U.S. JOBLESS CLAIMS

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US JOBLESS CLAIMS

Latest data on unemployment and jobless claims were welcomed by the financial media and helped equity markets gain momentum. Weekly jobless claims data is now at an important support. Will it reverse from here? We don’t know yet but if we see signs of reversal in the following weeks, resulting in worse than expected job numbers then we will conclude that the trend line is valid and this could be a major turning point similar to year 2000 and 2006. An interesting chart to watch in the following weeks…

USD/INR (U.S. DOLLAR/INDIAN RUPEE)

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USDINR

Breakouts from contracting ranges are usually very powerful. The longer the consolidation period the more powerful the breakout is. In the case of USD/INR we are getting closer to a strong breakout from the year-long consolidation range. Breakout above 55 levels will be bullish for the U.S. Dollar and will target 57-58 area on the price chart. Breakdown below 53.50 will be bullish for the Rupee and will be followed by a directional move towards 50-51 area. Levels to watch; 55 as resistance and 53.50 as support.

OATS (JUL3)

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OATS

One of the most exciting chart pattern in grains market is in Oats July 2013 futures contract. This massive symmetrical triangle is likely to break upwards with strong momentum. I posted similar chart patterns earlier on Soy Meal, GBP and Copper. All of them formed perfect symmetrical triangles and were followed by strong breakouts. Oats is a good candidate for a medium/long-term directional move. Breakout above 400 levels will generate a buy signal and medium-term stop-loss will stand at 350 levels.

GOLD ($/OUNCE)

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GOLD daily

After a 20 month-long sideways consolidation Gold is likely to find support at the strong support area between $1,525-$1,535. Since October 2012, prices have been moving lower as part of the sideways consolidation. Gold tested the support area for 4 times over the past 20 months.

GOLD

On the long-term chart, decade-long uptrend had two major interruptions. First one was a sharp correction in 2008 that took gold price from 1,000 levels to 680 levels in less than 8 months. The second one is still ongoing. Unlike the first major correction, price is contained in a tight range between $1,800 and $1,525 levels. However, latest correction took longer than the previous one. Gold might be forming a major low at these levels as the long-term trend channel and the 100 & 150 week moving averages act as strong support. If this is a major low (will be clear in the following weeks by prices rebounding sharply) gold would resume its long-term uptrend towards 2,000 levels. If price breaks below 1,525 levels long-term positive outlook will be challenged.

JAPAN NIKKEI 225

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NIKKEI

NIKKEI daily

Japan’s Nikkei 225 index is losing momentum after the strong rally. In mid-December 2012 I drew attention to the strong breakout in Japanese equities (December 19, 2012 – Japan Nikkei 225) supported by a weakening Yen. Breakout from a 3 year-long downtrend at 10,000 levels was followed by a sharp upward move. As we got closer to 12,000 levels on the index, momentum and volume declined. This is a concern and should be taken as a warning signal for a possible correction towards 11,400 levels. Two charts above show the weekly and daily scale of the Nikkei 225 index.

COPPER

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COPPER

Equities are testing new high levels. Currencies are volatile, especially after the latest sharp movements on JPY, GBP and EUR. Gold is testing a major support level. Commodities are lagging… and Dr. Copper is telling us the other side of the story. A year-long symmetrical triangle is close to completion. Breakdown from this symmetrical triangle can trigger a sharp sell-off on copper price. What implications would that have on the overall market. We know that copper is a leading indicator of economic activity. How would the already volatile currencies react? Breakdown below 350 levels could send prices towards 320 levels.

NZD/USD

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NZDUSD

Volatility in currencies keeps rising with GBP/USD breaking down a long-term support earlier during the month, JPY/USD rallying towards 95 levels over the past 2 months and now NZD/USD breaking down a strong 8 month-long trend line support. After the failed break above the horizontal resistance at 0.847 levels NZD/USD reversed sharply. First the cross rate breached the 200-day average at 0.84 levels and then broke down the medium/long-term trend support at 0.83 levels. This is a significant development and suggests further weakness for NZD. Unless we see cross rate pushing above 0.8350 levels in the following days we should expect lower levels on the NZD/USD.

EUR/USD

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EURUSD

EUR/USD reaches strong support area formed by the 50 & 200 day moving averages. 1.3050 is the level where 200 day moving average and the lower boundary of the upward trend channel meet. Since we have seen 50 & 200 day moving average crossover in December 2012, this is the first sharp pullback to the support zone formed by the two moving averages. If we see cross rate holding above 1.3050 levels in the following days we will put an intermediate term low and expect a rebound towards 1.33-1.35 area. Breakdown below the 200 day average will change the bullish outlook on this chart.

SPAIN IBEX 35 AND ITALY MIBTEL

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SPAIN IBEX 35

ITALY MIBTEL

Both Italy and Spain are holding above their 200 day moving averages. After bottoming in mid-2012, both indices have formed higher highs and higher lows. Lower boundary of  short/medium-term trend channels and the 200 day averages are overlapping at recent low levels and strengthening support levels for both indices. As long as Italy’s MIBTEL holds above 15,600 and Spain’s IBEX 35 above 7,900, we will expect the uptrends to resume.

GOLD

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GOLD daily

GOLD is likely to find support between $1,525 and $1,550. Year-long consolidation range has been intact between $1,525 and $1,800 levels. Latest sell-off in gold prices is not different that the earlier weaknesses precious metal experienced when the price reached the lower boundary of the medium-term consolidation range. Long-term trend analysis and the moving averages suggest $1,525 should act as strong support. Sideways consolidation between $1,525 and $1,800 is part of the long-term uptrend.

GOLD weekly