Morning Technical Notes – Tuesday 14 May

Today’s wrap and technical outlook for indices, commodities and currencies from CMC’s head of analysis for North America, Colin Cieszynski

Asia Pacific indices 

Australia 200 looks vulnerable here. Although it has been holding 5,200, the formation of a negative RSI divergence and bearish rising wedge suggest that the uptrend may be near exhaustion. Initial support near 5,185 then 5,125.  

Japan 225 keeps on climbing. Even though it’s very overbought on the RSI and vulnerable to a correction signs of exhaustion or reversal have yet to appear. It could struggle, however, should it start to approach the 15,000 barrier. 

China A50 has been consolidating in the 8,050 to 8,225 area but RSI rolling back under 50 suggests momentum may be turning negative again. A break of 8,000 would confirm the start of another downturn where 7.820 Fibonacci support could be retested. 

HongKong43 saw selling pressure accelerate and its RSI drop from overbought territory back under 70, a bearish technical signal. Currently sitting on 23,000 if that key level fails, 22,800 or 22,500 potential support could be retested.  

India50 appears to have completed a double top, falling off after failing to break through 6,100 and sliding back under the 6,000 level. Currently testing 5,970, next support in a correction appears near 5,800.  

Singapore30 has completed a measured move up from its previous trading channel and has started to stall near 3,450. The last time RSI was this overbought, the index traded sideways for three months. Initial support appears near 3,400 and 3,420. 

US Indices 

US30 remains in an uptrend, well supported above 15,000 and trading near 15,080 with resistance near 15,140 and measured tests of 15,240 or 15,400 possible over time.  

SPX500 continues to level off in the 1,620-1,635 area holding well above its 1,600 breakout point with measured resistance still in place near 1,655. 

UK and European indices 

UK 100 remains supported, holding well above its 6,500 breakout point. With RSI overbought, however, it may need to consolidate in the near term before potentially mounting an assault on its 2007 peak near 6,750. 

Germany30 failed to hold above 8,300 and with RSI overbought, the current rally looks tired and due for a correction. In a pullback situation, it could easily drop back to test 8,160 or key trend and psychological support near 8,000. 

France 40 continues to attract support above its 3,900 recent breakout point but also continues to struggle with the key 4,000 level as it consolidates recent gains.  

Italy 40 failed to overcome resistance near 17,350 and has skidded back toward 17,200 as it starts to work off an overbought RSI. A retest of 17,000 as new support can’t be ruled out. 

Spain 35 has broken down through 8,500 as is drops following failed attempt to break through 8,700 which may have completed a bearish triple top. RSI suggests upward momentum falling. Next support appears near 8,240 then 8,000. 

Commodities  

Corn has jumped 3% today as upward momentum continues to accelerate through its base building process. Now trading near $6.75, next resistance appears near $7.00 then $7.45. 

Wheat has moved back above $7.00 as it continues to build an ascending triangle base between $6.65 and $7.30. A case could also be made for a reverse H&S bottom. Next measured and prior resistance on a breakout appears near $7.80.  

Coffee Arabica successfully retested 140 old resistance as new support, confirming the start of a new uptrend with next upside resistance near 145 and 154. 

Orange Juice remains under accumulation and has popped back above 145 to signal upward momentum building again with next resistance near 153 then 167 on trend with support near 140.  

Gold retested Friday’s $1,445 breakdown point as new resistance and has turned lower again, confirming the start of a new downswing. Next support appears near $1.420, $1,400 and $1,340. RSI remained under 50 keeping downward mo intact. 

Silver keeps rolling over. Having broken a short term trend support line, it could drift lower within a $22.00-$24.50 trading channel. RSI indicates that its longer-term downtrend remains intact.

 Copper remains in an upswing consolidating its recent breakout in the $3.32 to $3.37 area with next resistance near $3.44 and more support near $3.30. 

US crude looks increasingly troubled here. It has started to roll down from lower highs in both the price and the RSI, signs of distribution. Slipping under $95.00, next support appears near $94.00 then $93.00 with resistance near $96.00 

UK crude continues to retreat, breaking $103.00 once again and with RSI indicating that downward momentum continues to accelerate. Next support appears near
$101.70 then the $99.75 to $100.25 area. 

Gasoline slumped back a bit but remains in an uptrend above $2.80 with more support near $2.70 and initial resistance near $2.95. 

Natural Gas has bounced up off of $3.85 but remains in a downtrend unable to retake $4.00. Once the cold snap passes it could resume its seasonal correction with next support near $3.65. 

FX  

NZDUSD is breaking down again, taking out $0.8300 and a key support line, then continuing to drive lower. RSI is starting to get oversold though so we could be heading for a washout. Next key support near $0.8220 then $0.8160. 

AUDUSD’s selloff continues breaking par which may become resistance. RSI has gone oversold but it remains to be seen if it is fully washed out or if more selling remains possible. Next support appears near $0.9860. 

USDJPY has started to stall with resistance emerging near 102.00. The big breakout rally has not been confirmed by the RSI and the negative divergence suggests 100 could be retested. Measured resistance appears near 103.00. 

AUDJPY remains in an uptrend above 100.00 but appears to be stalling short of 102.00 with RSI suggesting momentum appears to be shifting into neutral. 

EURJPY traded up to another new high today but a negative RSI divergence suggests the recent rally may be nearing exhaustion. Initial support appears near 131.00 then 130.00 with measured resistance near 134.70. 

USDSGD sharply reversed course last week and broke through $1.2400 while the RSI broke out of a downtrend to signal a big change in momentum. Next upside resistance appears near $1.2440 then $1.2525.

About Colin Cieszynski

Colin Cieszynski, has been a Senior Market Analyst with CMC Markets Canadian office since 2007. Colin has provided trading insights to individual and institutional clients for over twenty years both as an analyst/strategist and investment advisor, with additional experience in investment banking and syndication. Colin tracks economic and market trends for Global indices, North American stocks, commodities and currencies utilizing both fundamental and technical analysis techniques. He has completed both the Chartered Financial Analyst and Chartered Market Technician programs.
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