INDIA, U.K. and JAPAN

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Over the past few years equity markets had strong performance. Developed markets did better than the emerging markets but overall it has been positive for equity asset class. In this update I’m sharing with you 3 long-term charts that can be the center of attention in 2014. Possible breakouts in these 3 markets can add fuel to the equity strength in the following months. India’s BSE Sensex index, U.K. FTSE 100 index and Japan’s NIKKEI 225 index are testing their long-term trend resistances. Breakout above these long-term strong technical levels can result in a multi-month uptrend and attract more investors.

INDIA BSE SENSEX INDEX

UK FTSE 100 INDEX

JAPAN NIKKEI 225 INDEX

INDIA BSE SENSEX and USD/INR

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INDIA BSE SENSEX INDEX

Strong price action should be followed by a decisive breakout on the BSE Sensex Index. Since 2007, Sensex tested 21,250 levels for three times and over the past few months price action suggests a breakout to all time highs is very likely. Confirmation of the breakout should come after a decisive weekly closing above the strong resistance at 21,250 levels. 200-day moving average should act as medium-term support at 20,000 levels if the index fails to clear the strong resistance. Breakout above 21,250 levels will push the index towards 25,000 levels in a short period of time.

USDINR

Indian rupee gained strength against the U.S. dollar and this trend is likely to continue towards 58-60 area. Strong equity market should bode well for the local currency.

INDONESIA JSX 45 INDEX and USD/IDR

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USDIDR

2 year-long depreciation for the Indonesian Rupiah should be over with the USD/IDR reaching long-term trend resistance at 12,400 levels. In 2012, I’ve analyzed several emerging market currency weakness against the U.S. dollar. USD/IDR was one of the charts that formed major base reversal (inverted head & shoulder). Since then, the asian currency depreciated from 9,000 levels to 12,000 levels. 2 year-long uptrend on the USD/IDR is due for a pullback. 12,400 levels is a strong resistance and only a decisive break above this level would put more pressure on the Rupiah. Otherwise expect the local currency to strengthen over the next few months.

INDONESIA JSX LIQUIDITY 45 INDEX

Strength on Indonesian rupiah should have a positive effect on the equities as well. JSX Liquidity 45 index found support at the lower boundary of its uptrend and now it is challenging the 200-day moving average at 746 levels. Equities should resume their uptrend as long as the trend channel remains intact. Strong support for the equity index is between 650 and 700 levels.

Gold, Silver, USD and Unemployment

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Here are some of the charts that I shared on twitter today. U.S. weekly jobless claims chart is extremely important as I shared several updates on this topic. Year 2013 can prove to be a major low for weekly jobless claims figure.

Both Gold and Silver are now close to major support levels.

U.S. dollar index rebounded from a 2 year-long trend support.

and some other updates on EUR/TRY, USD/TRY and NIKKEI…

INDIA BOMBAY SE SENSEX INDEX

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INDIA BSE SENSEX

Strength in India’s BSE Sensex Index is no surprise as the benchmark has been testing historical high levels. In September I shared an analysis showing similarities between India and South Africa equity index chart patterns. I think consecutive tests of the historical high levels on the BSE Sensex Index will lead to a breakout and higher levels in the following months. There are usually “double tops” in technical analysis but rarely we see “triple tops”. 3rd test of the historical high level at 21,200 could be a preparation for a decisive breakout. Let’s wait for confirmation. A breakout above 21,200 with a strong weekly bar will be very bullish for this market.

Yields, Copper and Nikkei

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Some quick thoughts I just shared on twitter. Charts are valuable. Notes on these:

1) 10 Year U.S. yields are climbing higher. Now very close to strong 7 year-long trend resistance. Breakout above 3.0 levels could be a “game changer”.

2) Nikkei 225 has strong long-term resistance at 16,000 levels. As it approaches to that level, expect weakness.

3) Copper might be forming a medium-term base at these levels. Breakout above 3.35-3.50 will be bullish in the medium-term with a price target of 4.

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.