Adam Smith Associates

The Big Fight

The US VIX has been in the news in the last few days. So right after the India VIX made its lowest reading on record, the US VIX has dipped to a low that touches the trendline of the low in 1993 to the low in 2006. In the long term history of the VIX these low points did not mark major market tops. At the same time it maybe noted that the US VIX rises higher much before such an event. So volatility was already rising into the 2007 S&P top before it happened.  On the other hand shorter term lows in the VIX have been associated with near term market corrections and therefore we may still pay attention to it. The recent low is also on the trendline of the lows of the last two years. So a rise in near term volatility from here when it happens would give us a near term correction is all we can say with this. Adam Smith Associates offers trade & commodity finance related services & solutions to its domestic & international clients. Views

Dollar Index The dollar index has formed a 5 wave decline that is overlapping like a wedge. This pattern is known as a leading diagonal and occurs in wave 1/A of a trend. So this marks a near term bottom from where the entire fall can be retraced meaningfully. Typically 38.2% up to 100 but mostly to test the wave 4 high at 101.28 close to 50% of wave A. In some cases we do get 61.8% which is near 101.74. After that wave C down is very swift. So this should be the last best rally for the dollar to 101. Nikkei The Japanese index making a new high now counts as impulsive and so it changes the markings from 2009 onwards into a 5 wave rise. We are in the 5th wave. This can have two efffects. Shorter term wave v=i can point to 20900 however the larger structure allows for a bigger move up. 5=1 is as far as 24000. Adam Smith Associates offers trade & commodity finance related services & solutions to its domestic & international clients. Views

Aluminium Aluminium - broke the neckline at 120 so the 40 week average is at 118. At the same time the pattern looks like a head and shoulders top which has pattern implications of a move down to 113. Nickel MCX Nickel prices developed a positive divergence on the RSI, and wave v of C should be finally complete. After a larger decline in A-B-C, we can expect an X wave, up, meaning a retracement of the fall if not a fresh up trend. A move back to 630-668 maybe possible to start with retracing 38.2% of the entire fall and near the wave iv of C swing high Adam Smith Associates offers trade & commodity finance related services & solutions to its domestic & international clients. Views expressed in this article are purely of the author - Mr Rohit Srivastava - a leading technical analyst. Visit www.adamsmith.tv for services offered by Adam Smith Associates Pvt Ltd

USDINR USDINR closed last week positive mostly completing wave v down, and today a close above the 20dma at 64.39 would be a first time in 3 months, so it may mark a trend change. First resistance above 64.39 is 64.86 EURO The Euro could not hold above 1.099 so the case is first for a dip to maybe the 20dma near 1.08 or the gap area at 1.081, and then move up again USDJPY Breaks Out USDJPY breaks out of a falling channel and the channel measurement target above 113 is up to 118. I am not concluding on the wave structure yet but the fall is 3 waves making it a corrective decline. The rise appears more impulsive right now. USDSGD USDSGD - appears to have completed a correction near a 50% retracement and broken out on price and retracement. With the dollar rally in currency pairs gaining momentum we should see more upside here. Initial resistance is at 1.42 above that to the high at 1.454. But there is a bigger case for a 3rd wave that can

USDGBP It has fallen in 3 waves so far, marked a-b-c. In my last note I considered the case of a Long term top in the contract. But prior to that i was keeping it as the last man standing in my bearish dollar call. So in the short term charts I keep that open just in case. If we are in wave 4 then near the lower end of the channel with the recent oversold RSI reading, maybe we have a bottom. Wave 5 up may just show up, even if it is s double bottom. Short term we should first test the averages at 0.788 and 0.792, Once we close above both then we can test the upper end of the channel at 0.821. We may rally into the coming Brexit vote that might make for the wave 5 top then. USDJPY It bounced back from the lower end of a falling channel. It did not complete a 5 wave decline as I was anticipating so the markings have changed from a-b-c to w-x-y showing a complex formation. Either we are going up in an x wave up to 113.50, or, if we breakout above 113.50 a new m

The Dow may not have competed 5 waves for the Nov-Apr move and it is possible we see one more new high to complete the structure. If so a move to 21600-22000 is open in the near term.  Adam Smith Associates offers trade & commodity finance related services & solutions to its domestic & international clients. Views expressed in this article are purely of the author - Mr Rohit Srivastava - a leading technical analyst. Visit www.adamsmith.tv for services offered by Adam Smith Associates Pvt Ltd