Dollar Index And Dow Technical Analysis

Dollar Index

Yesterday was an important day for the dollar as it gave up to break the 40day average and close below it. Last week i discussed why the Euro could bottom out and start its move toward 1.30, so has it? The rising euro is the clearest reason for a falling dollar. This week however I remained on watch for upside in the dollar because even as the dollar closed down last week, completing 3 waves up, wave c<a and so wave c was short.

So there is always risk of extension; that can never be ruled out. The dip in the dollar therefore can either be wave 3 down long term or an x wave within the larger counter trend move up. Supports are 93.41 at the 20wma and 92.45 at 61.8% of the rise so far. If wave 3 down starts right away then we are looking for 83.50 next. Sentiment for the dollar bulls was at 87% at the recent high but not extreme, also positions are more short than long. These were other reasons to wait. That said the bigger view is that the dollar is in a bear market so any move towards a declining trend should be taken seriously. Also weekly momentum is back above zero [see on chart] so the up cycle has done its minimum requirements.

Work with the presumption that the larger trend down has started till there is evidence otherwise. If the larger trend is down for the dollar why did commodities give up overnight? Maybe it was a knee jerk reaction or just time for a correction in all dollar assets.

DOW

Dow hourly charts indicate a 5 wave decline from the 5th wave top. The fall broke the rising channel. A brief bounce in wave 2 is all that we should get before wave 3 down.

Dow Transport, Dollar Index and Karachi 100 technical analysis

DOW TRANSPORT

Dow Transports – broke the wave 1 low to start wave 3 down to 8820. The 20dma near 9260 should be resistance.

DOLLAR INDEX

The Dollar finally got over the 20dma and now the next resistance is at 94.20. If the downtrend is to continue short term then 94.20 should not be surpassed. Above that consider that a larger degree wave 4 up started as shown. Note that wave 3 can be complete as it has 9 legs [5+4=9 for an impulse], even as IV and II have a very high ratio. If true then wave 4 will retrace to 38.2% at the upper end of the channel and near the wave IV high at 96.25 before wave 5 down starts.

KARACHI 100

Karachi breaks the rising channel trendline for the entire rise since 2009, giving the first sign that a bull market may have ended. The 5th wave was truncated as it did not achieve its full potential at the upper end of the long term channel and that was a surprise. The chart shows wave C down starting for the current leg and the fall so far is in 5 waves down. Any pullback to the broken  trendline near 44000 should face selling pressure and we should head towards C=A near 38200 in the next move down.

 

Adam Smith Associates offers trade & commodity finance related services & solutions to its domestic and 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

All eyes on DJIA and what about Dow Transports

All Eyes are on the DJIA, while the Dow transports just started wave v down forming a 5 wave decline ahead of other indices.

Adam Smith Associates offers trade & commodity finance related services & solutions to its domestic and 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

Technical Analysis of CRB Index, DOW, NASDAQ, BSE 200 And DAX

CRB Index
The CRB Index of commodities is now tracking higher with Oil and base metals. Only the PMs are lagging behind. While it is possible to imagine that Crude is still in wave B as a triangle, the CRB index that mostly reflects energy looks like it maybe done. The recent bottom involved a 66% retracement in price [blue line] and a weekly RSI of 29. Wave C up should not only carry to the wave A high but go past the grey trendline that marks the 2009 lows to rule out the case for new lows first in the index and oil as some are anticipating. My markings can change to 1-2-3 but even conservatively we should go in wave C to the upper end of the channel near 215 [current 178]

BSE 200

Is it possible to count the rise from 2009 as 5 waves? I usually take 2008-2013 as a triangle. But if I go by all the impulse wave markings of the street for each rally since 2009 it can be done as 9 legs are complete. In 2015 when I called the market top I used the Arithmetic scale chart of the BSE 200 or broader indices to project that the upper end of the channel was reached and we may go to the lower end. After 12 months down a move up started that after 2 years and adding 4 more waves [yellow extention] has brought us back to the upper end of the channel on the arithmetic scale. So it is a key resistance zone as much as given the number of waves completing the blow markings show we have 5+4=9 waves that can be marked as complete 5 waves with a 3rd wave extended for the long term 5th wave [circle]. Let us see what unfolds here.

NASDAQ 100

The Nasdaq 100, a year back among the many alternates I considered was a triangle for 2015-2016. Going back to that it changes the outlook for the Nasdaq near term. Wave 5 up would have only started. The upper trendline of the highs goes to 6080-6100.

DOW

Dow – wave 5 is extending, we are now in wave v of 5 and that is also subdividing. 21340 is the lower trendline and till it does not break we can go to 21800.

DAX – leading the way for Europe

Unlike US stocks that are stretching out in wave 5 higher, the European indices have 5 wave declines. It shows up very clearly in the German DAX. It recently bounced back in 3 waves to almost 61.8%. Yesterday it fell below the b wave low confirming that the bounce was corrective and maybe wave 3 down to  12060

 

Adam Smith Associates offers trade & commodity finance related services & solutions to its domestic and 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