Friday, November 28, 2008

The sideways price action that appeared to be a triangle pattern failed to have the downward follow through that would be expected of a genuine, typical triangle.

The price pattern has now developed into more of a rectangle up to this moment in time. Viewed on a weekly chart, the trend is still down, based on short term moving averages and chart patterns.

The 200 week moving average was rising until recently but has now flattened out around 1.3369 (on the weekly chart) and is clearly down on the daily chart.

For anticipated price action for this week, the resistance and support zones are quite clear. The upper level of the corrective range is an area of strong resistance (from 1.3295 – 1.3325). It will not be unusual for an area of resistance to act as a price magnet to attract and then repel the market.

A close above this resistance area would run into additional resistance between 135.70-136.25, and very formidable resistance at 1.3900.


EUR/USD chart as at 27 November 2008 using NextVIEW Advisor

TECHNICALS

Bollinger Bands – so far these bands have capped the upside move.
NextView RSI – in positive territory, above 50.

R1 – 1.3295
R2 – 1.2570
R3 – 1.3900

Support begins very near current price action, at 1.2770. Additional support appears at 1.3619 at the down sloping trend line. A drop below this level would probably indicate a continuation of the down trend.
S1 – 1.2800
S2 – 1.2326
S3 – 1.2070

***
Article and Commentary by Don Schellenberg. A trader and trading coach, he is a noted expert on Market Structure, Elliott Wave and Fibonacci. He trades the forex market.
This currency pair has moved almost in a flat line for 14 weeks, as seen in the weekly chart of USDCNY.

Although there have been a couple of spikes below the lower horizontal line on the chart, price has retreated within the narrow trading range.

Lower time frame charts such as daily and hourly do not provide much more useful information about the most probable break out direction from the narrow range.

For the last eight weeks the trading range has become even more narrow, suggesting that a break out will most probably occur soon.


USD/CNY chart as at 27 November 2008 using NextVIEW Advisor

TECHNICALS

R1 – 6.8406
R2 – 6.8702
S1 – 6.8046
S2 – 7.7480

The long term trend is still down, until proven otherwise.
SMA 200 – above price and sloping down at approximately 7.6770 (not shown on the chart).

***
Article and Commentary by Don Schellenberg. A trader and trading coach, he is a noted expert on Market Structure, Elliott Wave and Fibonacci. He trades the forex market.

Thursday, November 27, 2008

Gold finally broke out of it’s nearly four week trading range and managed to move above initial resistance around 778 and is currently stopped near my previous R2 level at 813.50 (now R1 on the current chart).

The zone immediately above the current price, from 826 – 854 is a formidable area of resistance.

So far I define the strong up move as only part of a correction of the down move that occurred between Oct. 10, from a high of 931.50 to Oct 24, at a low of 681.50. A strong close above 854. could redefine the recent up move as part of a new uptrend.

A drop below S1 and the rising trend line on the chart would signal weakness and a probable test of the S2 region.


Gold chart as at 27 November 2008 using NextVIEW Advisor

TECHNICALS

NextView RSI – registers as being on the high end of a down trend.
Stochastic – in the over bought area, but sustaining that level.
EMA 20 – price is above the rising moving average, a positive sign.
R1 – 826-854.
S1- 765.
S2 – 681.50

***
Article and Commentary by Don Schellenberg. A trader and trading coach, he is a noted expert on Market Structure, Elliott Wave and Fibonacci. He trades the forex market.

OIL AND SUPPORT

The fall in the oil price on the NYMEX (New York Mercantile Exchange) Crude Oil weekly chart below $100 was a move below an important psychological barrier. The price collapse to the support area between $68 and $70 was very rapid. There was a small rise in the oil price between $65 and $70, but then the price retreated to the next support level near $58. This was the first weekly rise in price since the fall below $100. This behaviour is important because it suggests the oil price may develop some consolidation activity.

The weekly price chart of NYMEX (New York Mercantile Exchange) Crude Oil shows a long term consolidation pattern between $38 and $70. The very fast parabolic trend rise in price started from the $70 level and moved to the parabolic trend peak price near $146 before the rapid parabolic trend price collapse.

The period 2005 to 2007 oil traded in a broad consolidation pattern between $58 and $68-$70. From 2004 to 2005 the $48 level was a resistance level. This level can now act as a support level. When prices falls very rapidly it is difficult to exact support levels to be successful. The price will fall past the support level and then rebound. This temporary price fall is called an ‘over shoot”. This suggests price can fall towards the lower edge of support near $48 and then rapidly rebound towards $58. The long term consolidation of price between $58 and $68 suggests there is a high probability the oil price will stabilise and consolidate in this area after a temporary dip towards $48.

A similar temporary dip below support at $58 developed in 2007, January. The rebound from this price dip developed into the beginning of the long term uptrend. This is a low probability development for oil in 2008 because the dip comes at the end of a strong downtrend in prices.

There is a low probability price will continue to fall below $48. If this develops then the next support level is near $38. This is a weak support level that is not well developed. A fall to this level would be a 73% fall from the high price near $145. A fall to $48 is a 67% fall in price. The size of this fall is similar to the price fall in other commodities including Nickel, Zinc, Lead and iron ore.

Consolidation of price activity is a high probability and resistance near $68 will be a strong barrier to any future price rises.



To read more articles and commentaries from Daryl Guppy, click HERE

***

Daryl Guppy, well-known international financial technical analysis expert. Appears regularly on CNBCAsia and is known as "The Chart Man". He is an equity and derivatives trader and author of books including Share Trading, Trend Trading and The 36 Strategies of The Chinese For Financial Traders. He has developed several leading technical indicators used by investors in many markets. His weekly analysis newsletters get favorable comment in Asia and Australia.

Wednesday, November 26, 2008

Most Asian markets closed higher today in positive response to US government's additional US$800 bailout package. The bailout package now stands at US$1.5 trillion dollars. Also, ailing financial giant Citigroup has received financial help to ease its credit woes. AIG just received US$40 billion from the bailout package. In Asia, only Malaysia and Japan markets closed lower. The Malaysian government has just recently lower its interest rates and vow to lower price of fuel, which for the first time Malaysians have to pay higher than market price.

Australian market closed lower as well. Below are the indices levels. In China, the government has slashed its key interest rates of 1.08 percentage-point, the biggest in 11 years to boost slowing economy. The Shanghai Stock Exchange Composite Index only namaged a 0.5% gain.

In Thailand, the SET index closed managed to close an inch higher despite aggressive government protests that affected both domestic and international airports in Thailand.

In Europe, markets continue to crash as more negative data, which economists now expecting economies to go deeper into recession. As at current time, London's FTSE and France's CAC40 Index closed at 2.5% and 3.1% respectively.

The US market is expected to open lower as the DOW futures are currently trading 1.8% lower . Investors are waiting for reports on jobless claims and orders on big-ticket items.


World Indices Quotes snapshot from NextVIEW Advisor
as at 9:30PM local time (+8:00GMT)

***
N.I.N.E.

Tuesday, November 25, 2008

Price of crude oil comes back above US$50 per barrel after staying below it for a few days. Price of light sweet crude oil in the futures exchange is currently traded at US$53 per barrel. The effort took by the new US economic team to tackle current economic woes boosts a little confidence in the market.


1 year weekly chart as at 25 November 2008 using NextVIEW Advisor

Price of Gold has risen sharply in the past few days. Gold futures in CBOT is currently traded at US$827. Just 2 days ago, it was trading at US$740. Uncertainty in the financial markets and economy prompts investors to continue to invest in gold. In Thailand, the Thailand Gold Association said that gold were limited to customers on a daily basis because of short supply.

Soft Commodities continue to decline because of fear that demand for these commodities may worsen amid slower economy. Price of Rubber futures in TOCOM has declined heavily after report shows slowdown in vehicle sales in the west that caused major automakers in the US to face severe financial problems. Price of RSS3 is currently at $138. Two days ago, price was about $173. The current price is traded at year 2005 level. Price of rubber peaked in July this year at $350.


1 year weekly chart as at 25 November 2008 using NextVIEW Advisor

Crude Palm Oil futures has started to ease after strong decline in the past four months. The 3rd month futures contract traded in Bursa Malaysia is currently trading at MYR$1,488. The price of Crude palm oil peaked at MYR$4,000 in March this year before falling to a low of MYR1,400 in October this year. Price has been above this level for a month and therefore a technical rebound is expected.

***
N.I.N.E.

Monday, November 24, 2008

This currency pair has moved mostly sideways for the past three weeks. The trading range was established by a low on October 28th of 1.2326 and a high on October 30th of 1.3299. Since then neither the high or low has been exceeded by price action. Long term trades are on hold but there has been plenty of range for active intraday traders to make profit.

The trading range has been squeezing down. This may turn out to be a descending triangle with a strong probability of a downside breakout, but it’s a little too early to confirm that just yet for reasons which I’ll explain under the ‘Technicals’ section below.

The week was not without it dramatic events – especially the 191 pip gap down when the market opened on November 16th. The typical reaction is for the market to close the gap and that is what happened, but without obtaining new highs or lows.

In a compressing market it appears that little is happening. The opposite is true. Pressure will build until either the bulls or the bears assert control with a resulting breakout from the formation.


EUR/USD chart as at 19 November 2008 using NextVIEW Advisor

TECHNICALS

1) This three week sideways market has taken the shape of a breakdown, or descending triangle, which is not yet confirmed. Bias is to the downside.
2) Several technical indicators are dramatically oversold. This is especially clear on a weekly chart. The market will search for strong enough support to launch sideways or upward correction, to ease the oversold condition.
3) In the last fifteen years the market has never been so far away from it’s 200 day moving average. Over time there is a tendency for the market to revert to it’s centre, which would be much nearer to this significant moving average.

R1 – Nearby resistance at 1.3298
R2 – 1.3938
S1 – Nearby support at 1.2326
S2 – 1.2064

Conclusion:
A close above the down sloping trend line would indicate a probable move at least to R1.
A close below 1.2326 will confirm the triangle and presage a move to 1.2064 or beyond.

***
Article and Commentary by Don Schellenberg. A trader and trading coach, he is a noted expert on Market Structure, Elliott Wave and Fibonacci. He trades the forex market.
Gold spiked marginally higher to 673. on Wednesday of last week and then closed the day at 736.50, below it’s opening value. This is bearish action for the near term, with no long term implications.

As with most of the markets that we’re analyzing this week, gold in a corrective pattern. The formation is not confirmed but appears to be a symmetrical triangle. So far, price movement has been confined within the perimeters of the rising and declining trend lines.

The triangle is consistent with my view that gold is currently in a wave “B”, in Elliott Wave terms, and the break out from this formation will most likely be to the downside.


Gold chart as at 19 November 2008 using NextVIEW Advisor

TECHNICALS

The high of 778 and the low of 681.50 define the range of the correction. A close above the high would have bullish implications while a close below the low would have bearish implications.
Bias is to the downside.

If my view of a triangle pattern is valid, several more days of compressing price action is likely before a breakout from the formation can be expected.

R1 – 778.
R2 – 805.
S1 – 681.50
S2 – 656- 623 (not shown on the chart).

NextView RSI – flat, below it’s 50% level.

***
Article and Commentary by Don Schellenberg. A trader and trading coach, he is a noted expert on Market Structure, Elliott Wave and Fibonacci. He trades the forex market.
The market has just now moved above the high of two weeks ago. Short term indicators have implied upward pressure and that is now occurring. A close above resistance in the R1 zone will target resistance at R2.

USDCNY Current price 6.8256.

EMA 20 – this short term moving average is flat.


USD/CNY chart as at 19 November 2008 using NextVIEW Advisor

TECHNICALS
R1 – 6.8174 -6.8404
R2 – 6.8700

***
Article and Commentary by Don Schellenberg. A trader and trading coach, he is a noted expert on Market Structure, Elliott Wave and Fibonacci. He trades the forex market.

Friday, November 21, 2008

The Wall Street falls heavily again today. After falling 427 points or 5% yesterday, the Dow Jones Industrial Average falls another 5.6% today at 7,552.29 points. The immediate and crucial support of 7,800 points was broken and this means that the correction in the down trend has resumed.

The next target level is at 6,600 points, based on the correction pattern on the chart since mid October. The longer term target is at 5,500 points based on a expansion of the down trend since August 2008 when the DJI was at about 12,000 points.

***
Article contributed by Private Trader, Market Expert, Trading Coach and Chief Market Strategist of Nextview, Mr. Benny Lee. For more articles and commentaries from Benny, click HERE.


Thursday, November 20, 2008

The deepening fear of a global crisis and recession in the US has caused investors to continue selling. The US market falls deeper as the Dow Jones Industrial Average (DOW) closes below the 8,000 mark. The DOW fell 427 points or 5% today at 7,997.28 points. The broader S&P500 index closes 6.1% lower to 806.57. US automaker giants were the latest casualties. More worries as recession might be even more protracted if Capitol Hill is unable to bail out the troubled auto industry.

Ford Motor Co. which is burning in cash shed 25% of its value to close at $1.26 while General Motors closes 9.71%. Financial giant Citigroup falls 23%. Other financial giants like Merril Lynch, JP Morgan, Bank of America falls more than 10%.

Consumer prices plunged by the largest amount in the past 61 years in October as gasoline pump prices dropped by a record amount. Light Sweet Crude Oil futures is currently at US$53 per barrel. The worry is that the recession, which many analysts believe will worsen in coming months, will further depress prices, hurting such industries as housing, autos and retailing, and contribute to a downward spiral that will feed on itself. Read more at Yahoo Finance.

Asian stock markets are ready for a sell off today. We should be able to see more records broken today in this part of the world.

***

N.I.N.E.

RSI DIVERGENCE SUCCESS

The RSI divergence signal has been very accurate. The divergence signal was confirmed on October 29. The market did not immediately rebound, but there was strong evidence the market has stabilised. The rebound developed strongly on November 10. The RSI divergence indicator is not used to predict events in the future. The indicator identifies a market condition where there is a high probability a trend change will develop.

The current rally has three important resistance barriers that will prevent this rally from developing into a long term trend change. The first barrier is the historical resistance level near 2000. This was a support area. It is now a resistance level.

The second barrier is the value of the long term Guppy Multiple Moving Average. The upper edge of this indicator is near 2100. The rally must develop sufficient strength to move through the group of long term moving averages. This group is widely separated and this slows the momentum of the rally.

The third barrier is the value of fan trend line 4. At the moment we estimate the position of fan trend line 4. The position is confirmed when the index develops a rally peak and retreat pattern. The rally peak is used to confirm the position of fan trend line 4. There is a high probability the position of fan trend line 4 will be near the 2000 resistance level.

There is a high probability the market will retreat from near 2000. There is a strong probability the market will retest the support area near 1750. Although we use the exact figure of 1750 in reality this is a support area and not an exact support line. The market will continue to test for support in this area. The market is “"Crossing the river by feeling for stones."

A change to a new strong market uptrend will not develop quickly. It would be unusual to see a “V” shaped recovery. There is a high probability the market will continue to develop a consolidation pattern. The consolidation will develop first between 1750 and 2000. As the consolidation is more successful the consolidation area will move between 2000 and 3000. This will include short term rallies.



A successful move above the value of fan trend line 4 will allow the construction of fan trend line 5. There is a high probability that a breakout from fan trend line 5 will signal the start of a new long term uptrend. The position of fan trend line 5 cannot be calculated until the first rally above fan trend line 4 has been completed.

To read more articles and commentaries from Daryl Guppy, click HERE

***

Article contributed by Private Trader, Market Expert, Trading Coach and Best-Selling Author Mr. Daryl Guppy. For more articles and commentaries from Daryl Guppy, click HERE.

Tuesday, November 18, 2008

The price of crude oil has been in a roller coaster ride in these two years. The price of oil was at about US$60.00 per barrel in April last year and a strong bullish started that month. The price of crude oil shot up as high as US$144.00 in July this year. Price always falls faster than when it goes up. The price of crude oil is currently back at its level in April 2007 last year. It took about 15 months to go up from US$60.00 to US$144.00 and four months to come back to US$60.00.

The price trend of crude oil can be tracked by a 20 week moving average. The trend was up from July 2007 until August 2008. The 20-week average is currently at US$97.80. At US$58.00, current price is 40% below the average and this is considered highly oversold. Normally price that is 30% below the average is considered oversold. The weekly Relative Strength Index and Stochastic indicators which indicate overbought/oversold levels are also indicating high oversold levels as the readings are below the oversold level of 30.


Weekly Light Sweet Crude Oil chart as at 17 November 2008 using NextVIEW Advisor

Price may have find support at US$50.00 and it is difficult to see it go below US$50.00. In the near term, a technical rebound is likely to happen. The current highly oversold levels may cause the price of crude oil to rebound and find resistance at US$77.00. Price is expected to trade at this support and resistance range.

***
Article contributed by Private Trader, Market Expert, Trading Coach and Chief Market Strategist of Nextview, Mr. Benny Lee. For more articles and commentaries from Benny, click HERE.
On October 28, the Kuala Lumpur Composite Index fell to a low of 801 points, a level not seen since May 2004. However, the market rebounded on the same day and closed at 832 points. The rebound created some opportunity if investors know how to take advantage in charts to identify this reversal. A trader will need to find stocks that are reversing and a few stocks are indentified. Powertrades have identified LIONIND as one of a possible stock to trade. The trigger was a Japanese Candlestick pattern.

LIONIND closed at RM0.515 on the 28th. Confirmations using Powertrades technique suggests to enter a trade the following day at RM0.53. Price of LIONIND eventually went up and a Powertrades exit signal was triggered on the 7th of November and LIONIND was exited at RM0.68. The trade net in a profit of RM0.15 or 28% in less than two weeks.


Daily LIONIND chart as at 14 November 2008 using NextVIEW Advisor

Find out how you can identify opportunities like this every day from the Powertrades training program for Malaysian Stocks and Futures market with 6 months of mentorship conducted by Mr Benny Lee. CLICK HERE FOR MORE DETAILS

***
N.I.N.E.

Monday, November 17, 2008

Last week I alluded to the possibility that a triangle was forming on the chart of Euro Dollar against the US Dollar (EUR/USD). In fact that is the exact pattern that took shape as identified by the converging trend lines drawn on the chart.

As expected the break out was to the downside. At time of writing the normal price target that results from a triangle has not yet been reached. Logical downside targets are 1.2100 and possibly 1.1800.

The strong support at 1.2326 has not yet been broken. That should be expected to happen within the next few trading sessions.

The market seldom moves in a straight line for very long. By examining price movement on charts we are determining probabilities, not certainties. If for some reason the market doesn’t move as we expect, we should be ready with alternative possibilities, so we aren’t caught off-guard.

In this case, if the market moved above the apex of the triangle, around 1.2820 before breaking below 1.2326, that would negate the probability of an imminent move lower.

At time of writing the probability remains to the down side. However a period of consolidation will likely appear either before or soon after the break out below 1.2326.


EUR/USD chart as at 13 November 2008 using NextVIEW Advisor

TECHNICALS

The triangle, especially in a fourth wave position, is a continuation pattern with a fairly predictable outcome. This appears to be the case with this currency pair.

Sensitive technical indicators, such as Stochastic, confirmed the direction of the break out from the triangle. After a period of testing the break out zone, the market has moved quite powerfully downward,

Stochastic – down
MACD – has been sloping upwards for the past two weeks and is beginning to cross down.

R1- nearby resistance at 1.2820
R2 – 1.3308
S1 – nearby support at 1.2326
S2 – 1.2100

***
Article and Commentary by Don Schellenberg. A trader and trading coach, he is a noted expert on Market Structure, Elliott Wave and Fibonacci. He trades the forex market.
I noted that momentum indicators showed some upward pressure in this market last week. The market, however, only spiked marginally higher to 769. before slipping down over the next couple of days to it’s current level at 714.

Nearby resistance is around 728. which was previously a support level. A test of this area is possible but the weight of evidence at this time points to a likely test of the Oct. 24th low of 681.50, to occur in the near future.


Gold chart as at 13 November 2008 using NextVIEW Advisor

TECHNICALS
Stochastic – sharply down
RSI – flat, below it’s 50% level.

R1 – resistance at 728.
R2 – 778.- at the top of the recent range.
S1- nearby support at 681.50
S2 –(not shown on the chart) 656.

***
Article and Commentary by Don Schellenberg. A trader and trading coach, he is a noted expert on Market Structure, Elliott Wave and Fibonacci. He trades the forex market.
Very little movement has occurred with this currency pair (US Dollar against Chinese Yuan USD/CNY) in the last week. The market has been moving primarily sideways for more than six weeks.

There has been a very small move into minor resistance at 6.8187 but so far the meaning of that is inconclusive. Until there is a break out from the rectangular price pattern, no clear trend can be identified. There is, however, still a slight bias to the downside.

TECHNICALS


USD/CNY chart as at 13 November 2008 using NextVIEW Advisor

Stochastic – the extreme gyrations of this indicator do not reflect trend, but only the minor up and down price movements within the narrow trading range.

Simple Moving Average (200SMA) – the market has been below this moving average for most of the past fifteen years. Until there is a move above this average, currently around 6.8900, the market should be considered basically to be in a down trend.

R1 – 6.8404
S1- 6.7926

***
Article and Commentary by Don Schellenberg. A trader and trading coach, he is a noted expert on Market Structure, Elliott Wave and Fibonacci. He trades the forex market.

Saturday, November 15, 2008

In Vonnegut's book Cat's Cradle, there is a religion called Bokononism. It is a collection of lies ("foma") that make life on the dreary island of San Lorenzo more palatable. Among other things, Cat's Cradle is a book about the role of lies in human life.

Philosopher and mystic G. I. Gurdjieff also emphasized the role of lies in human psychology. The greatest of lies that we tell ourselves, Gurdjieff asserted, was that we have free will. In reality, most of our actions are mechanical, tossed here and there by moods, whims, needs, and the impact of external events.

Of course, it is painful to face the fact that we lack control over our own lives. So we create our own personal Bokononisms. We take solace in New Year's resolutions and earnest plans for self-improvement that, like last year's exercise equipment, eventually become part of our forgotten mental furniture.

Psychologists would never exist if people had free will. Those with problems would read self-improvement books, take good advice, and end their problems straightaway. But, no; that's not how human psychology works. We can know what to do and we still don't do it. We know we're supposed to eat healthy foods; we know we should always be appreciative of our spouses; we should exercise, not overspend our savings accounts; and we should cut our losing trades.

Quite simply, people lack intentionality: the ability to sustain directed activity. They cannot do.

Gurdjieff's insight was that we lack intentionality because we fail to remember ourselves. In a state of self-awareness, we vow to do the right things. Once we exit that self-awareness, the right things vanish with it.

Zen masters spend years cultivating the capacity to remember themselves: to remain self-aware. They realize that free will begins with the ability to sustain a single thought--and only that thought. Sit quietly in a dark, silent room and make the effort to focus all your attention on a mental image of an empty vessel. See how long you can sustain the image without your attention drifting to random thoughts and images. Before long, you forget the vessel altogether...

So what does this have to do with trading?

In 1983, Richard Dennis and Bill Eckhardt sought to resolve their dispute over whether trading success could be taught or whether it is inborn. They tested a trading system, to be known as the Turtle Trading System, and taught it to their group of novice traders.


Legend has it that the Turtles went on to become wildly successful traders. But, of course, like much of history, that is a pack of foma.

The Turtles varied significantly in their trading performance. Some followed the rules Faithfully and made significant money. Others did not and could not follow the rules and were dropouts from the experiment. Intentionality, not the system rules (which were the same for all traders), predicted trading success.

And now I will give away the secret of the Turtle Trading System and why it so effectively illustrates Gurdjieff's insights:

The Turtle Trading System is a system for losing money.

It makes losing money scientific and details precisely how it should be done.

Most traders want lies: how to make money easily, without the constraint of rules or the demands of research. They do not want an education in how to lose money, because they do not want to lose money.

And that is why they never make money.

The precise rules for the System are readily available and there is even software that will tweak the rules and identify the most promising markets to trade. According to Alexa, less than 4 people in a million will visit those pages. And, let's be generous and say that 10% of those visitors make the effort of downloading the rules and 10% of them can actually follow the rules to learn how to lose money.

That leaves us with very few people.

Gurdjieff taught, "If we do what we like doing, we are immediately rewarded by the pleasure of doing it. If we do what we don’t like doing the reward must come later. It is a mathematical law and all life is mathematics."

Not many people like learning how to lose.

Losing money with intentionality: that's a useful secret of the Turtle Trading System, even for those who aren't Turtle System traders.

***

Brett N. Steenbarger, Ph.D. is Associate Clinical Professor of Psychiatry and Behavioral Sciences at SUNY Upstate Medical University in Syracuse, NY and author of The Psychology of Trading (Wiley, 2003). As Director of Trader Development for Kingstree Trading, LLC in Chicago, he has mentored numerous professional traders and coordinated a training program for traders. An active trader of the stock indexes, Brett utilizes statistically-based pattern recognition for intraday trading. Brett does not offer commercial services to traders, but maintains an archive of articles and a trading blog at www.brettsteenbarger.com.

Friday, November 14, 2008

The America market is already in recession. The monthly Standard and Poor’s S&P 500 index chart provides three important targets. The first is a target level for a normal market retreat which is usually followed by a rebound. The second support target level defines the recession level. The third support target level defines the depression level.

The monthly S&P 500 index chart shows a rounding top pattern. The 2008 September market falls carried the S&P 500 to the rounding top pattern target level near 1200. A rebound was expected from this level but the 2008 October market falls carried the market well below this level and to the long term support level at 1050. This is the lower level of a trading band that developed in 2003-2004. The failure of the support level near 1050 was the first suggestion of a developing recession in America.

The next strong historical support level is near 800. A fall to this level confirmed a recession in America. The rally after the American election has failed because it is unusual for a trend recovery to start from a point that is between confirmed historical support and resistance levels. The rebound from near 840 has no historical precedent. This suggested it has a low probability of developing into a genuine rebound point. The rally from this level is unsustainable and there is a high probability the market will test support near 800. This is the level where traders will look for consolidation patterns to develop.

This is a Recession target level and economic recovery will take 4 to 8 months. This will include several rallies and severe retreats. Consolidation at this level confirms a recession.

Failure of support near 800 will allow the market to fall towards long term historical support near 500. This is a depression support level target. A minor support level developed around 670 1996 but the strong well tested support/resistance level at 500 developed in 1994 and 1995.

The market could fall quickly to this level but the more provable outcome is a slow drift from recession to depression with a gentle slide and a trend with lower levels of volatility. Recovery from an economic depression will develop over one to two years. Trading conditions in this market are very different and new investment strategies will be required. The rebound from the recession target at 800 will be slow because new money is required to develop a new uptrend. Any rebound from the depression targets will be more difficult.

Successful testing of support at 800 is the key requirement for a market recovery.



To read more articles and commentaries from Daryl Guppy, click HERE

***

Article contributed by Private Trader, Market Expert, Trading Coach and Best-Selling Author Mr. Daryl Guppy. For more articles and commentaries from Daryl Guppy, click HERE.

Wednesday, November 12, 2008


Daily market indices chart from October 1 to November 11, 2008 using NextVIEW Advisor

Latest News:

Obama urges action as Asian, European data gloomy
NEW YORK (Reuters) - U.S. President-elect Barack Obama urged the Bush administration to back a second economic stimulus package and aid the ailing auto industry on Tuesday, after fresh reports of economic weakness in China, Japan and Britain reinforced fears of a prolonged recession. Click on headline for more details

Oil futures settle below US$59
HOUSTON: Oil prices continued their downward spirals Tuesday as crude hit a 20-month low and Wall Street offered yet more evidence that U.S. consumers are holding on to the money they have. Click on headline for more details

Gold, other commodities drop on weakening demand
NEW YORK: Gold and other commodities prices tumbled in tandem with the stock market Tuesday as more signs of economic weakness drove concerns about a slowdown in demand for raw materials.

***
N.I.N.E.

Tuesday, November 11, 2008

Price of CPOF was in a bearish trend since July 2008 and is still in a bear trend. However, recent price developments on the chart show that the current support level may hold, at least until the end of the year. The Relative Strength Index indicator is has remained flat despite falling prices. This means that the down trend momentum has weakened.

The declining short term 30-day average for CPOF is currently at RM1,740. The price of CPOF is just 6.5% under this short term average. The price is expected to break above the average this time because of an increasing momentum in the short term trend. The longer term 90-day average which is declining since July is currently at RM2,450.

This means that the current price is 33.6% below this longer term average. Therefore, the price of CPOF is technically oversold in the longer term. Oversold is the term used to indicate over-speculation. Normally price is expected to rebound when it goes into an oversold level.

Price has been oversold and rebounded a few times since August but failed to even go above the short term average. This time it is more likely to break above the short term average and climb to the longer term value, determined by the long term average.

Last Friday, Malaysia and Indonesia says that production will be cut to limit supply and prevent further fall in prices in anticipation of global recession. Indonesia’s Agriculture Ministry’s director general for plantations, Achmad Mangga Barani said in Jakarta Post that an agreement between the two nations has been signed with the aim of anticipating over-supply amid falling demand. He said that the cut will be made starting next year through a replanting program covering a total of 300,000 hectares of oil palm trees from both countries.

The government intervention from these two countries which produce some 85 percent of the world’s crude palm oil would support price of CPOF from falling further and therefore the low of RM1,400 has a high chance of being the bottom for the price of Crude Palm Oil.

Vegetable oils forecast expert Thomas Mielke believes palm oil prices have bottomed out and expects sharp increases ahead. “I believe prices have reached the floor two weeks ago and the market is now in transition,” Mielke told a forum of more than 100 palm oil traders in Petaling Jaya over the weekend.


CPOF chart as at 10 November 2008 using NextVIEW Advisor

Technically, if the price of CPOF is able to break above the short term average of RM 1,740, we may expect a rally to RM2,400 to RM2,500. This range is determined by the longer term average and a cluster of Fibonacci retracement levels of 50% and 61.8% from the historical high and from the price in July.

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Article contributed by Private Trader, Market Expert, Trading Coach and Chief Market Strategist of Nextview, Mr. Benny Lee. For more articles and commentaries from Benny, click HERE.

Saturday, November 8, 2008

The economy is saying to the financial markets "If you jump, I jump.... later". In his seminar on October 25 in Singapore, Author, Private Trader and Trading Coach Dr. Alexander Elder mentioned that normally, the financial market lead the economy about nine to twelve months ahead.

Now that the financial markets have taken a dive.... the economy is following suit. We may not feel it now especially in the Asian region... but we shall feel the pinch next year. So, 2009 is going to be a tough year.

Already, unemployment rate in the US has spiked up to 14 year high of 6.5%. About 10 million people in the US are jobless. The economic crisis in the US is deepening. read more here.

Economy saying to Financial Markets "I'll see you soon..."

N.I.N.E.

Friday, November 7, 2008

As mentioned previously, EMA21 created some resistance on the upside and for the last several days has continued to do so.

There is still upward momentum showing on the daily chart, so a break above nearby resistance at 778. is not out of the question. However, as far as trend is concerned, the downtrend as indicated by the slope of the 60 day Moving Average is still decidedly down.

There is also the possibility that a decline below 721 will trigger some intense buying which could push gold up to 780. or even 800. A move higher than these figures is unlikely until the October 24th low of 681.50 is tested or exceeded to the downside.


Gold chart as at 6 November 2008 using NextVIEW Advisor

TECHNICALS

NextView RSI – declining below its’ 50 line.
Stochastic – rising
60 day Moving Average – sloping down
21 day EMA – currently containing price on the upside.
Bollinger Bands – contracting – evidence of a stall in the trend.

R1 – a resistance zone between 783- 820.
R2 – 931.50
S1 – support at 681.50

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Article and Commentary by Don Schellenberg. A trader and trading coach, he is a noted expert on Market Structure, Elliott Wave and Fibonacci. He trades the forex market.
US Dollar Against Chinese Yuan (USD/CNY)

It may be too early to forecast a continuation of the downtrend with this currency pair, but in fact, near term, that is the most probable development.

The October low at 6.7737 will be the first price target to the downside. A close below that level will target 6.7746 and then 6.7109.


USD/CNY chart as at 6 November 2008 using NextVIEW Advisor

TECHNICALS

Stochastic – dropping from Overbought levels
MACD – dropping below its’ zero line into bearish territory.

R1 – resistance at 6.8405
S1 – the first level of support at 6.7737
S2 – the second level of support at 6.7450

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Article and Commentary by Don Schellenberg. A trader and trading coach, he is a noted expert on Market Structure, Elliott Wave and Fibonacci. He trades the forex market.