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Tuesday Technicals - 4 October 2016

Here's the regular quick draw 5 macro technical charts (going as far as individual commodities, currencies, bonds, and sectors, as well as the rest of the major indexes and benchmarks). No comments on anything except the technical/price developments. Even if you're not technical analysis minded it's a useful way to keep on top of trends in some of the main financial markets and as a prompt for further investigation...

1. DAX - Downtrend vs Uptrend

-The DAX still appears to be struggling to break out of the downtrend that was established following the peak in July last year.

-At the same time a nascent uptrend began with the low in February this year (followed by the Brexit low).

-It's now starting to look like a large triangle (however doesn't quite meet the criteria); looking only at the trendlines and nothing else you would say the path of least resistance is for the DAX to run down and test that lower uptrend line (i.e. bearish until it breaks)

Overall technical view: Bearish after a failed upside break of the downtrend line


2. Nikkei 225 - Minor Head and Shoulders

-A minor head and shoulders pattern has shown up on the daily chart of the Nikkei.

-The Nikkei has also made a failed break of the 200 day moving average.

-At this point it looks at risk, but the simple measure rule for a head and shoulders pattern would only take it down to around support of 16000 (where it would face a new test).

Overall technical view: Short term bearish

3. AUDUSD - Downtrend vs Uptrend

-Another case of downtrend vs uptrend, the AUDUSD has thus far failed to break the downtrend line.

-At the same time it now has 3 touches of the uptrend line, making that one start to look equally compelling.

-To me this is another case of a market that is setting up for a major move, rather than try to forecast the move I would say watch those lines for a clear breakout and expect price to carry on in the direction of that breakout.

Overall technical view: Bearish bias given broadening top pattern on the daily, but main point is to watch for a break of those trend lines and go with it.

4. DXY - Another fork in the road

-DXY again is another market at a fork in the road, caught between a nascent uptrend line and and overarching downtrend line.

-The other pattern of note in the DXY daily graph is the symmetrical triangle pattern.

-The "nascent uptrend" for DXY is looking increasingly less convincing with the higher lows being satisfied but the higher highs not really present.

Overall technical view: Wait for the break, but bearish bias in respect of the larger downtrend line and absence of new short term highs.

5. S&P 500 - What do you see?

-Some argue a pennant pattern is unfolding but I struggle to see one.

-The market is clearly struggling to break either way.

-Thus the more important chart to me is the second one showing market breadth from the latest ChatStorm; the bearish breadth divergence resolved with the September selloff, and that brought breadth down to an apparent uptrend line, which to me suggests underlying strength in the market.

Overall technical view: Be wary of over-reading the chart, breadth seems to show underlying strength in the market, but there are some lines in the sand there... so this is yet another market at a critical point; call it a cross roads, a fork in the road, a line in the sand, it looks like things could be set to get really interesting in markets in the coming weeks and months.

Thanks to and for charts.

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