Nifty and Euro Stoxx diverge

From April to date at each lower high in European stocks based on the DJ Eurostoxx 50 index Nifty has made a higher high. This cannot go one, one of them is wrong and will adjust big time. So far I think world equities are leading the way down so it appears as if Nifty has to make the adjustment.

Taiwan - triangle complete

In my last update the triangle on the Taiwan chart had some room to complete wave e. Now the upper trendline is touched and the daily momentum rolled over, so it is fair to thing that we are topping near 8800, and wave C down can unfold from here long term which has the implications of a crash to 6350.

Jakarta Composite

Jakarta also has a triangle but one that is rising or ascending like a wedge. It does so into what can appear like a right shoulder on the long term chart. It is wave B like in the case of Taiwan. And implications of wave C down long term would be new lows below the neckline. C=A points to 3700 to start with. 

Euro

The Euro rose in 3 waves and started lower. Wave iii down may start now till we are below 1.183, the recent high. iii=i would indicate 1.066 for wave iii of c down. Wave i made a low of 1.09 that needs to be broken.

Nifty and Dow divergence

Multi month divergences of Nifty with the Dow have become routine even as the broader trends eventually Sync with each other over time. This does not mean that we are decoupled, only more stupid.

S&P

While Europe leads the way lower for equities it is possible that US stocks make one more leap higher as the S&P shows an expanding pattern near the highs, with each of the moves within the triangle being 3 waves each as required. So for wave e up to complete it requires one more push higher towards 2125 on the S&P before we expect a trend reversal. This does not mean that prices cannot decline from current levels but this is a possible outcome.

Copper

Copper topped near the upper end of the channel and the entire rise is corrective so I am marking it as an 'x' wave. The fall from March is a complex a-b-c-x-a-b-c formation and we should be starting wave a down. First to test the lower end of the channel at 2.01$.

Agro and Sugar

I have been bullish on Agro commoditty prices and sugar but even as some have done well others like Corn and Wheat in global markets have suddenly given up and fallen to new lows. This is unusual and requires a rethink. That said Coffee prices are moving up slowly, and Soy Cocoa and Rice are seeing corrections. So Sugar the best performing sector is doing what?

The Sugar chart from the bottom a year back shows that we are at the upper end of the channel and from the Feb 2016 bottom we have completed a 5 wave advance. So unless we see a further advance it is possible that something ended here and as shown below a complex pattern maybe over. So till there is new evidence we should consider the possibility of a near term top at least in Sugar prices.

On the Ncdex as well after wave 5 completed we are seing sugar priceds make corrective moves that could be a ending diagonal in formation in the 5th wave. Remember any significant move down in sugar prices would affect sugar stocks near term and so manage your positions accordingly. Wave e up to 3738 maybe one last push up that is possible. See the negative divergences in RSI and the drop off in volumes in the 5th wave. Support is at 3544 below which we have a trend reversal.

USDBRL

USDBRL - The Brazilian real, was one of the strongest pairs recently. In other words the USDBRL kept falling. The decline is in a larger channel and the recent dip fits a smaller channel. Prices just closed above the 20dma and broke out of the channel, from oversold RSI territory. So that should mean that we finally have a bottom in place. It should rise with the dollar here on.

The larger degree wave count that I have in mind for a while is that this decline is still wave 4. We recently retraced 38.2% of the entire rise and Fibonacci projections for wave 5 are, truncated wave 5 back to 4.25 meaning a double top, OR 5.29 as a normal 5th with 5=0.618 of wave 0-3.

Copper

Copper is heading to the falling trendline of the highs at 2.265$, and a breakout would be further bullish. However till that happens my markings are of a counter trend x wave. So watch for action close to that level for the trend going forward. A breakout would extend the move to 2.40$. 

Dax

The DAX index has bounced off the Brexit lows but it is not at a new high. The high yesterday is the 4th consecutive lower top from the April high and this is true for most European markets except the FTSE. So the recent bounce hit the 20dma and we are seeing a sell off from there. This could simply mark the continuation of the previous downtrend. Once a 5 waves down on hourly charts is visible it would be the first confirmation of this thesis.