Autochartist - Latest Chart Patterns
Weekly discussion and analysis of chart patterns from our partners at Autochartist.
Weekly Commodities Update: Gold
A chart analysis of the Comex gold futures reveals the week ahead may prove to be a pivotal one. Autochartist has identified multiple support lines on the key level indicator platform. These key levels are all converging between $1700 and $1708 per ounce, which lies just beneath Friday’s trading range.
Gold has already rebounded from this support zone several times in recent rally attempts. The rallies have met resistance as broader commodities and equity markets continue to find solid footing amid the record-setting volatility.
The failed rallies have set up an intermediate term trading range in the form of a pennant chart pattern, illustrated here on the 30-minute time interval. The pattern is a near-textbook image of a classic pennant, with well-defined support and resistance levels. The internal readings show a ranking of eight bars for uniformity, initial trend, and overall quality, with a nine-bar clarity score. Gold held the support in Friday’s session and is now poised near the apex of the pennant, which encourages the prospects of a breakout early in this week’s trading.
As the bottom of the pennant coincides with the key support levels across multiple timeframes, additional strength is given to the technical outlook. A breach of this level resulting in a breakout signal to the downside would be seen as a failure of the key $1700 per ounce level, and likely trigger sell-stops. This could establish a strongly bearish move in the short term as momentum traders add short positions on the perceived weakness.
A resurgence of strength from the bottom of the pennant to a price breakout above $1720 would be a solid confirmation that the support remains intact, and could establish the $1710 level as a definitive base for the next major rally back above $1800 per ounce. Given the clarity of the pennant on the half-hour chart, Autochartist is likely to paint a clear forecast for a new range once the direction of the breakout has been established. This is a great pattern to keep an eye on as the next move unfolds.
Weekly Forex Update: USD/DKK
USD/DKK continues to advance inside the clear triangle chart pattern. Autochartist rates the overall quality of this chart pattern at the five-bar level as a result of the low initial trend (measured at the three-bar level), average uniformity (five bars) and significant clarity (seven bars). Higher clarity of this triangle points toward the more widespread agreement among market participants regarding the recent upward movement of this currency pair.
This chart pattern develops in line with the predominant uptrend visible on the weekly USD/DKK charts. More specifically, this triangle follows the recent daily upward price impulse, which broke through the resistance trend line of the preceding longer-term weekly downward ABC correction (labelled in red on the second chart below). The bottom of this chart pattern (point C) formed at the combined support area made out of the support level 5.2300 and the longer-term weekly uptrend line from the middle of the 2008 (as is shown on the second chart below). The pair has recently reversed up (at point D) from the 38.2% Fibonacci retracement of the preceding upward price impulse (from C to B) and is expected to continue upward movement in the coming sessions.
The following longer-term daily USD/DKK chart shows the technical price levels mentioned above.
Weekly Index Update: E-mini S&P 500 futures
The 30-minute e-mini S&P 500 futures chart has formed an emerging flag pattern. Based on the number of successful touches of the uptrending resistance line, Autochartist is suggesting a continuation move to the downside. Although the chart pattern formation has been confirmed, the lack of follow-through to the downside suggests the possibility of a reversal move to the upside.
This can be deemed a dangerous short trade; however, the risk/reward ratio appears to be favourable. The key is momentum. If sentiment is shifting to the downside, then it must show up in the form of red candlesticks. If selling pressure isn’t detected then it is suggested that traders consider a possible breakout to the upside.
The 15-minute e-mini S&P 500 futures chart may be offering traders some clues as to the next move. Originally the channel-up chart pattern was suggesting a breakout to the upside since the initial trend was up. The weak one-bar rating and the confirmed minor top, however, led Autochartist to call for a reversal trend change. Like the 30-minute chart, momentum and volatility will be needed to drive this market lower. Without it, there is still a bias to the upside.
With both the 15- and 30-minute charts suggesting resistance has been met, traders should consider a possible breakdown in price if the candlesticks begin to show that shorting has been occurring with clarity and conviction. In other words, it is suggested that short-traders continue to play the short side if red candlesticks begin to appear, and consider a long-side breakout should the candlesticks remain green.
Disclaimer: the above comments do not constitute investment advice and IG Index accepts no responsibility for any use that may be made of them.
