Palladium Trading At Lower Weekly Bollinger Bands

Palladium Trading At Lower Weekly Bollinger Bands

Palladium, Weekly

Palladium has been trading sideways in a wide range since October last year. In the process market has created a lower weekly high and has now moved close to support levels. This suggests that in there is weakness in the long term picture but it doesn’t mean there can’t be short term rallies. Stochastics oscillator is now oversold and price is trading at lower Bollinger bands. This highlights the fact that price trading fairly close to important higher time frame support. Nearest support level is at 723.00 while the 23.6% Fibonacci resistance level at 767 practically coincides with a resistance created by a weekly pivot low 772.10. The fact that this region coincides with a 38.2% Fibonacci level when drawn from the year 2011 low the 2014 high increases its significance as a resistance level.

PA Daily

Palladium, Daily

The daily down trend that has been in force since the beginning of this month has taken Palladium inside a daily pivot near the weekly support level . This has caused the downside momentum to wane a bit and lifted Stochastics oscillator slightly higher. Nearest daily support level at 723 is the same as in the weekly chart.  There is some resistance right above the current prices from the sideways moved seen last week. Nearest significant resistance after the sideways move above the 739.35 is at 767.

 

PA 4h

Palladium, 240 min

Since June 8th the down trend in Palladium has been changing the slope to less bearish (black channel vs. blue and red regression channel lines). A sign that buyers are slowly stepping in and trying to create a reversal as price is getting close to a major support. Stochastics is pointing higher suggesting that price might be actually doing just that. However, there are resistance levels ahead and it probably takes some short term consolidation before price can turn higher. Nearest intraday support level is at 731.32 while the bottom of the sideways range above at 739.35 is likely to act as a resistance. The next more significant resistance level is in the region of 746 to 750 where the 23.6% Fibonacci level, 50 period SMA and the upper Bollinger bands coincide.

Conclusion

Long term picture is a sideways market with a bearish slant to it as price has just recently made lower high and the March low was a lower low especially on a closing basis. The short to medium term picture has potential turn bullish as price has moved close to levels that sent price considerably higher in March. Therefore, we are looking for momentum reversal signals above 723 resistance this week. The daily chart suggests that the short term move has potential to 767 (23.6% Fibonacci level).

Janne Muta

Chief Market Analyst

If you wish to get the latest forex brokers news,you can visit our TopForex Brokers official website: http://www.topforexbrokerscomparison.com

About Janne Muta, HotForex’s Chief Market Analyst

jmutaJanne Muta is a seasoned industry professional with over 16 years experience in the global markets. Originally from Finland, Janne has worked for institutions in both Helsinki and London as an institutional fund manager, global market analyst and FX educator.

Traders and fund managers from around the world have benefited greatly from Janne’s technical analysis methods. The indicators and price action based trading models he has developed, have, after rigorous testing, proven to be invaluable in identifying high probability trades.


“My mission is to help you to become a confident and successful trader”

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

Free Forex Analysis for 06.12.2015

Free Forex Signals for 06.12.2015

Today’s Currency Movers

EURUSD, Daily

EURUSD remained weak yesterday and the pair closed below the shooting star candle from day before amidst positive US data. Yesterday US retail sales was reported to have surged 1.2% in May, with the ex-auto figure up 1.0%, close to expectations. April’s headline unchanged figure was revised up to 0.2%, and the ex-auto number was left at 0.1%. Sales excluding autos, gasoline, and building materials increased 0.6% versus 0.3% previously (revised from 0.1%). Atlanta Fed boosted its Q2 GDP forecast to 1.9%up from 1.1% previously in the wake of the firm May retail sales report, which was propped up by auto sales and gasoline prices. That closed the gap somewhat with Blue Chip economists, who have a median forecast of around 2.65%. US household net worth rose to $84.9 tln in Q1 from a revised $83.3 tln in Q4 (raised from $82.9 bln), according to the Fed, thanks to rising home values and investment gains. Household debt increased at a 2.2% annual pace, down from a revised 2.8% previously (was 2.7%). Increased returns and lower borrowing is a relatively healthy development for the outlook on consumer spending and dovetails with some of the better contemporary readings on the economy.

U.S. business inventories rose 0.4% in April, with sales up 0.6%, both higher than expected. March’s 0.1% rise in inventories was not revised, but the February gain is now 0.3% from 0.2%. The 0.4% sales increase in March was bumped up to 0.6%, with the 0.2% February drop revised to -0.3%. The inventory-sales ratio was steady at 1.36 and is just a shade below the expansionary high of 1.37 in February. The data are good news for Q2 GDP. US initial jobless claims rose 2k to 279k in the week ended June 6, from a revised 277k in the prior week (was 276k). That brought the 4-week moving average to 278.75k from 275k (revised from 274.75k). Continuing claims were up 61k to 2,265k in the week ended May 30, from a revised 2,204k (was 2,196k). US consumer comfort index sank to 40.1 for the period ended June 7, down from 40.5 the week prior and the lowest reading since November, according to Bloomberg. That’s down about 8-points from an 8-year high in mid-April. Rising gasoline prices contributed to the decline, though wage gains and firmer equities supported household sentiment.

IMF doesn’t see progress on Greece. IMF’s Rice said the IMF has major differences with Greece in key areas and doesn’t see a progress on the way to an agreement with obstacles still including pensions, taxes, financing. Markets have been buying into hopes of a deal with Greece today, but that always seemed premature, considering that comments from most officials continue to stress that talks continue, but also that Greece needs to make more commitments and that there are still differences. Even if there is a bailout extension, it would not solve the problem as any payout of funds still hinges on the implementation of reform commitments that Tsipras is unwilling to subscribe to.

Germany prepares for Grexit, according to a German newspaper Handelsblatt. Tabloid paper Bild meanwhile reported that the government is preparing for default with considerations of capital controls and a haircut on Greek debt. So far it was mainly Tsipras who threatened that a Grexit would mean the beginning of the end for the Eurozone, but after the IMF finally lost patience with the lack of progress in the talks with Greece, the reports suggest that Germany is also not willing to keep Greece in at all costs. A Bloomberg story meanwhile said creditors will give Greece less than 24 hours to come up with a serious counter-proposal to its own reform list. There may not be any real progress, but it seems the beginning of the end to the Greek crisis is finally here, even if it could still go one way or the other.

Today’s data calendar being quite thin EURUSD might not move that much today. Over the next couple of days I think that bias is still to the downside due to the shooting star candle from two days ago. Today’s price action has taken place below Wednesday’s low and yesterday’s low was also below Wednesday’s shooting star low, which is inline with the expectation that EURUSD is likely to remain weak and retest the support 1.1006 to 1.1049 region. The nearest significant daily support and resistance levels are at 1.1049 and 1.1380 while the low from Wednesday has clearly been a resistance today.

2015-06-12_1104

Currency Pairs, Grouped Performance (% Change)

Today’s currency mover is AUD which is down by roughly 30 to 40 basis points against everything else but NZD that is weak after the RBNZ cut the rates yesterday in a surprise move. AUDCHF is reacting lower after rallying to a pivotal resistance. The pair is making lower lows and lower highs in a daily chart. GBPAUD has been moving sideways and still trying to push higher through the resistance. EURAUD moved lower yesterday after creating two no-demand candles. AUD weakness is the only clear theme this morning as other currencies’ performance has remained mixed.

Main Macro Events Today

  • German Wholesale Price Index numbers improved both on m/m and y/y basis. Monthly change in May came in at 0.5% compared to 0.4% in April while the yearly change improved from -0.9% to -0.4%.
  • US Producer Price Index data for May is out today and should reveal a 0.8% (median 0.4%) headline with the core up 0.1%. After a long run of drops driven by falling oil prices we have now begun to see rebounds which should help lift the PPI headline. The trade price data for May began to reveal this effect with a 1.3% import price increase following a steady string of declines through the winter.
  • US Michigan Consumer Sentiment: The first release on June Michigan Sentiment is due today and should reveal a decline to 90.0 (median 91.5) from 90.7 in May. The IBD/TIPP poll for the month eased to 48.1 from 49.7 in May. Confidence measures have eased over the Spring as gasoline prices begin to rebound off lows and consumers become accustomed to their new level.

 

2015-06-12_0930

Janne Muta

Chief Market Analyst

If you wish to get the latest forex brokers news,you can visit our TopForex Brokers official website: http://www.topforexbrokerscomparison.com

About Janne Muta, HotForex’s Chief Market Analyst

jmutaJanne Muta is a seasoned industry professional with over 16 years experience in the global markets. Originally from Finland, Janne has worked for institutions in both Helsinki and London as an institutional fund manager, global market analyst and FX educator.

Traders and fund managers from around the world have benefited greatly from Janne’s technical analysis methods. The indicators and price action based trading models he has developed, have, after rigorous testing, proven to be invaluable in identifying high probability trades.


“My mission is to help you to become a confident and successful trader”

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

MSCI World Index Is Topping Out

MSCI World Index Is Topping Out

On May 7th I tweeted on MSCI World Index saying that the bull market for stocks is over. I pointed out that MSCI World etf charts (weekly and monthly) indicate that the markets have entered to a volatile topping phase. This phase typically takes place after a long move higher and leads to a severe correction or a period of bear market. Monthly chart showed an increase in volatility and a bearish shooting star candle with the next candle moving well below the shooting star low. The weekly chart showed how this MSCI World index tracking etf had moved outside the up trending regression channel, a clear sign of increased volatility and weakness. Since my tweet price action has been exactly what you’d expect of a market that is topping out.

In this report I will take a closer look at some of the main stock market indices around the world and provide an updated view on the MSCI World index.

Over the last few years the financial media has been full of people trying to figure out when the global stock market rally might be ending. Most experts and commentators focus only on fundamentals and macroeconomics as they try to figure out the most likely future course of the markets while others take the view that central bank money printing (sometimes called funny money) makes fundamental analysis obsolete. There are high level examples of very skilled people misunderstanding and misinterpreting the impact of macroeconomic developments. Probably the most famous example is the Fed president Ben Bernanke failing to see subprime crisis impacting the economy. This was of course followed by a huge downward market in stocks that lasted until March 2009.

On May 28th Bloomberg TV highlighted a big sell off that took place in Shanghai listed shares. Shanghai Composite index fell by 6.5% on one single day. Another Chinese index, Hang Seng Composite Index finished the day down by almost 3.4%. Such moves often come as a surprise for those that don’t know how to read price action and focus solely on fundamentals. Fortunately technicals and market dynamics are quite revealing when it comes to spotting the early indications of developments that often lead to increased volatility. Let’s take a look at some of the world’s most followed stock market indices.

 

HSCI W

Hang Seng Composite Index, Weekly

HSCI D
Hang Seng Composite Index, Daily

Strong rally in Chinese stock market started in March as traders and investors alike started focussing on central bank stimulus. Market participants started buying stocks not because the underlying economy was performing and economic growth accelerating but because there was hope of increased liquidity in the economy. In other words the underlying economy and the real value of Chinese companies did not go up but the expected future value money went down as it was likely to be diluted by the extra liquidity by the central bank. This is not a great basis for investments fundamentally but certainly can lift the markets higher (or push the value of money down) for a period of time.

Hang Seng Composite reached the topping formation from year 2007 and has been since facing severe challenges in trying to move higher. Week starting on April 27th created a doji candle (a sign that upside momentum was lacking) and has since failed to move to new highs. Index dived twice from the top of the range before dropping below the support area (3810 -3840). Roughly at the time of my tweet on MSCI World index etf it was also reported that institutions have significantly increased their stock liquidations in Chinese stocks. Increased volatility was supporting the report and now that Hang Seng index has topped we have the ultimate proof that validates the rumour. Price made a return move to resistance at 3812.50 while the nearest significant support level is at 3461.  A new lower high would mean further confirmation to this bearish technical picture.

nifty w
CNX Nifty, Weekly

nifty d
CNX Nifty, Daily

Indian stock market had a solid run higher for the whole of the 2014. The rally started in August 2013 and made the 2015 high in March. Since March high of 9119 CNX Nifty drifted lower until it attracted buyers at 7997 support level in early May. Also, the 50 week SMA and lower Bollinger Bands coincide with this area adding to its significance. This area has been a support since but even though a couple of weekly pin bars were created the rally from this level was weak and index has returned to this level again. This is not encouraging and suggests that buyers are not in overwhelming majority at this support. Therefore, violation of this support on a weekly closing basis is now more likely. Daily chart shows how Nifty has been trending lower and making lower highs and lower lows. If the current support doesn’t hold it is likely that the recent volatility is indeed a new market top and a more severe correction is ahead in Indian stock market. The next significant weekly support level is at 6415.

Nikkei W

Nikkei 225, Weekly

Nikkei d

Nikkei 225, Daily

Japanese stock market has been moving higher ever since 2012 driven up by the QE programs driving the value of JPY down. This has taken Nikkei close to a year 2000 highs at 20833. The proximity of this resistance has made this market a little hesitant but at the same time hope of additional stimulus has caused the bulls to bid after the dips. Normally I would say that because Japanese stock market is trading near the upper end of the regression channel and close to a major resistance, upside is getting limited. However, in the world of seemingly endless supply of central bank funny money only seeing equates to believing and we don’t yet have signs of weakness in the daily timeframe chart. Therefore this market could well push through the year 2000 high. The nearest significant weekly support level is between 18030 and 18300.

DAX w

DAX, Weekly

DAX D

DAX, Daily

German DAX has been trending higher ever since the low of 2009 but in October 2014 this market started a strong rally that extended outside the trend channel this year in February. This accelerated rally failed in April and the German index moved outside the rising regression channel. DAX made a daily closing high of 12374 on April 10th and has since had a good sized correction all the way to the 38.2% Fibonacci retracement level. The 12374 high and the correction that followed coincide with EURUSD creating a higher weekly low. This indicates that traders had been buying German shares based on the idea that EURUSD moving lower will increase competitive advantage of European companies. Now that EURUSD has rallied and created a higher low the pair is less likely to move below the March support. This has made the investors and traders more careful and they have been taking money off German shares.

Some months ago EURUSD was the easiest game around with the result that investors poured money in German shares. However, now that EURUSD has stabilised due to more careful views on when the US Fed might raise interest rates and the IMF has suggested Japan should introduce more QE to achieve the 2% inflation target the USDJPY has become more interesting playground than EURUSD. At first this meant sideways movement and consolidation in DAX index which then created a lower high in the region of 50 day moving average and has been moving below this average for over a month now. This hasn’t happened since October last year.

Four days ago DAX found support from 38.2% Fibonacci level that coincided with the lower Bollinger Bands.  DAX rallied from this support and is now trading just below the 23.6% Fibonacci level that has provided support on a closing basis (weekly chart) in April and May. Major weekly support and resistance levels are at 10050 and 11920. Yesterday market reacted lower from the same level. This suggests further weakness to come in DAX.

Stoxx W

EuroStoxx 50, Weekly

Stoxx D

EuroStoxx 50, Daily

While German DAX is more exposed to currency fluctuations and represents the strongest economy in Eurozone the EuroStoxx 50 index represents a wider take on European countries. France has a 34.6% weight, while Germany’s weight is 30.82% and Spain’s 12.58%. Italy, Netherlands, Belgium and Finland all have a lower than 8 percent weighting in the index. This index has not had the extraordinary performance that German DAX has over the last 12 months but has still corrected lower with it. EuroStoxx found support from levels near 38.2% Fibonacci level from which it has rallied strongly higher over the last three days. Nearest significant weekly support is at 3325.50 (coincides with a 50% Fibonacci level) while the pivot from May 27th at 3691.40 is the nearest major weekly resistance. This market is closer to support levels than DAX and therefore not so vulnerable to major corrections. After two days of rallying higher index met resistance at previous but now penetrated support level and has reacted slightly lower today. I expect further weakness in this index as well.

SPX W

S&P500, Weekly

SPX D

S&P500, Daily

While DAX and Nikkei have been rallying strongly due to central bank money printing the S&P 500 index has been one of the most boring stock markets for both investors and traders alike. Market has been range bound for the best part of the year. Against the backdrop of what’s happening in German and Japanese markets this suggests that those moving the markets have forgotten this sandbox and are trading where the real action is.

Technology stocks have the highest weighting in S&P 500 index and the fact that Nasdaq is trading at year 2000 peak is slowing the index down. Banking stocks has been another sector causing sluggish performance lately.  Finance sector etf (XLF) has been moving sideways since February and is only now challenging the highs from December last year.

When global stock markets start to sell off it is usually the US market that will be the last to resist moves lower. Fund managers see less liquid and therefore more volatile markets (such as Hong Kong) more risky and therefore off load them before they start selling more defensive US positions. In the US the last 100 days’ positioning has been favouring cyclicals, technology, health care and financials while two safe play sectors, utilities and consumer staples, have not been in the favour. This hints that the US positioning this year has been slightly on the bullish side when the sector performance comparison is made against the S&P 500 index.

However, according to Bloomberg Goldman Sachs research note in May the US stock market is quite overvalued at the moment. According to GS dividends and buybacks will be responsible for supporting a market where the median stock in the Standard & Poor’s 500 Index is trading at 18.2 times earnings, putting it in the 99th percentile of historical valuation. This means that the future long term upside is likely to be limited and investors are therefore cautious. However, with extremely low interest rates it is the equities market that is still more attractive option when compared to fixed income investments. Therefore, it seems that with QE from the Fed now out of the equation the US stock market can rise modestly if the Fed decides to keep the interest rates low. This should be a worry to long term investors in stocks.

DAX D IQQW D IQQW W

IQQW-XET, MSCI World Index tracker ETF, Monthly

IQQW D

IQQW-XET, MSCI World Index tracker ETF, Weekly

Until October last year this etf tracking the most widely followed stock market index globally (MSCI World Index) was trending higher in a steady upward movement. However, since then it has rocketed higher which is never a sign of a lasting and steady up market. If a market moves too far too fast it is bound to have a sizeable correction (or even enter a bear market) at some stage. This correction usually takes place after a sideways movement and could lead to a bear market, which is what happened in 2000 and 2007. This time however, virtually all the central banks around the world are involved in funny money printing. It seems that people don’t care if the value of their money is diluted by the central banks that have an unlimited licence to just keep on printing. After six years of QE it has almost become a norm. Unless things get really ugly for reasons we don’t see at the moment, this might lead to buyers stepping in earlier than in these two earlier occasions (2000 and 2007).

The monthly shooting star candle in April pointed to lower prices and since then upside momentum has been missing from most of the global stock markets. Weekly chart reveals that the index ETF has made a lower high and has since then moved back to the support at 32.73, which once more bounced IQQW higher. This is very bearish and the peak of the lower high is a clear sell area should the market still manage to rally up there. After a weekly lower high it is probable that this market is now on sell the rallies mode but this sideways or a topping movement can last for several months before it is resolved. There are some minor weekly support levels at higher levels but the nearest major level where at least two technical factors roughly coincide is the area from 25.70 (2007 high) to 26.67 (38.2% Fibonacci level). This is some 20% below the current prices and could well be the extent of the downmarket.

 

Conclusion

It has been claimed by analysts that fundamentally global economies are still in an inflationary stage. But this view was shared by many analysts in 2007 as well. As we know global equity markets discount the future and the new macro trends are notoriously difficult to spot. The challenge lies in recognising those trends from macro data and news flow. In retrospect many things in economies are evident but often at the time of market tops the majority of analysts and commentators are still focussing on the current economic trends, not on the factors potentially changing the trend. And to be fair spotting those changes ahead of time is extremely challenging. Therefore after seeing two major market tops in my career (2000 and 2007) I am convinced that the collective opinion of market participants’ as it is displayed in different markets is be the best indicator of things to come. Therefore, a lack of momentum after a multiyear run higher is a sign that we need to pay attention to. The message from the MSCI World index is that we have a strongly increased chance of global stock markets topping and then rolling over.

There will always be markets that react differently and depending on central bank activity there might even be markets that don’t correct that much. However, this far (since my tweet on MSCI world index etf) market action in this etf has been exactly what I suggested it would be. MSCI World Index tracking etf has been moving sideways in a way that is typical for a market that is topping. This development is a good reason to steer clear from long term stock investments and concentrate these funds on forex trading where we can choose when to have market exposure and when to stay in the sidelines. This is highlighted by the fact that the US stock market valuation (still the most important stock market globally) is firmly on the high side.

The cautiousness I have on stock markets is legitimate in the light of price action but I would like to remind the readers that we do live in a world where easy QE money has become almost a norm. The negative stock market development could therefore be reversed for instance by a concentrated central bank effort. A strong liquidity increase would kick the famous can further down the road and if the liquidity boost was strong enough it would send the stock markets into new highs. According to some analysts co-ordination among central bankers is at the time of writing still as strong as at the time of financial crisis even though no such crisis exists. This either tells about them seeing the world economies much more fragile than we are lead to believe, or simply that this club of bankers is enjoying the global power they have managed to gain.

Janne Muta

Chief Market Analyst

If you wish to get the latest forex brokers news,you can visit our TopForex Brokers official website: http://www.topforexbrokerscomparison.com

About Janne Muta, HotForex’s Chief Market Analyst

jmutaJanne Muta is a seasoned industry professional with over 16 years experience in the global markets. Originally from Finland, Janne has worked for institutions in both Helsinki and London as an institutional fund manager, global market analyst and FX educator.

Traders and fund managers from around the world have benefited greatly from Janne’s technical analysis methods. The indicators and price action based trading models he has developed, have, after rigorous testing, proven to be invaluable in identifying high probability trades.


“My mission is to help you to become a confident and successful trader”

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.