ROMANIA BUCHAREST BETI

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ROMANIA BUCHAREST SE INDEX

Strength in European equities is helping the frontier equity markets in Eastern Europe. Relatively smaller markets such as Romania’s BETI index had strong performance over the past few years and the uptrend is likely to resume. In the beginning of 2014, BETI cleared 6,150 levels. Now the index is trying to breakout from a medium-term consolidation range by pushing above 7,340 levels.

BRD GROUPE SOCIETE GENERALE

BRD GROUPE SOCIETE GENERALE (ROBRD.BX) ( is a financial sector company that trades on the Bucharest Stock Exchange. According to Reuters the company is the 4th largest in the BETI index with $1.66 billion market cap. Stock is now breaking out of a 2 year-long base formation with a strong weekly price bar. Chart pattern price target is around 12.5 levels. Flat-range breakouts are usually powerful and are followed by strong trend periods.

For those who has direct access to Eastern Europe, Tech Charts community will be happy to hear your recommendations regarding efficient ways to access these markets.

 

U.S. DOLLAR/TURKISH LIRA

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There are two themes that I would like to discuss on this chart.

1) Breakout to all-time high levels which I like to call uncharted territory.

2) Significance of long-term chart patterns.

I’ve been following and writing about this pair for almost 2 years. I’ve been also betting on U.S. dollar strength against most of the emerging market currencies. (All updates on USD/TRY for the past 2 years)

USDTRY

When price clears strong horizontal resistance which has been intact for almost a decade it usually signals a major shift in supply/demand dynamics. In the beginning of 2012, USD/TRY broke above 1.75 levels. That was the major shift that pushed the cross rate above decade-long resistance. However, depreciation of the Lira didn’t start until another medium-term chart pattern (symmetrical triangle) was completed in the first quarter of 2013. Only after a decisive break above 2 levels USD/TRY started moving higher towards its long-term chart pattern target at 2.7 levels.

Long-term chart pattern was a head and shoulder continuation (here is a perfect discussion on head and shoulder continuation) (@PeterLBrandt)  that took almost a decade to form. Breakout from the head and shoulder continuation also pushed the USD/TRY to all-time high levels. When these two important chart developments took place at the same time, it became clear that a major shift was underway.

Price targets derived from chart patterns are only reference points in our analysis. Price can exceed these levels. However, it is important to note that around 2.7 levels there are two strong resistances. 1) Upper boundary of the trend channel 2) Head and shoulder price target. Let’s keep a close eye on 2.7 resistance.

BIST 100 (TURKEY) and INDUSTRIAL SECTOR

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Industrial sector outperformance is usually negative for Turkey’s BIST 100 index. Last  time I updated this chart was in January 2014. Since the last update It’s been more than a year and BIST 100 index trended higher from 60,000 levels to 91,000 levels. Strong upward trend might be reversing once again towards a corrective period in Turkish equities.

BIST 100 INDEX

XUINDXU100

Industrial Sector continues to outperform the BIST 100 index. 

Relative performance ratio between Industrial sector and BIST 100 index is breaking out of a long-term consolidation. Historically industrial sector’s outperformance didn’t bode well for the BIST 100 performance. Strong uptrends were usually led by financial sector outperformance.

Latest change can have significant medium/long-term implications. We can expect further correction/sideways trading in equities and continuation of industrial sector outperformance in the coming months.

UK FTSE 100 and STOXX 600

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A chart that breaks out to all time high levels has the least resistance. It is called the uncharted territory. Prices are expected to resume their trend after a decisive breakout to all-time high levels. This is what happened with some of the indices over the past few years. I attached below some of the strong breakouts to all-time high levels that have taken place. S&P 500 Index, Germany DAX Index and India BSE SENSEX index are some of them.

S&P 500 INDEX

BSE SENSEX INDEX

GERMANY DAX INDEX

More and more equity indices are now breaking out to all-time high levels or at least preparing for strong breakouts. UK FTSE 100 index is one of them. Index closed the week above strong resistance level at 6,950. Few more weeks of strength will confirm the decade-long breakout.

UK FTSE 100 INDEX

Europe continues to gain strength thanks to ECB. Euro Stoxx 600 index is preparing to clear multi-year resistance at 400 levels. I’m not sure if any of these latest breakouts could end up being bull trap. The best available information (latest price information) suggests strength and increase in upside momentum in global equity indices.

EURO STOXX 600 INDEX

MSCI ALL COUNTRIES WORLD INDEX is now challenging multi-year resistance. Decisive monthly scale close above 430 will confirm the breakout.

MSCI ALL COUNTRIES WORLD INDEX

VIETNAM VN INDEX and QATAR DSM 20 INDEX

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In 2014, Qatar has been upgraded to emerging market status with the United Arab Emirates. Vietnam is still in the frontier market universe. Over the past year both indices formed head and shoulder top chart patterns. Head and shoulder is a common reversal chart pattern, that usually forms after a long up/down-trend. Since the beginning of 2009, global equity markets had  strong uptrends. Some of the equity markets are now showing signs of weakness.

Qatar DSM 20 index formed a head and shoulder top with a downward sloping neckline. Downward sloping neckline is usually more negative than a horizontal neckline. Vietnam VN index has a horizontal neckline at 510 levels. Breakdown below the neckline is a confirmation of larger scale correction. For Qatar DSM 20 index breakdown below 10,700-10,920 area will signal further weakness and for Vietnam VN index, a decisive break below 510 levels will confirm the year-long head and shoulder chart pattern.

QATAR DSM 20 INDEX

VIETNAM VN INDEX

US DOLLAR/PHILIPPINE PESO

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Since the beginning of 2013, emerging markets currencies performed poorly. Though one currency showed resilience over the past 2 years; Philippine Peso. During 2013 the cross-rate moved from 40.5 to 45.5 and in 2014 the performance of Philippine Peso was neutral against the U.S. dollar. Whereas during the same period most of the emerging market currencies depreciated against the dollar.

Last one year’s price action on USD/PHP is a symmetrical triangle (continuation). Chart pattern suggests possible weakness for the Peso in the coming months if the cross rate breaks above 45-45.5 area. Philippine Peso can join the weakness in emerging market currencies. Breakout above 45-45.5 area can target 48-50 range.

USDPHP

UK FTSE 100, STOXX 50, NIKKEI 225

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Global equity indices are gaining upside momentum. Recent breakouts above long-term trend lines suggest multi-month uptrends. Last week's price action pushed UK FTSE 100 index to all time high levels. Charts that are very close to long-term breakouts: MSCI ALL COUNTRIES WORLD INDEX, EURO STOXX 50 INDEX and UK FTSE 100 INDEX.

Positive price action is likely to continue in the developed market equities.

JAPAN NIKKEI 225 INDEX

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PERU LIMA IGRA SE INDEX

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PERU LIMA IGRA INDEX

Peru LIMA IGRA index has one of the weakest chart set-ups in the emerging market equities. Multi-year head and shoulder top has a neckline standing at 14,150 levels. Index is trading at 13,493 levels – below the multi-year support. Decisive “weekly” close below 13,360 levels (minor low in January) will confirm the downtrend towards 10,000 levels. Strong medium/long-term resistance area remains between 14,150 and 15,000. Technical outlook is negative for Peru equities.

USD/CNH (CHINESE YUAN OFFSHORE)

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Here is a detailed article that explains the difference between on shore and off shore Chinese Yuan.

http://www.businessinsider.com/onshore-and-offshore-renminbi-2014-2

I am analyzing the long-term base formation on the USD/CNH (Chinese Yuan Off Shore) in this update. I think this chart is important as we start reading more about currency wars. Cup & handle is a reversal pattern. In this case it is a bullish development and suggests higher levels for USD/CNH. In other words depreciation for the Chinese Yuan. Breakout above 6.27-6.30 area will confirm the 2 year-long base formation. Until the beginning of 2015, USD/CNH had lower lows and lower highs. In the last quarter of 2014, the low formed at a higher level. This could be the beginning of a change in trend.

USDCNH

PLATINUM

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PLATINUM

Commodities markets have performed poorly compared with stocks over the past 3 years. From industrial metals to agricultural commodities deflationary pressures are being felt worldwide.

Platinum prices which is almost 50% lower than 2008 historical high levels, is now testing a 15 year-long trend support. Usually prices should rebound sharply from such historical level. However, over the past four months the performance has been lackluster. Breakdown below 1,170 levels will have long-term implications and will be negative for Platinum prices. It is important to note that the next major long-term support is around 735 levels. Next few months will be extremely important for the medium/long-term trend.