MACRO Update - Yuan Devaluation, Bond Market Crash, US Negative Divergence

Published: Fri, 03/10/17

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Dear Members,

10 MARCH 2017

The Currency markets had some relief over the last few months but the Chinese Yuan started another round of devaluations and with the USDINR near critical support levels it could also catch a bid. Currency market might diverge from the dollar index itself. US Bonds crashed this week to new lows signalling new highs for yields and pushing high yield bonds lower, but so far markets are not taking note of this trend. And US equities are reacting after reading record highs on Sentiment. Negative divergences on daily and weekly charts and a perfect Fibonacci fit is what we are getting for the the Nasdaq. All this makes for a good set of headwinds Indian Markets apart from just the state elections and the FED

So yesterday I published the Long Short report to subscribers discussing the state of the Indian markets and our own Sentiment indicators that have many divergences. The report is online now.

Here are the updates published this week on all the markets discussed above. Enjoy!

Rohit Srivastava

USDINR

USDINR has been falling for a while and reached the lower end of a falling channel from the NOV top. At the recent low we have formed a ending diagonal shown in blue. This at the lower Bollinger band with positive divergences in the RSI and momentum in buy mode we have a set up for a bottom. Will the next move end up being a X wave retracing the 3 month decline or the start of a larger move up? That we will answer based on the impulsive behaviour of the rise. 61.8% of the A-B-C fall is at 68 so that would be the initial objective. 67.12 the 40dema would be the first important resistance.

usdinr-090317

USDCNY

USDCNY - starts its next move in wave v of III towards 7.05 at the upper end of the long term channel.

usdcny-090317

US 5 year T Notes

US Yields made new multi year highs today. I decided to move away from the 10/30 year charts that I usually use because they did not give me a clear indication that we were in wave 4. So the 5 year note was a good idea. The Monthly chart shows wave C down developing and we are in wave 5 of C. The final wave is not over as C=A is not yet achieved as shown by the box. So yields should keep rising for the next few weeks. This will put pressure on most asset markets in the short term.

notes100317

Russel 2000

Russel - formed a negative divergence on the weekly charts and might be closing the week down for the first time since the new high last week. The move id done so till we get another buy signal this market should correct some more.

russel-100317

Nasdaq Composite

I have discussed how the arithmetic scale has been better for US indices since 2009 to fit a channel into the rise. So the Nasdaq composite is not only at the upper end but at the point where wave 5=1, and where wave 3=1.618 times wave 1. This is quite a perfect fractal, textbook to say the least rare, and the Sensex had the same fractal fit for the 1999-2000 bull market. Time to see whether wave 5 terminates at this Fibonacci projection as it logically should.

nasdaq-100317

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Rohit Srivastava
www.indiacharts.com
For accurate market forecasting. Market forecasting is a study of past data to assess
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knowledge and the help of a qualified investment adviser. Stocks based on the Elliott
wave model are based on the Fibonacci fractal of the market and momentum indicators,
targets are based on Fibonacci maths and are only indicative of what the mathematical
model throws up. This is not a recommendation to buy/sell.
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