Global Equities turning lower, Dollar at break point, Oil tricky

Published: Sat, 04/30/16

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The Complete Technical Analysis
Dear ,

I have been writing all week long as various Global markets rolled over. How India is going to do from here will depend a lot on the direction of the rest of the world. We cannot decouple given our dependence or Global Capital.

Gold and Silver bull markets are going on as expected.




USDJPY

Central bank meetings should mean a lot for currency markets so it is surprising how recently the FED meet does not appear to move the dollar index much. That said the BOJ has spoken and the USDJPY has started a move down which maybe the final push lower for this leg in what appears to be a triple zig-zag, formation. We are in the last leg marked as a-b-c where c=a points to 106 and the wave 2 swing low from 2014 is near 105.35 so somewhere in the 106-105 range we can expect the USDJPY to form a bottom.

usdjpy280416


Dow Hourly

The hourly chart of the Dow shows a trendline break for the 5 wave rise from the Jan low and after that we have seen a small five wave decline marked as wave 1, we are now bouncing back in wave 2 which can also be a right shoulder of a potential h&s pattern.

dow280416


Brent Crude

I have often discussed a different wave count on Brent crude even since 2010. The reason I did that was I believed that the move up to 2008 highs only competed wave 3 for crude and on Brent, wave 4 does not fall below the wave 1 high and wave 5 as shown is a clear 5 wave rise. The only thing is that the 5th wave is truncated, meaning it did not make a high above the 2008 high. From there we are able to mark the decline as A-B-C. and wave B is a clear trignale. The question then is whether wave C down is over. This question is important in building a bias for the near term trend. Should you expect a larger retracement of the fall, or should you expect one more new low before a final bottom. The Brent chart below is on an arithmetic scale and here if we do not go above 48$ then a final wave down in wave e maybe pending. This is an alternate to keep at the back of your mind. I will confirm when short term trend turns down. Right now Crude is on the rise and we do not have a clear sign of a trend reversal yet.

crude280416


Dow - Trend reversal

Dow - or the DJIA turned lower and closed below the 20dma. After a 5 wave advance and negative divergences this should be a trend reversal. Should we mark the recent high as wave 2 or 5 or X will remain an ongoing discussion with no perfect answer at this stage. I have put an X there for now. The implications are first for a test of 17484 near term and then staying below that up to the lower channel line at 15500.

dow290416


Nikkei 225

Nikkei - completed a 5 wave advance and started lower. This completed an X wave at the neckline of a larger H&S pattern. So failure to go above the neckline should result in the neckline target of 13780.

nikkei290416


KLSE

KLSE - This Asian chart has a beautiful H&S. The recent attempt at the neckline ended at the 61.8% mark of the fall from the right shoulder. Prices are below the neckline again. The next move down should see the neckline target of 1475. The wave count is to mark the recent high as an X wave and expect and A-B-C decline from here.

klse290416


Taiwan

Taiwan broke down last year and fell in 5 waves, now marked as A. The bounce back is within 61.8% and completed a-b-c of B. Wave C down will develop and would go down to 6400.

taiwan290416


Dollar Index

The dollar is getting critical here. Remember I turned long term bearish in Dec. However from there the decline was a series of overlapping waves. Now I can mark 1-2-1-2-1-2-1-1, how many times? So I have been considering the alternate that either a leading diagonal is forming or one more move up in the larger triangle is pending. So far not proven right. It is still falling. But as many dollar pairs especially EMs are getting oversold I wonder if it is late to be too bearish the dollar without a near term bounce. So if I extend the lower trendline it goes to 93. And yes this move so far is mostly  being driven by the JPY. So if 93 holds we might still get a rally first before the larger dollar collapse but if it breaks well... Goodbye dollar.

dxy290416



FTSE

The FTSE has topped out with its daily momentum giving up. A first look at the chart can confuse you and so I do what I do in these cases. Turn it upside down. So here is what is mostly a 5 wave fall in wave A. Wave B has bounced back to the wave IV area and sold off, this is also almost 61.8%. Wave C would be a major bear leg down, as big as wave A, and going far below it. What is concerning is that wave A is a 10 month affair. So it is a slow grind and I wonder if wave C would also be similar. We should however now be developing wave 1 of C down.

ftse260416


Copper

Copper has seen a deep retracement in wave b and so far the fall was 5 waves and rise 3 waves so staying below both 2.323 and 2.30 the next wave should be wave c down to below the wave a low of 2.06

copper260416


CAC

CAC - is at 61.8% of the last fall and the same level where a potential left shoulder peaked. Will we develop a right shoulder and roll over? Time will tell.

cac260416


Brazil

Final note this morning, Brazil retraced 78.6% of the last 5 wave decline, and it is either wave 2 or X. The rise is 3 waves and a move below 51227 would weaken it further. So wave 3 down may start. In other words till we are below the recent highs Brazil maybe considered topped out and back into a bear market.

brazil260416
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Rohit Srivastava
www.indiacharts.com
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