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

USD/TL

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USDTL

1.75 levels has been long-term support for the USD/TL. In the last quarter of 2011, cross rate breached above 1.75 levels and since then price has been consolidating above this critical technical support level. Over the past week, cross rate rebounded from the horizontal support to test the year-long trend resistance at 1.80 levels. Breakout above 1.80 can push USD/TL towards 1.92 levels. Breakout on the RSI could be the early warning signal for a possible breakout on the price chart. Above 1.80 levels expect further weakness for Turkish lira.

COCOA

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COCOA

Here we have another soft commodity that is closer to its long-term support area. Similar to sugar, cocoa also peaked in the beginning of 2011 and since then prices have pulled back to test the lower boundary of the long-term trend channel at 2,050 levels. Finding support between 2,050 and 2,100 could help cocoa establish a new long-term uptrend. Current price action is similar to 2005-2006 base formation.

SUGAR

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SUGAR

Sugar price is offering a great opportunity for the long-term positions. Price is now testing the 9 year-long trend support between 17 and 18 levels. Over the past 2 years sugar price pulled back from 35 levels to the lower boundary of its long-term uptrend. RSI formed positive divergence on the weekly scale. Breakout above 20 levels will reverse the 2 year-long downtrend. 17-18 area should act as strong long-term support.

OATS

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OATS

Long-term symmetrical triangles are powerful chart patterns to trade. They have defined boundaries and breakouts from these type of consolidation patterns are usually followed by strong trend periods. Consolidation ranges are considered to be low volatility periods where price fluctuates around the moving averages. Low volatility periods are followed by high volatility periods and vice versa. As a result long-term consolidation patterns unfold into a large-scale up/down trend periods.

SOY MEAL

In March 2012 we have identified a 4 year-long symmetrical triangle on Soy Meal. Breakout from this chart pattern resulted in a multi-month uptrend. Similar technical set-up is present on Oats price chart after 4 year-long sideways consolidation. Breakout above 400 levels could result in a strong uptrend. Soy Meal reached its price target at 550 levels. After a confirmed breakout I will update this chart with the possible price targets. For now we should put Oats on our watch list for a possible strong breakout.

COTTON

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COTTON

Long base formation on Cotton price might be close to completion with soft agricultural commodity breaching the 5 month-long horizontal resistance at 77.60 levels. The chart analyzes ICE Cotton May 13 futures price. Chart pattern can be defined as an ascending triangle or cup with handle formation with a round base that is spread over a 6 month period. Recent strength comes after low a volatility period thus increasing the likelihood of an upward trend. If cotton price remains above 77.60 over the next few days, we should expect acceleration on the upside towards 83 levels.

CHINA GDP & CHINA SSE 50 INDEX

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In April 2012 I analyzed the downtrend on the Chinese GDP and the SSE 50 Index (April 13, 2012 – SSE50 Index & China GDP). Chinese equities were trending lower since the mid-2009 and the GDP growth since the beginning of 2010. Equity markets acted as a perfect leading indicator. I’ve concluded that until we see a change in trend on the equity market performance, which was a clear downward trend at that time, we should expect lower GDP growth for the Chinese economy. At the time of the analysis quarterly GDP figure stood at 8.1 % and the SSE 50 Index was around 1,700 levels. In the 2nd and 3rd quarter of 2012, equity indices resumed their downtrend and the GDP dipped to 7.4%.

SSE 50 INDEX II

CHINA GDP II

4th quarter GDP for the Chinese economy is expected on the 17th of January. Overall growth is anticipated to rise by 7.8% annually in the fourth quarter. This will be an improvement from the third quarter, when the economy expanded by 7.4%, and would be the first uptick in growth since the beginning of 2010. By looking at stock market performance over the past few months we can say that equities are signaling a turnaround in the economy and the growth rates and possibly putting a medium term bottom at these levels. Breakout above the 2 year-long downtrend on the SSE 50 Index is bullish for the chinese equities and should be backed by strong economic data.