Autochartist - Latest Chart Patterns
Weekly discussion and analysis of chart patterns from our partners at Autochartist.
Weekly Commodities Update: US Treasury Bonds
Treasuries treaded water during the first week of 2012 as equities rebounded slightly. Both treasuries and equities remained inside of their recent ranges, leaving traders to await further developments to see which way the trends are going to break. US Treasury bonds have been holding a broad range slightly below record highs, forming the channel down chart pattern identified here on the Autochartist emerging patterns platform.
The resistance drawn from the swing high near 146.00 points forms the top of the channel down, with the recent swing low near 141.00 points confirming the bottom of the formation. Measuring 68 four-hour candles in duration so far, the market appears capable of trading inside of this range for some time to come. This makes it a dominant pattern to watch for a breakout in order to establish long-term directional bias for the treasuries.
Meanwhile, swing trading inside of the channel may be an effective strategy for shorter-term traders. The nearly four-point range between the upper and lower channel boundaries affords substantial opportunity to capture portions of each move. Risk on these positions can be limited by placing Stop-loss orders outside the support and resistance provided.
An eventual move below 140.00 or above 145.50 will be required to complete this pattern and generate a directional forecast. This may occur sooner than later if extreme volatility returns to the markets, however January’s fairly uneventful beginning encourages the likelihood that the price is likely to form at least one or two more legs inside the channel before a meaningful trend shift occurs.
Weekly Forex Update: USD/KRW
USD/KRW continues the steady advance inside the uniform triangle chart pattern. The overall quality of this chart pattern is measured at the four-bar level, which reflects the following values of the individual contributing quality indicators: below-average initial trend (rated at the four-bar level), substantial uniformity (eight bars) and low clarity. Higher uniformity reflects even distribution of the reversal points on which the upper and the lower trend lines of this triangle are based. This triangle reverses the strong preceding downtrend visible on the daily, weekly and the monthly USD/KRW charts.
The bottom of this triangle (point C on the chart below) formed when the aforementioned preceding downtrend reversed from the major support 1050.00. The following sharp upward price impulse from point C stopped close to the resistance at the round price level 1200.00 (point A). The price then corrected down (in the A to D price move) to the strong support area lying at the intersection of the previous major resistance 1100.00 (now support after it had been broken by the C to A price impulse) and 61.8 % Fibonacci retracement of the preceding C to A impulse. The price has continued upward movement from point D, correcting twice to the support areas close to the subsequent Fibonacci correction levels of the C to A impulse – to 50% Fibonacci retracement at point E and to 38.2% Fibonacci retracement at point F (as shown on the second chart below). The pair is expected to rise further in the coming sessions.
The following daily USD/KRW chart shows the technical price levels mentioned above.
Weekly Index Update: Wall Street
Autochartist has identified the formation of a Gartley Fibonacci pattern on the 60-minute Wall Street chart. Based on the break from point A to point B, the pattern is predicting a break into the forecast price level at 12270.00 over the near term. The Gartley pattern is a complex price pattern based on Fibonacci numbers and ratios. It is used to determine buy and sell signals by measuring price retracements of a stock index’s up and down movement.
The Dow Jones example shows an uptrend XA with a price reversal top at A. Using Fibonacci ratios, the retracement AB should be 61.8% of the price range A minus X, as shown by line XB. At B, the price reverses again. Ideally, retracement BC should be between 61.8% and 78.6% of the AB price range, not the length of the lines, and is shown along the line AC. At C, the price again reverses with retracement C to target between 127% and 161.8% of the range BC and is shown along the line B to target. The target is the point to buy as the market could begin a rally from this price.
Patient traders may want to wait for the possible break into the target before beginning their buying campaign for a move into the identified Fibonacci levels 12333.89 to12537.77, but aggressive traders may want to consider shorting the market for the anticipated break. It all depends on one’s style of trading and personal preference as well as the confidence one has in Autochartist’s ability to forecast the next move. If considering the short side traders should remember to use Stop-loss protection, and that a move through point C or 12435.83 will negate the formation.
Disclaimer: the above comments do not constitute investment advice and IG Index accepts no responsibility for any use that may be made of them.
