Gold chart pattern
The following comments were made in the previous post on the daily bar chart pattern of Gold: "Daily technical indicators are looking oversold. But don't expect a strong fight back by bulls. Any attempt at a pullback will provide another selling opportunity."
Bears used every rise to sell. Gold's price dropped to an intra-day low of 1237 on Jul 3, but formed a 'reversal day' bar (lower low, higher close) with good volume support.
Oversold technical indicators triggered a pullback rally that is facing resistance from the falling 20 day EMA. A dip in the US Dollar index also helped bullish cause.
Daily technical indicators have corrected oversold conditions, but remain in bearish zones. Expect resistance from 1280 if the rally continues further.
On longer term weekly chart (not shown), gold’s price closed below its three weekly EMAs in long-term bear territory. Weekly technical indicators are in bearish zones. MACD is falling below its signal line. RSI is moving sideways. Slow stochastic is trying to recover from its oversold zone.
Silver chart pattern
The following comments were made in the previous post on the daily bar chart pattern of Silver: "On Thu. Jun 21, silver's price dropped to seek support from the 'Support zone' (between 16.10 and 16.20), only to bounce up - as it has done several times during the past 5 months. How much longer can the 'Support zone' hold?"
Bears answered the question emphatically. Silver's price dropped to the next 'support zone' (between 15.60 and 15.80), only to pullback above 16.20 - where it faced resistance from its falling 20 day EMA.
All three EMAs are falling, and silver's price is trading below them in a bear market. Expect bears to sell on every rise.
Daily technical indicators are in bearish zones. Only Slow stochastic is showing upward momentum.
On longer term weekly chart (not shown), silver’s price closed below its three sliding weekly EMAs in a long-term bear market. Weekly technical indicators are in bearish zones. Slow stochastic has slipped inside its oversold zone.
S&P 500 index chart pattern
For more than 5 months, the daily bar chart pattern of S&P 500 has been consolidating sideways within a large 'symmetrical triangle' pattern. The rising 200 day EMA indicates that the long-term bull market is very much alive.
From Apr '18 onwards, the index has formed a bullish pattern of higher tops and higher bottoms inside the 'triangle'. (At the time of writing this post, the index is testing resistance from the upper edge of the 'triangle'.)
In a holiday-shortened trading week, the index touched an intra-day low (below its 20 day and 50 day EMAs) of 2699 on Mon. Jul 2, but rallied to touch an intra-day high (above its 20 day and 50 day EMAs) of 2764 on Fri. Jul 6. Volumes were on the lower side.
Daily technical indicators have turned bullish. MACD has emerged from bearish zone, and is about to cross above its falling signal line. RSI has moved above its 50% level. Slow stochastic has risen sharply from its oversold zone.
A convincing breakout above the 'triangle' and a move above the 2800 level will put bulls back on track to regain control of the chart. Bears will try to make their progress as difficult as possible.
The index is trading above its three EMAs in a bull market. So, the advantage remains with bulls. However, their 'best laid plans can go awry' due to Trump's trade war with China, Europe, Canada, Mexico, India.
On longer term weekly chart (not shown), the index closed above its three rising weekly EMAs in a long-term bull market. Weekly technical indicators are in bullish zones, but not showing any upward momentum.
FTSE 100 index chart pattern
After touching a lifetime high of 7903.50 on May 22 '18, the daily bar chart pattern of FTSE 100 has been correcting/consolidating within a bullish 'flag' pattern, from which the likely breakout is upwards.
Note that the index faced resistance from its 20 day EMA and fell below its 50 day EMA every day last week, but did not fall to the lower edge of the 'flag'. That increases the possibility of a breakout above the 'flag' soon.
(At the time of writing this post, the index is trading above its three EMAs and testing resistance from the upper edge of the 'flag'.)
Daily technical indicators are looking neutral to bullish. MACD and RSI are moving sideways with slight upward biases in their respective neutral zones. Slow stochastic has crossed above its 50% level.
As and when the index breaks out above the 'flag', note whether there is a surge in volumes. That will technically validate the upward breakout.
On longer term weekly chart (not shown), the index closed above its three rising weekly EMAs in a long-term bull market. Weekly technical indicators have corrected overbought conditions, but remain in bullish zones.
FIIs were net sellers of equity during all five trading days last week. Their total net selling was worth Rs 36.6 Billion. DIIs were net sellers on Thu. Jul 5 but net buyers on the other four days. Their total net buying was worth Rs 24.4 Billion, as per provisional figures.
Indian engineering exports have grown by nearly 20% during Apr-May '18 even as the US-China tariff war has spread to key trading markets in Europe, Canada and Mexico, as per an EEPC statement.
Agri experts and activists from Maharashtra have criticised the government for its 'false and misleading' claim that the MSP of kharif crops have been hiked by 50%.
Yes Bank has forecast the recently announced increase in minimum support prices (MSP) for kharif (summer-sown) crops will add 35 bps (0.35%) incrementally to headline inflation during FY 2018-19.
BSE Sensex index chart pattern
The following remarks were made in last week's post on the daily bar chart pattern of Sensex: "The rising 200 day EMA shows that the long-term chart structure remains bullish. The down trend line, which has dominated the chart for the past 5 months, shows that bears are not ready to give up their near-term advantage."
Other than the fact that Sensex gained about 0.7% on a weekly closing basis - erasing most of the previous week's loss - nothing much has changed on the chart technically.
Bulls made another attempt to make the index breach the down trend line but failed as bears stood their ground. The index closed above its three daily EMAs in bull territory.
Daily technical indicators are looking neutral to bullish. MACD is facing resistance from its sliding signal line in bullish zone. ROC is falling towards its 10 day MA in neutral zone. RSI is in neutral zone, but not showing any upward momentum. Slow stochastic has risen to the edge of its overbought zone.
The index appears to be waiting for some trigger to make a decisive move. May be Q1 (Jun '18) results will show some earnings growth from India Inc. Auto and FMCG earnings should show improvement.
The tariff war unleashed by Trump, high oil prices, a falling Rupee against the US Dollar, continuous FII selling are not making market sentiment conducive for bulls despite good inflows into domestic mutual funds.
Stay invested, and wait for opportunities to present themselves. The forthcoming IPO from HDFC AMC should be a good long-term investment opportunity.
NSE Nifty index chart pattern
For the 4th straight week, the bar chart pattern of Nifty faced strong resistance from the down trend line. For the 2nd week in a row, the index dropped below the 33 points downward 'gap' (formed on Feb 5) but received support from its rising 20 day EMA.
Nifty closed above its two rising weekly EMAs in a bull market. However, for the past 23 weeks it has closed below the down trend line.
Weekly technical indicators are in bullish zones, but not showing any upward momentum. MACD is moving sideways just above its signal line. RSI and Slow stochastic are sliding down inside their respective overbought zones. ROC has crossed below its 10 week MA and falling towards neutral zone.
Nifty's TTM P/E has moved up to 26.62 - which is well above its long-term average in overbought territory. The breadth indicator NSE TRIN (not shown) is oscillating in neutral zone, hinting at some more consolidation around current levels.
Bottomline? Bears are strongly defending down trend lines on Sensex and Nifty charts. For the 4th straight week, bulls have failed to budge them. Some more consolidation or correction is likely. Wait for clear trends to emerge. Long term trends continue to remain up.
(Note: Don’t worry too much about index fluctuations! Learn how to choose fundamentally strong mid-cap and small-cap stocks. Become a paid subscriber of my Monthly Investment Newsletter today. A limited number of new subscriptions are being offered till Jul. 21, 2018. Contact me for details: mobugobu@yahoo.com.)
"When technical tools are used judiciously, their value cannot be overstated. And every time you apply a tool of technical analysis, you are calculating a consensus of bullishness or bearishness among all market participants...
The principles of market psychology underlie each and every technical indicator, so a good understanding of crowd behavior is crucial to your understanding of the fundamentals of particular technical indicators.
Assuming that most readers already possess some knowledge of interpreting the more common technical indicators, we will specifically describe how market psychology drives these individual tools."
Read more at:
https://www.investopedia.com/articles/trading/02/121602.asp
FIIs were net sellers of equity during the first three trading days this week. Their total net selling was worth a huge Rs 25.3 Billion. DIIs were net buyers on all three days. Their total net buying was worth Rs 12.6 Billion, as per provisional figures.
Indian auto sales showed double-digit YoY growth in Jun '18 - albeit on lower base in Jun '17 due to BS IV and GST implementation uncertainties. Maruti (36%), M&M (25%), Tata Motors (63%), Bajaj Auto (65%), Ashok Leyland (28%), Honda Cars (37%) were the leaders of the pack.
Nikkei India's Manufacturing PMI improved to 53.1 in Jun '18 from 51.2 in May '18. The Services PMI climbed to 52.6 in Jun '18 from 49.6 in May '18. (The 50 mark separates growth from contraction.) The Composite (Mfg. + Services) PMI rose to 53.3 in Jun '18 from 50.4 in May '18.
The following comments were made in last week's update on the daily bar chart pattern of Nifty: "Bears have forced open the door for an index fall below the 50 day EMA, and a test of support from the 200 day EMA. Will Nifty fall that far? May be not right away. Expect support from the zone between 10400 and 10550.."
Just as expected, Nifty dropped below its 50 day EMA (on Thu. Jun 28) and received support from the zone between 10400 and 10550. The subsequent pullback rally is facing resistance from the (green) up trend line.
The index has closed above its three EMAs in a bull market. A convincing move above the (purple) down trend line will put bears on the defensive. Note that on a few past occasions when Nifty moved above the 'gap' (formed on Feb 5), it faced resistance from the down trend line and fell below the 'gap'.
Will this time be different, or will the pattern repeat? Volumes (not shown) on recent down days have remained strong. The number of declining stocks have been higher or equal to the number of advancing stocks during the pullback rally. Both are bearish signs.
Daily technical indicators are looking neutral to bullish, and are showing slight upward momentum. MACD is below its signal line in neutral zone. RSI is trying to move above its 50% level. Slow stochastic received support from the edge of its oversold zone, and has moved up to neutral zone.
Nifty's TTM P/E has moved up to 26.02 - which is much higher than its long-term average. The breadth indicator NSE TRIN (not shown) is oscillating in neutral zone, hinting at near-term index consolidation.
Oil's price is not showing any signs of moderating in the near future. Coupled with a weak Rupee against the US Dollar, it is creating an environment for higher inflation and higher interest rates. A slew of IPOs are in the pipeline - including a Rs 30 Billion offering from HDFC's AMC. Liquidity may get squeezed out of the secondary market.
Investors should be cautiously optimistic, and remain invested. Avoid impulsive buying or selling till the consolidation/correction resolves itself into a clear trend.
[Is this a good time to buy mid-cap and small-cap stocks, or should you wait for a deeper correction? Answers to such questions can be found in my Monthly Investment Newsletter. Paid subscriptions are being offered only for a limited period. Send an email to mobugobu@yahoo.com for details. Subscriptions will remain open till July 21, 2018.]
WTI Crude Oil chart
The daily bar chart pattern of WTI Crude Oil shows a strong fightback by bulls just when bears were gaining the upper hand. After falling below 64 on Jun 18. oil's price gained more than 10 points (16.6%) by closing above 74 on Jun 29.
What happened? Wasn't increase in production by the OPEC cartel supposed to put a lid on oil's price? Firstly, the increase of 1 Million barrels/day was less than market expectations. Secondly, Trump's sanctions on Iran's oil exports raised the spectre of supply constraints.
Lastly, uncertainty over supply outages in Libya due to an armed struggle and falling North American inventories combined to create a perfect speculative environment for bulls.
The speculative nature of oil's price rise last week is visible on the sliding volume bars and the sharp price rise above the three daily EMAs. Such sudden price spikes are unsustainable.
Daily technical indicators are looking overbought. MACD is showing upward momentum but negative divergence by failing to touch a new high with oil's price. Upward momentum on RSI and Slow stochastic have stalled. A correction can start at any time.
On longer term weekly chart (not shown), oil's price closed well above its three weekly EMAs in long-term bull territory. Weekly technical indicators are looking overbought and showing negative divergences by failing to touch new highs with oil's price. Some correction or consolidation is likely.
Brent Crude Oil chart
The following comments were made in the previous post on the daily bar chart pattern of Brent Crude Oil: "On Mon. Jun 18, oil's price formed a large 'reversal day' bar by falling lower to the edge of the channel, only to bounce up and close above its 50 day EMA. Another attempt may be made by bulls to breach the upper edge of the channel."
On Jun 20, oil's price faced resistance from its 20 day EMA, and dropped to seek support from the lower edge of 'Support/Resistance zone 2' the next day. The subsequent rally led to a breakout above the channel (Flag) pattern on Jun 27.
Good volume support technically validated the upward breakout. Oil's price touched a lower top of 79.70 on Jun 29, which triggered a pullback towards the top of the 'Flag'. The 77 level has provided some support.
Daily technical indicators are in bullish zones, but not showing any upward momentum. MACD is moving sideways above its signal line. RSI is falling towards its 50% level. Slow stochastic is moving down in overbought zone. Some consolidation or correction is likely.
On longer term weekly chart (not shown), oil's price received support from its 20 week EMA, and closed above its three weekly EMAs in long-term bull territory. Weekly technical indicators have corrected overbought conditions, but remain in bullish zones.
S&P 500 index chart pattern
The following remarks appeared in last week's post on the daily bar chart pattern of S&P 500: "Slow stochastic has dived below its 50% level, and may be hinting at a further fall in the index towards its 50 day EMA. As long as 2680 is not breached, the past 3 months' bullish pattern of 'higher tops, higher bottoms' will remain intact."
The index started trading on Mon. Jun 25 with a downward 'gap' below its 20 day EMA and closed below its 50 day EMA. For the rest of the week, the index oscillated like a yo-yo - getting support from the 2700 level and facing resistance from 'GAP 2'.
On Thu. Jun 28, the index touched an intra-day low of 2692 but closed above 2700. The 2680 level has not been breached. The past 3 months' bullish pattern of 'higher tops, higher bottoms' remains intact. But for how much longer?
The past 5 months' trading appears to have formed a large 'symmetrical triangle' pattern. A fall towards the lower edge of the 'triangle' may be on the cards. What if the index falls below the 'triangle'? The possibility can't be ruled out - and long positions should be squared off in that event.
Daily technical indicators are in bearish zones, but not showing much downward momentum. Slow stochastic is inside its oversold zone, and can trigger a technical bounce. A convincing move above 2800 will put bears on the defensive.
On longer term weekly chart (not shown), the index received support from its 20 week EMA, and closed above its three weekly EMAs in a long-term bull market. Weekly technical indicators are in bullish zones, but turning bearish. MACD is about to cross below its signal line. RSI is about to fall below its 50% level. Slow stochastic is poised to drop from its overbought zone.
FTSE 100 index chart pattern
The daily bar chart pattern of FTSE 100 had touched a lifetime high of 7903.50 on May 22. Since then, the index has been correcting/consolidating within a 'flag' pattern above its 200 day EMA.
Such a 'flag' usually has bullish implications. In other words, the likely breakout from the 'flag' is upwards. When? That is a good question. A typical 'flag' consolidation lasts anywhere from 5 to 8 weeks. 5 weeks have elapsed within the 'flag' already. So, a breakout can be expected within the next couple of weeks.
Daily technical indicators are in bearish zones, but not showing much downward momentum. Some more near-term consolidation within the 'flag' is possible. (At the time of writing this post, the index is trading 50 points lower within the 'flag'.)
On longer term weekly chart (not shown), the index bounced up after testing support from its 20 week EMA, and closed above its three weekly EMAs in a long-term bull market. Weekly technical indicators are correcting overbought conditions, but remain in bullish zones.
