A technical look at some selected charts, today I’ll step back and look at some longer term weekly charts. Click the images for larger versions
This chart going back to 2003 encompasses the last run up, crash, and subsequent recovery period. As you can see, we’re approaching the fall 2007 highs again, and the manner in which we’re doing so suggests that it eventually will make new highs. After that, it will be interesting to see. The price action from 2010 to the current date looks very similar to the period from late 2002 to the middle of 2006, when 7 waves led to a consolidation in mid-2006 which produced a burst higher to what is now the all-time high in October 2007. A similar scenario may repeat itself. Since mid 2010, there have been 7 clear waves, leaving us about 60 points away from new all time highs. Some consolidation at these levels is probable before a final push above the magic 1576.
The crash from 147 to 35 in crude futures recovered rather rapidly in the post 2008 years, peaking at 115 in 2011. Since then, there has been a consolidation phase, wth a clear triangle forming over the last year and a half of price data. The next leg of the move in crude will likely be determined by which way prices move out of the triangle, and confirmed by a breach of either the low of roughly 75 and the high of 115. For longer term trades, it’s probably best to wait until this pattern resolves itself. On a much shorter time frame however, this $40 range presents opportunities for trading short term movements.
10 Year Futures
The 10 year still is in a long term bull, that began after the breakout from that double bottom in 2007. It will be difficult to call the end in the bull run in bonds from a technical perspecdtive utnil the trend breaks down, which it hasn’t shown any signs of doing. The top in the middle of 2012 has still held, and on a medium term basis, the 10 year has been in a correction. The line in the sand at 127’26 is a good reference point for assessing the longer term nature of bond prices.
The 2008 top in the Euro at 1.6037 began a corrective period which has persisted since. From an Elliott Wave perspective, the 3 wave move from the top to the 2010 low at 1.18 could be an A wave. The Euro could be in the midst of a 3 wave B move, the last leg of which could be in progress at the moment. This suggests that a move to the 1.50 area is now on the cards.
The Yen crosses have been where all the action is in the FX markets over the last few months, due to the regime change taking place. Technically, the clear break of the mutli year downtrend augurs at the very least a corrective phase. It is still not certain whether the definite, multidecade trend of weakness in USDJPY is over. As you can see, the trajectory ove the move is incredible, wiping out almost 3 years of price action in a few months. Right now, it looks like 100 is a magnet, but the manner in which it gets there may be up for grabs.
As with the USD/JPY, the EUR/JPY has broken out from its multi year downtrend in recent months and is poised to be heading higher. The highlighted range between 126 and 138 represents the 2009 range, from which the recent, now-broken trend fell from. You can see that last week it did pierce into the range ever so slightly and was promptly rejected. The price action here will be key going forward.
Finally, gold. The entire bull run is pictured here, with two trendlines. Since the last top in September of 2011, gold has consolidated. My personal belief is that there is one more leg lower in this consolidation, the question being how low that leg travels. A reaction lower to the 1500 area meets nicely with the upper trendline, and a move lower to the 1100-1200 area in 2013 would meet with the lower trendline. The long term trend dating back to 2001 remains intact with either move, but for the short to medium term I would be surprised if the 1923 high was breached.