Tuesday Technicals - 22 November 2016
Here's the regular 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 (albeit we will typically cover the broader case in the Weekly Macro Themes where the technical and fundamental set up produce a compelling investment idea). 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. Emerging Markets - Oversold
-RSI turning up from oversold on the daily emerging markets ETF chart
-Sentiment (monthly Sentix survey) also pulled back from extreme optimism; is now neutral.
-Price seems to have found support at the 200 day moving average; same level as the big inverse head and shoulders neckline of earlier this year; likewise relative performance vs the S&P500 looks to have bottomed at the Jan trough.
Overall technical view: Short-term bullish - looks oversold, overdone.
2. EURUSD - Think outside the rectangle...
-EURUSD finding support at a familiar level; 1.05 seems to be the loosely defined line in the sand.
-The result is, after 4 failed attempts at support, and numerous failed attempts at resistance (1.14) a large rectangle pattern has formed on the weekly chart.
-Rectangle patterns, like symmetrical triangles, can act as continuation or reversal patterns... the key is the breakout; the cautionary for EURUSD is there have been a few false breakouts so far; the other point is that a move back toward the top of the range or consolidation zone would be almost a 1000pip move (!)
Overall technical view: Neutral; wait for break: if it doesn't break support, it will likely head back towards resistance.
3. AUDUSD - Capitulation to support
-Massive capitulation move seen, RSI now turning up from most oversold its been since last year.
-Has it resting on support around 0.73 after failure to even test key resistance level of 0.78
-Remains below 50 and 200 day moving averages, so a bearish trend bias is suggested.
Overall technical view: Bearish bias, but looking oversold, watch for a possible break of support
4. Treasuries - Looking oversold
-Major treasuries ETF showing up oversold on a number of indicators e.g. RSI, Williams R%, Stochastics
-Support of $120 remains a key level, if broken best to stand aside or increase shorts
-Trend indicators quite negative e.g. a death cross (50<200)
Overall technical view: Bearish bias on trend indicators, but looking short-term oversold
Note: this was covered in more depth in last week's Weekly Macro Themes.
5. S&P500 - ATH
-The S&P500 broke to a new All Time High, making a first breach into overhead resistance
-Strong uptrend indicators (price > 50 &200, 50 > 200, 50 & 200 day moving averages upward sloping)
-Breadth is also improving, but importantly, remains below the highs which implies there is further scope for upside before it becomes 'overbought'.
Overall technical view: Bullish, breakout opens door for move towards 2300 and beyond.
Thanks to Investing.com StockCharts.com IndexIndicators.com for charts.
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