Autochartist - Latest Chart Patterns
Weekly discussion and analysis of chart patterns from our partners at Autochartist.
Weekly Commodities Update: Gold
Gold futures completed an impressive rally to reach a key target level during last week’s trading. The week ahead will be important for determining whether this is a short-term uptrend or the beginning of a major leg higher on the chart. After breaking out of the falling wedge chart pattern identified here on the Autochartist 60-minute timeframe, the market moved easily towards the forecast price range.
The move as measured from the swing low inside the falling wedge level to Friday’s close amounts to better than a $20 per ounce gain for gold without a retracement. The trade above $1667 per ounce is very near the wing high price that began the formation of the wedge, making this a 100% retracement of the downside correction. This level represents the minimum projected price and leaves the pattern open for further gains as high as $1678 per ounce on continued strength.
Traders will be watching for a possible pull-back early in the week. If this occurs it may be viewed as a buying opportunity for momentum traders who missed the initial breakout, as well as a point to add to long positions for those who did catch it. The overall bias from this pattern breakout remains solidly bullish, with the resistance trend line of the wedge now acting as key support at the $1655 per ounce level.
In the longer term, a continuation towards $1678 will bring into play a longer-term chart analysis which projects an eventual retest of the 2011 highs. With the falling wedge pattern achieving the completion stage, Autochartist will identify new patterns on multiple timeframes to track the relative strength of the uptrend. Likewise, signs of weakness and key level failures on the way up will be identified as they develop.
Weekly Forex Update: USD/NOK
USD/NOK has recently completed the high quality up-channel chart pattern. The overall quality of this chart pattern is measured at the eight-bar level, which reflects the following values of the contributing quality indicators: significant initial trend (rated at the seven-bar level) and near maximum uniformity and clarity (both rated at the nine-bar level). This chart pattern reverses the previous upward correction to the prevailing downtrend visible on the daily and the weekly USD/NOK charts.
The first two connecting points of the upper resistance trend line of this up-channel (points A and B on the chart below) formed when the pair reversed down from the combined resistance lying at the intersection of the round price level 6.0000, and the Fibonacci cluster made out of the 50% Fibonacci retracement of the preceding downward price impulse (from June 2010), and the 38.2% Fibonacci correction of the longer-term preceding down move (March 2009), shown on the second chart below. The top of this chart pattern (at point C) formed when the price reversed down sharply from the longer-term downward-sloping resistance trend line built on the starting pivots of the aforementioned preceding downward price impulses. The sharp downward impulse from point C broke through the support trend line of the preceding upward correction and through the support trend line of this up-channel with breakout, whose strength is measured at the highest ten-bar level. The pair is expected to fall further in the direction of the forecast area set between price levels 5.7504 and 5.8506.
The weekly USD/NOK chart below shows the aforementioned technical price levels.
Weekly Index Update: US Tech 100
The US Tech 100 index rebounded after forming point C of an ABCD Fibonacci pattern, setting up a potential rally into the forecast price level at 2440.50. If this price level is reached within the forecasted timeframe, the index is expected to start a correction into a series of Fibonacci price levels between 2435.99 and 2421.41.
The ABCD Fibonacci pattern, which is referred to as the ‘lightning bolt’ pattern, is also known as the backbone of all Fibonacci patterns. It is created by price and time symmetry. This means that the forecasted rally from point C to point D (target) is related to the actual rally from point A to point B in terms of price and time. Because of its two-sided nature, this pattern is appealing to both long and short traders.
The rally from point A, or 2425.50 to point B, or 2437.30 is equal to 11.80 points in nine candlesticks. Adding this number to point C, or 2428.70 produces a forecast of 2440.50 in nine 30-minute candlesticks. The break from point B, or 2437.30 to point C, or 2428.70 is projected to trigger a move to 2431.90 in three candlesticks. Besides the swing chart projection, a series of Fibonacci levels are also potential targets. Typically, a market will correct at least 50-61.8% of the previous rally, but a break of 78.6% will put the market at 2431.22, which is close to the swing forecast of 2431.90.
Now that point C has been formed, bullish traders can enter on the long side for the start of a rally and a possible change in trend to up on a trade through 2437.30. If the price and time target is reached, then aggressive counter-trend traders may want to trade the short-side for a correction into the retracement levels.
Disclaimer: the above comments do not constitute investment advice and IG Index accepts no responsibility for any use that may be made of them.
