to show that actually we are at a low volatility period. Levels to watch in the long-term for EUR/USD: (resistance: 1.41, support: 1.21) for GBP/USD: (resistance: 1.65, support: 1.50).

ITALY MIBTEL & SPAIN IBEX 35

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ITALY FTSE MIBTEL INDEX

European equities recover from the bear market by first clearing their 200-day moving averages and then by breaking to new high levels. Two indices that have shown considerable strength over the past few months are Italy’s MIBTEL and Spain’s IBEX 35. Italy FTSE MIBTEL started gaining momentum after the breakout above 17,700 levels. Uptrend is intact and the index just completed a minor consolidation in the larger scale uptrend. We can expect the index to resume its uptrend in the following weeks.

SPAIN IBEX 35 INDEX

Spain’s IBEX 35 index gained strength after breaking out of its year-long sideways consolidation at 8,800 levels. Similar to Italy’s MIBTEL index, Spain’s IBEX 35 just completed a minor sideways consolidation which is expected to be part of a larger scale uptrend. Both indices have positive technical outlook and should target higher levels in the following months.

10 YEAR U.S. TREASURY YIELDS

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10 YEAR US YIELDS

Yields are rising once again putting pressure on the bond market. U.S. 10 year Treasury yield doubled since mid-2012 and now it is close to strong trend resistance between 2.9-3.0 levels. 200-day moving average which is at 2.4 levels is acting as medium/long-term support. Unless 10 year U.S. yield breaks down 2.4 levels in the following weeks we can expect higher prices that could eventually clear the 6 year-long trend line resistance at 3.0 levels. Technical outlook is positive and suggest higher yields in the following weeks/months.

US 5 YEAR NOTES

U.S. 5 year treasury note completed a pull back after breaking down strong trend support in the first half of 2013. Unless price moves above 122 levels we should expect lower bond prices in the following weeks. Technical outlook is negative.