Currency, US 30 Year Treasury Bonds, Nasdaq, DAX, Karachi Index and Commodity - Technical Analysis
US TREASURY BONDS
While the 10 year has already broken the rising channel 2 days ago the 30 year bonds are now at the rising trendline near 152. So a further decline in the bond market will get this second confirmation of a break down in the bond market. We would be at the start of a 3rd wave down in US bonds. [We have discussed this scenario and its impact in this months Long short report.]
USDCAD
The last post identified the Wave B high at 61.8%. From there we have a 5 wave decline so the down trend is established. We may get the first retracement of the fall when the 5 wave decline completes but the larger trend down will resume again, till C=A is achieved. The RSI is getting oversold. 1.33 near the wave 4 high would be a resistance level during a counter trend move up. After that we may head to 1.25 in wave 3 of C.
EURO
The euro/dollar did not achieve 1.15 and it is hard to say yet that prices have started wave 2 down. When they do we get a retracement of the entire 5 wave rise back to the wave 4 low near 1.11. Till then it is open to interpretation. But the overall picture is clear, that we are ending a 5 wave rise and due for retracement before a larger rally resumes.
NASDAQ
So while the Dow tested its highs again the Nasdaq was again pulled down as all the FANG stocks gave up. The Nasdaq 100 index broke the 29/06 swing low. The neckline of a h&s broken the pattern points to 5420.
DAX
DAX – the German index has not confirmed a trend reversal on long term charts yet but it did form a doji star on the quarterly chart. That it did so after achieving the target of 5=1 shown by the box makes it an important candle to watch as the trend could be complete here.
KARACHI 100
A very steep fall in the Karachi 100, and it is in wave 5/5, but the 5th wave did not achieve the Fibonacci or channel target. So I leave it open as to whether the final top is in or not. While possible ideally it should extend some more.
Copper
Copper Quarterly momentum crossed over to the buy side as a positive indication. We still have to get over the quarterly averages at 2.73 and 2.84 for a larger move to 3.80 to develop.
Gold
Gold broke the neckline of the last several months at 1230$. The neckline measurement target coincides with the 78.6% retracement near 1160. However the rising trendline from the 2015 Dec bottom is at 1173. 61.8% is at 1188. That gives us two levels to watch for oversold readings and a trend reversal to capture the bottom in gold. 1188 and 1172-1160. It is normal for wave E to either be short or go below the lower line [causing a selling exhaustion] before turning around. Right now staying below 1232 is bearish near term.
Soy Meal CBT
Soy Meal prices made a double bottom near 292$, and broke out of the falling trendine for wave of 2. A bottom maybe now in place for a larger 3rd wave up to start. Initial hurdle is 330 at 61.8% of Y. Then the X at 354 after that we should be heading to a new high above 432.Failure to go above 330 and 354 can keep us in wave 2 by some alternate patters.
Silver
Silver hit the 20dma resistance at 16.90 and sold off. Staying below this level Silver would be in wave iii down to 15.52.
Wheat CBT
After being bullish global wheat prices in my last update I was negative as prices reacted from the falling channel of the last few years. But we now have a breakout so it is best to stick to the original outlook. Wheat CBT should be in wave 3/3 up now. Staying above 470 the trend is up and the next two swing resistance levels are 524 and 615. The monthly Bollinger band is also near 500. So getting past the 500-524 range would expand volatility meaningfully.
Sugar CSCE
The relentless fall in global sugar may have ended. Wave v of C down was forming for a while and extending. Now it counts as a completed 5 wave decline and yesterday’s bounce gets the RSI out of oversold territory. The recent low is near the 2016 bottom seen in sugar so it is a good level to hold near 12.5$. This is also wave 2 down for the longer term. The next move up should mark the start of a 3rd wave advance in global sugar prices.
Coffee CSCE
Coffee prices bounced back from the oversold territory, meaning an RSI of below 30 on both the daily and weekly charts. The near term a falling trendline from the wave d high is at 131, so a move above 131 should be a final confirmation of a trend reversal. The quarterly chart below shows the big picture. The development of a triangle from 2010 onwards which is mostly wave B, and sets it up for wave C up a major new bull move for Coffee prices. Lets get a little imaginative here. If C=A is achieved over 5 years Coffee prices go to 700 from 125 now. That is quite crazy. The triangle breakout will be above 168. Note it is also possible that prices remain within the triangle for now and only go to 168 to come back to 120 again. So unless we breakout the triangle is still forming. For the year ahead however a move to 168 can be seen.
Adam Smith Associates offers trade & commodity finance related services & solutions to its domestic and international clients. Visit www.adamsmith.tv for detailed services offered by Adam Smith Associates Pvt Ltd.
Views expressed in this article are purely of the author – Mr Rohit Srivastava – a leading technical analyst.
