Autochartist - Latest Chart Patterns
Weekly discussion and analysis of chart patterns from our partners at Autochartist.
Weekly Commodities Update: Gold
Gold futures resumed their upward climb in last week’s trading, moving significantly above the $1700-per-ounce key level support. The overall chart analysis suggests that the buyers are still in command of this market as the steady climb has yet to see any meaningful price retracement. While this bodes well for the longer term, Autochartist has detected a formidable resistance level at $1740, which did manage to cap the week’s gains.
After marching steadily higher in the uptrend phase of a channel up chart pattern, gold pulled back softly to set up a pivot point within the formation. The $30-per-ounce span between the support and resistance trend lines that form the channel up creates a large potential trading range, while the lack of retracements so far suggest that the pattern may still be in a fairly early stage of development. This is partially reflected in the average internal rankings for quality, uniformity, and clarity. A continuation of range-bound trade within the channel will likely improve the rankings and become the dominant pattern for traders to position against.
Alternatively, follow-through momentum may enter next week’s trading to push the price above $1740 per ounce and above the channel’s trend line resistance. This would signal a premature breakout from the emerging pattern and signal a decisively bullish forecast for a commencement towards $1800 per ounce once again.
Weekly Forex Update: HKD/JPY
HKD/JPY has recently completed the flag chart pattern. The overall quality of this chart pattern is measured at the seven-bar level, which is the result of the strong initial trend (rated at the ten-bar level), low uniformity (three bars) and above-average clarity (six bars). The completion of this chart pattern continues the predominant downtrend visible on the daily and the weekly HKD/JPY charts. More specifically, this flag follows the preceding sharp downward price impulse (being the ‘flag-pole’ of this flag, whose strength is reflected by the maximum initial trend value) from the strong level of resistance at the round price level 10.00. The top of this chart pattern (point B on the chart below) formed when the pair reversed down from the resistance level 10.0765 (identified previously by Autochartist, as is shown on the second ‘key levels’ chart below). The pair is expected to fall further in the direction of the forecast area set between price levels 9.84 and 9.72.
As can be seen from the following daily key levels chart for HKD/JPY, the top of the above flag formed when the pair revered down from the resistance level 10.0765, which had been recently identified by Autochartist.
The key levels chart below shows that the lower boundary of the forecast area calculated for the completion of the above flag (9.72) stands very close to the strong horizontal level of support 9.7324, identified previously by Autochartist. Expect strong support at this level.
Weekly Index Update: E-mini S&P 500 futures
The e-mini S&P 500 futures contract has formed a potentially bearish ABCD Fibonacci pattern on the 30-minute chart. Now that the market has retraced the break from point A to point B to form point C, it is set up to break into the target price, or point D. Following a successful test of this potential support level, Autochartist is forecasting a possible retracement into a series of Fibonacci retracement levels ranging from 1308.75 to 1323.50.
The ABCD Fibonacci pattern is called the ‘backbone’ of all Fibonacci chart patterns. This is because some form of it is contained in all Fibonacci patterns. This pattern is also price and time symmetrical. This means that the move from point C to the target price or point C is symmetrical to the break from point A to point B.
The top at point A is 1319.25; point B is 1307.25. The range of the break from 1319.75 to 1307.25 is 12 points in six candlesticks. Since point C is 1316.25, a 12-point break would make the target price 1304.25. If the market reaches the price and time target as forecast, then traders should watch for a potential reversal back to the upside.
Because of the two-sided nature of this Fibonacci pattern, it can be attractive to short and long traders. Now that point C has been identified as a top, bearish trend traders may want to short the market looking for a break into the target price. A trade through 1316.25 will negate the pattern. Counter-trend traders may want to explore the long side of the market if the e-mini S&P 500 futures contract successfully tests the target price at 1304.25. The objective of this trade will be any of the Fibonacci retracement levels, with the 50 and 61.8% price levels at 1310.00 to 1311.50 respectively the most likely upside targets.
Disclaimer: the above comments do not constitute investment advice and IG Index accepts no responsibility for any use that may be made of them.
