AUD/NZD

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AUDNZD

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.

AUDNZD II

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

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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.

SILVER

COPPER II

INDUSTRIAL METALS

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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

INDUSTRIAL METALS 3 YR CORR

5 YEAR WEEKLY ROLLING CORRELATION

INDUSTRIAL METALS 5 YR CORR

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.

ALUMINUM

COPPER

LEAD NICKEL

TIN

ZINC

MSCI EM

U.S. GOVT. BONDS

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U.S. treasury and government bond prices are completing bullish chart patterns that could resolve on the upside in the following weeks. U.S. 30-year T Bond is completing an inverse head and shoulder base and the U.S. 10 year T Note is forming a falling wedge pattern. Both chart patterns are considered to be bullish and suggest higher prices in the short/medium-term. Breakout above 135.3 levels will confirm the inverted head and shoulder on the 30-year T Bond price chart and breakout above 126 levels will confirm the falling wedge on the 10-year T Note.

US 30 YR BONDS

US 10 YR T NOTES

DAX, NIKKEI and DJIA

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For those who are not a big fan of twitter I’m posting my latest updates on global equity markets. I believe these are important charts and are worth reviewing again. Global equity markets are experiencing a correction. Long-term trends are still intact. Long-term 200-day averages will play a significant role in determining the next direction of the long-term trends.

MSCI WORLD MARKETS

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Global equity markets can experience a pull back. MSCI World Markets index is testing strong long-term resistance levels. A pull back towards the long-term averages would result in a reversal on the MACD too. It is still early to call for a reversal but it is also extremely important to keep an eye on this long-term chart after 5 years of uptrend. Failure to breach long-term resistance at 1,690 levels could result in medium-term weakness towards 1,440-1,500 area.

MSCI WORLD MARKETS INDEX

SERBIA AND SLOVENIA

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Frontier markets performed well over the past year. More and more frontier equity markets are gaining strength. Both Serbia and Slovenia equity indices are completing 2 year-long base formations. Slovenia SBITOP Index cleared 700 levels; a horizontal resistance for the cup & handle formation. Index should target 970 levels in the medium-term. Serbia SRX USD index is one step behind from Slovenia. Serbia is still preparing for a strong breakout above 187 levels that will also complete the bullish chart pattern. Both indices are gaining strength and technical outlook is turning positive. More information on cup with handle formation (here).

SLOVENIA SBI TOP INDEX

SERBIA SRX USD INDEX

USD/ZAR

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Positive sentiment for the South African rand might be over as the cross rate reaches strong support area formed by the long-term trend line and moving averages. Both 3 year-long trend line and the 200-day moving average are forming support at 10.35 levels. RSI (Relative Strength Index) is also testing 50 levels; which is considered to be the lower boundary for a bull market. Over the past 3 years cross rate managed to rebound from the 200-day average and the RSI rebounded from 50 levels simultaneously. Expect a similar rebound from the strong support area and weakness in South African rand against the U.S. dollar.

USDZAR

BRENT CRUDE OIL

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Oil prepares for a massive breakout in the following weeks/months. Magnitude of the price change is likely to make the oil “the hot topic” in the financial media. Why am I saying this?

1) Breakouts from low volatility periods are usually very powerful and are followed by strong directional moves. United States Brent Oil ETF (BNO) and ETFS Oil Securities (OILB.L) both meet this criteria.

2) The longer price tests a trend resistance the more valid that level becomes. 45 levels on the BNO and 73 levels on the ETFS Brent are strong horizontal resistances. They are valid trend lines.

While it is still early to call for a direction, I would suggest everyone should place these two charts at the top of their watch list. A strong directional move is overdue.

BNO

ETFS BRENT II

COTTON

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COTTON

Cotton price prepares for a strong breakout from its 2 year-long base formation. Recent consolidation can be one of the two bullish chart formations. A cup with handle chart pattern or an ascending triangle.

CHART PATTERNS

If it is the former, Cotton should break above 94 levels in the short-term. Breakout above 94 levels will clear 2 year-long horizontal resistance and should be very bullish for Cotton prices.

If prices are forming an ascending triangle, breakout above 94 will be delayed. Only after another pullback towards the 200-day moving average will Cotton challenge the 94 resistance. One or the other, current technical outlook is bullish and suggests higher prices in the medium-term. Watch 94 levels as strong resistance.