Tag: support

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Euro checks support

The euro is headed for another test of support at $1.40 after respecting resistance at $1.45. The descending triangle suggests a downward breakout with a target of $1.30. Momentum crossing below zero would strengthen the signal.

EURUSD

* Target calculation: 1.40 – ( 1.50 – 1.40 ) = 1.30

The pound sterling is also headed for a test of support, this time at $1.60. Breach of the rising trendline warns of trend weakness; a Momentum cross below zero would again strengthen the signal. Failure of support would offer a target of $1.53*.

GBPUSD

* Target calculation: 1.60 – ( 1.67 – 1.60 ) = 1.53

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Commodities: trend starts to bend

The CRB Commodities Index threatens a breakout above its trend channel, while 63-day Momentum crossed above zero. Neither is of much consequence yet, but retracement that respects support at 335, or a Momentum trough that respects the zero line, would warn that the down-trend is at an end.

RJ/CRB Commodities Index

* Target calculation: 315 – ( 330 – 315 ) = 300

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Reminder: we’re in a bear market

Don’t be fooled by current month-end froth in the markets — into thinking that the bear market is over or that the early August plunge was a false signal. The S&P 500 Index has made little headway after completing a double bottom at 1200 despite average volumes indicating the absence of strong selling. 63-Day Momentum peaking below the zero line indicates a primary down-trend. Expect the bear rally to test resistance at 1250/1260 before a retreat to 1100. Breach of 1100 would find support at the 2010 low of 1000, but the calculated target is even lower*.

S&P500 Index

* Target calculation: 1100 – ( 1250 – 1100 ) = 950

The Nasdaq 100 performed better, clearing 2200 to complete a double bottom with a target of 2350*. Bullish divergence on 13-week Twiggs Money Flow indicates buying pressure. But this is a bear rally in the middle of a bear market, and further falls on the Dow/S&P 500 would drag the Nasdaq lower.

Nasdaq100 Index

* Target calculation: 2200 + ( 2200 – 2050 ) = 2350

Fedex and UPS remain in a primary down-trend, indicating that economic activity levels remain poor.

Fedex and UPS

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Rand weakens

A three-year chart shows strong support for the US dollar at R6.50. Earlier breach of the descending trendline and rising 63-day Twiggs Momentum both warn that the Rand is likely to weaken. Now we have a break above resistance at R7.00 testing the 2011 high of R7.35. Breakout would signal an advance to R8.00*.

South African Rand

* Target calculation: 7.30 + ( 7.30 – 6.50 ) = 8.10

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Aussie weaker

The Aussie Dollar continues to consolidate between $1.03 and $1.06 against the greenback. Failure of support at $1.03 would test parity, while breakout above $1.06 would target resistance at $1.10. In the long term, declining commodity prices are likely to drag the Aussie lower — unless the Fed starts printing money again.

Australian Dollar AUDUSD

* Target calculation: 1.03 – ( 1.06 – 1.03 ) = 1.00

The Aussie Dollar is testing the upper border of the declining trend channel against its Kiwi counterpart. Reversal below short-term support at $1.255 would indicate respect of the upper channel and a down-swing to around $1.20*. Breakout above $1.28 is unlikely but would warn that the down-trend is weakening.

New Zealand Dollar NZDUSD

* Target calculation: 1.24 – ( 1.28 – 1.24 ) = 1.20

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Loonie band

The Candian Loonie is consolidating in a narrow band above parity, warning of selling pressure. Earlier penetration of the long-term rising trendline indicates the up-trend has weakened. Breach of support would confirm a primary down-trend, with an initial target of $0.94 against the greenback.

Canada Loonie CADUSD

* Target calculation: 1.00 – ( 1.06 – 1.00 ) = 0.94

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NZ50 bullish divergence

Bullish divergence on 21-day Twiggs Money Flow on the NZ50 Index signals buying support. Breakout above 3300 is possible, but the primary down-trend is unlikely to change, given the state of global markets.

NZ50 Index

* Target calculation: 3100 – ( 3300 – 3100 ) = 2900

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Shanghai Composite confirms down-trend

The Shanghai Composite Index respected resistance at 2650, confirming the primary down-trend. Expect a test of 2350. 13-Week Twiggs Money Flow reversal below zero would warn of rising selling pressure. In the long term, failure of support at 2350 would offer a target of 1600*.

Shanghai Composite Index

* Target calculation: 2400 – ( 3200 – 2400 ) = 1600

Monday’s long tail on the Hang Seng Index and higher volume indicate short-term support at 19000. Expect a rally to test the recent high at 20500.

Hang Seng Index

* Target calculation: 19000 – ( 22000 – 19000 ) = 16000

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India Singapore short-term support

The Sensex rallied Monday but on light volume. The sharp fall on 21-day Twiggs Money Flow below zero warns of strong medium-term selling pressure and support at 16000 is not expected to hold.

BSE Sensex Index

* Target calculation: 16500 – ( 17500 – 16500 ) = 15500

Monday’s long tail on the Straits Times Index also indicates short-term buying support. The sharp fall on 21-day Twiggs Momentum indicates a strong down-trend and support at 2700 is expected to fail.

Straits Times Index

* Target calculation: 2800 – ( 3000 – 2800 ) = 2600

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India Singapore short-term buying

The DJ Total Stock Market (formerly DJ Wilshire) Index for India ($DWIN) gapped down on Monday’s open but closed with a long tail. Short-term buying is unlikely to withstand concerted selling pressure, signaled by 13-week Twiggs Money Flow below zero.

Dow Jones Industrial Average

* Target calculation: 1820 – ( 1980 – 1820 ) = 1660

DJ Singapore also closed with a long tail, indicating short-term buying support — confirmed by higher volume. Again this is unlikely to withstand long-term selling pressure for more than a few days.

Dow Jones Industrial Average

* Target calculation: 220 – ( 240 – 220 ) = 200

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