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…
-Euro Stoxx 50 has passed one test in making a fairly convincing breakout from the down trend line established from the peak in 2015.
-The next test comes by looking at the monthly chart which shows an even longer term down trend line established from 2000 and tested 3 times; one would be right to askwill this time be different?
-The 50 and 200 day moving averages are putting in strong up-trend signals, but 3300 is an important level.
Overall technical view: Bullish bias, caution should be applied as the long term trend line is approached, but an upside breakout of the longer term trend line will be very bullish medium-term.
2. Copper – Bull flag
-After an upside breakout from a symmetrical triangle, as previously flagged copper is now undergoing another critical point.
-The latest pattern to form is a bullish flag formation, typically this is a continuation pattern and using the measure rule of the flag being crica half way up the “pole” upside would be as much as 20%.
-The other implication of an upside breakout from the bull flag would be a more clear upside breakout of the down trend of the past 5 years; it would also place the price around the previous support levels around 6800-7000.
Overall technical view: Bullish bias, trigger is an upside break of the bull flag.
3. GBPUSD – Brexitdown, er, I mean Breakdown
-GBPUSD broke down through support of 1.21
-Previously breaks of support have been followed by significant moves e.g. 1.41 and 1.29 (with the exception of the false breakdown through 1.41 in February 2016).
-At present the daily RSI is not yet oversold so it’s too soon to call a bottom, but as pointed out previously speculativefutures positioning has been stretchedto the short side for some time.
Overall technical view: Bearish bias, bears watch for any signs of a false breakout or oversold conditions.
4. Coffee – Bottom is in, now what?
-Bullish divergence (lower low on price vs higher low on RSI) concluded with a bottom in the coffee ETF.
-Aside from a breakaway gap price has broken up through the 200 day moving average.
-But coffee now faces two key tests; can it break up through the 50 day moving average? and can it break through resistance of 21.5?
Overall technical view: Bullish bias but the key trigger is a solid break of the 50dma AND support of 21.5
5. Korea – Ascending the triangles
-South Korea ETF saw an upside breakout of a large ascending triangle on the weekly chart in 2016.
-Subsequently the breakout failed and what appears to be yet another ascending triangle is forming.
-We’re left with 2 key trend lines: 1. Resistance of 58, and 2. Support of the upward sloping trend line in place from mid 2015. With the 50 and 200 day moving averages showing bullish trend signals, a bullish bias is warranted.
Overall technical view: Bullish, 58 is the long side trigger, 54 the short side.
Topdown Charts: "chart driven macro insights"
Based in Queenstown, New Zealand, Topdown Charts brings you independent research and analysis on global macro themes and trends.
Topdown Charts covers multiple economies, markets, and asset classes with a distinct chart-driven focus. We are not bound by technical or fundamental dogma, and instead look to leverage any relevant factor to capture the theme.
As such, here you will find some posts that are purely technical strategy, some that just cover economics and data, and some posts that use multiple inputs to tell the story and identify the opportunities.
Head of Research
Callum is the founder of Topdown Charts. He previously worked in investment strategy and asset allocation at AMP Capital in the Multi-Asset division. Callum has a passion for global macro investing and has developed strong research and analytical expertise across economies and asset classes. Callum's approach is to utilise a blend of factors to inform the macro view.