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.

Currency Technical Analysis

USDINR

USDINR – retraced 23.6% intraday at 65.29, and we are open to 65.12 at 38.2%, and this is wave ii of a larger move up. Once done wave iii goes to much higher levels; iii=i=66.20. We are in the second week of a 4 week cycle for rising USDINR pair, based on its typical cycle.

EURO

Euro – Wave 2 ended or is a complex pattern. So either wave 1 of 3 is forming or an x wave. 61.8% at 1.88 is the first resistance at 61.8% followed by 78.6% at 1.198. The near term trend is up for the Euro then

Commodity Technical Analysis

SUGAR CSCE

Global sugar prices are again rising. So wave 4 triangle appears ruled out. EWI was considering it and I waited for a while and now the price action of the months since July is a base triangle that is bullish. Prices are rising and a bottom may already be in place. Then we could be looking at a multi month rally in Sugar. We closed t at 15.13$ and a close above the 40 week average at 15.30 on a weekly basis would be good confirmation for a bigger move.

LEAD MCX

Most base metals are back into correction mode and the potential for a further rally appears to have deteriorated. So I was bullish on Lead and it did rally but halted at 78.6% retracement of w below and in 3 waves. So it is best marked an x wave. This takes me back to my initial thinking that the Oct top is wave 5 and we are in a more prolonged corrective phase till proven otherwise. In this case Lead could go back to 61.8% of wave 5 near the lower trendline at 147 for this expanding trading range.

ZINC MCX

Daily and weekly momentum for Zinc are in sell mode and all the moves since the Oct top are 3-3-3-3-3, and it now looks like a triangle. So resistance is at 215.80, and support at 206.50. Below 206.50  we could see a dip back to 190. Retracements are 187.25 and 180.40, at 50% and 61.8%

NICKEL MCX

Wrong, that is it, I thought wave 5 ended at a double top but then we broke out. The move to new highs ended in three waves, so it must be part of wave 5 [impulse = 5+4 waves ]. So wave 5 can now be marked at the high of 838 truncated in wave v of 5. We closed below the 20dma and can dip to 61.8% retracement at 730. If that breaks then the 20 week average is at 708.

GOLD

Gold formed a triangle and it appears to be taking support at the 1270 mark. So possible that we get a short term rally with the dollar falling. A move above 1288$ would indicate a rally to 61.8% near 1320. At this stage I still mark this as wave B and not the start of a new wave, though the long term outlook i bullish.

BSE Finance Technical Analysis

With the advent of so many indices there is always an index you will find to justify something. So while wave E has thrown over the upper line in the Nifty, I have changed it to wave 5 at the top, wave E is not ruled out on the Nifty 500 or on this new BSE Finance index with perfect touch points. Unlike the Banking index that has less than a dozen stocks in it the BSE Finance index has 100 stocks in it. So it is a better representation of the sector or industry. This is a distribution pattern with pattern implications for a move down to below the neckline equal in size to the pattern itself.

Similarly on the S&P BSE Sensex Next 50 index, with a slight throw over

So Nifty may have gone too far for E but a close below 10230 puts it inside the trendline of the previous two highs that it broke out of. Staying below 10230 therefore is a sign of failure.

USDINR, USDGBP And Euro Technical Analysis

USDINR

USDINR – has retraced 66% of the initial rally. wave I therefore think it is wave i of iii subdividing. iii=i would point to 66.45 or higher if extended. Today prices broke out of the downtrending line and closed above the 20dma so that was a positive sign.

USDGBP

USDGBP – wave iii up next points to 0.787 with support at 0.757.

EURO

The Euro hourly chart shows a flag and a-b-c rise. The structure of wave c is not clear, so it is over or a few more squiggles or attempts at the upper channel can also occur. Once we break the flag however the move should be in wave 3 down to new lows

The Euro hourly chart shows a flag and a-b-c rise. The structure of wave c is not clear, so it is over or a few more squiggles or attempts at the upper channel can also occur. Once we break the flag however the move should be in wave 3 down to new lows.

Commodity Technical Analysis

CRUDE

Crude Oil went past the 2017 high. Here I am considering the alternate scenarios developing. We are in either wave 3 or c up. the third wave will end in 5 waves and in that sense we are only in wave iii so Oil prices have way to go. One minor correction in between the next achievable level is near 62. 62 is the 2015 high and the trendline of the two tops seen since 2016. Near 62 we can consider which is the better case, but the Oil rally that has started now has a few more legs before it is done in either case.

Aluminium MCX

Aluminium prices closed above the 20dma taking support at 139.23 and unless we close above it the immediate bearish case should be held back. The dialy momentum has crossed back to the buy side so watch if it goes past the 142.70 high we might get a new rally. The parallel channel would then have resistance at 147.50 next.

LEAD MCX

As discussed Lead prices closed up above the 20dma which was at 141.415, and pushed the daily momentum into buy mode. 167.50 is the Upper bollinger band and next resistance.

NICKEL MCX

Nickel broke past the 785 mark to new highs causing extentions in what I thought to be a near double top. Implications are here. III=I points to 873, however the big jump in one day is wave i of III and iii=i points all the way to 910.

Gold

Gold spot closed just below the 20dma at 1281.50 and did not break the 1284.10 swing high. Both keep in tact the wave count that wave C down is unfolding. Below 1263 we head toward the 1200 mark

SILVER MCX

Silver had a bump up yesterday, that should be wave ii of c. Wave c will develop into a 5 wave decline and wave iii of c down should be next 61.8% retracement is at 39928, from where wave iii down can start. iii should head towards 37500, as it may extend up to 1.618 times wave i.

SUGAR NCDEX

Covering Sugar Ncdex after long [Rs./Quintal] and using a line chart. Why? the contract has suddenly become very illiquid. It has also not declined along with Global sugar prices. It did rise with them and traded a lot last year. Am not sure what has happened but now on many days there are no trades and the price is erratic. One day it was up from 3300 to 3700 and now on 30/10 it is back at 3310 on a single trade and has not traded for days. C=A is achieved [near the wave 4 support] but hard to say if this erratic structure is complete. So we need to watch prices in light of global prices for a while and see what happens.

RAPESEED

Rapeseed is rising and might continue to. Taking support at the longer term channel support prices are rising. Retracement levels are 4100, 4300 and 4500. 3830 is the 40dema and the immediate support holding which we are heading to higher retracements.

SOYBEAN QUITAL

Soy Bean Ncdex rallied in wave 1 and wave 2 maybe complete in A-B-C. If the recent low of 2754 holds we could be in wave 3 up and that would initially retrace 61.8% at 3080, and if that is surpassed then 3=1 could be the bigger picture near 3424. We have closed above the 20dma at 2870

CRB Index Technical Analysis Report

CRB Index

The CRB index went past the Sept high due to the recent rally in crude prices. For a while I have maintained that crude will see a dip before a rally. The dip did not last but the new highs are now causing metals to resume the rally. The question on the back of the mind is whether the larger wave C/3 rally has started already?. Crude did not look impulsive in the initial phase of the move up but was making higher tops and bottoms. So that takes me to the CRB index that has a different look. This index has 2 clear 5 wave rallies that I interpreted as a-b-c and was expecting a dip but with the hights taken out the bullish alternate is to consider 1-2-1-2-3 as an alternate which means that there is a lot more steam in the CRB commodity index and thus the whole space. The base metal prices after the recent correction have started giving buy signals again so clearly something else could be at work. The bull run in metals may resume again as prices take off to new territory. Have covered Lead today but will cover the others like Aluminium and Nickel that are showing possible bullish outcomes. Copper is lagging behind as usual along with Zinc. Gold and Silver often work opposite to the base metals but eventually catch up so for now they are still correcting. The daily chart of the CRB index parallel channel now goes to 200 as the next potential target.

Now you should also appreciate the big picture. The CRB index in wave 2 dipped to a 70.7% retracement. If wave 3 has started it should go to the upper end of its channel but may also test the falling trendline from the 2008 high. While most people cannot imagine a bull market in commodities coming back, with the bear market in the dollar this is exactly what you might get. So expect targets on the upside to overshoot in commodities. This will have a direct bearing on commodities prices. I will not be surprised if the falling trendline is eventually surpassed. The reasons are a combination of coming supply tightness and the other purely past monetary actions. Both have been overlooked by the markets due to the crash in prices in the wake of the rising dollar despite years of growth in GDP and expansionary policy. The big turn might have started sooner than most are expecting.

Nasdaq 100 Technical Analysis

The Nasdaq 100 – is rising in a channel. While wave 5 could have ended into the July high, the period resulted in a consolidation that looks like a running triangle. So the entire rise from the 2016 bottom is in a channel and wave 5 can go to the upper end of the channel, and the rising channel is now kissing the long term channel from the 2009 lows as well, with both converging at 6600. So unless we get an early trend reversal in price indicators that the 5th wave for the Nasdaq 100 topped, it can stretch as far as 6600 in the coming weeks. The Dow rallied earlier and now Nasdaq is playing catch up.

Currency Technical Analysis

EURO

1.152 and 1.13 are the next two fibonacci projections for the Euro on the way down. the trend down should resume and the up move yesterday maybe almost done.

USDJPY

USDJPY support is at 112.90, and heading in wave iii towards 117.95

USDINR

USDINR – two major near term support levels coming up. 61.8% at 64.59, and the 20wma at 64.45. Holding these two the next wave up to above 66 should start.

EURINR

EURINR – is in decline with the Euro and the 38.2% retracement is at 74.16 and 50% retracement is at 72.92.