Tech musings

In my two previous posts on crude oil on June 1 and on 9^th may, I wrote that crude “Crude recently broke below the channel and is now heading towards 70 USD per barrel.”  Subsequently crude oil made a low of 77 USD and recovered sharply from there.  As we can see in the chart Nymex crude took support near historical lows of 77 and bounced upto 100 USD. Despite this robust 30% upmove crude still remains one of the weakest commodity on charts.

If we look at the given chart we can see that crude faced resistance at previous channel marked in yellow and had weakened considerably from there. Again the support for crude from here would be around 77 USD.

 

Crude Nymex - Daily chart

In the second chart we can see a head and shoulder formation developing on crude oil.  Crude is currently forming the right shoulder of the pattern. Once crude trades below 90 USD levels it will correct sharply towards 77.

 

Crude Daily

In the third chat is the yearly chart of crude. Here we can see that Crude touched 100 USD levels in 2007 and since than it had been almost 6 years but crude never closed above 100 USD. The current yearly candle for crude is a doji and as we can see the support line for crude is around 50 USD. I think there is high probability that crude will trade around 50 USD levels by next December.  Secondly despite an open ended QE by FED and ECB Risk asses have failed to move up sharply, I think this is a sign of impending slowdown in global economy.

Crude Nymex- yearly chart

I have updated my view on nifty in the beginning of this month when Nifty was trading at 5342levels.  Nifty closed this month at around 5703 i.e. up move of around 7%. Going forward from there are quite a few possibilities. Going only by chart analysis it seems that Nifty should move towards 6350 levels. Although there will be lot of congestion around 5800 -5900 levels. But historically October have been one of the worst month for Indian markets. Secondly when we look at charts of other major index they are all trading near major resistance levels. Thirdly, QE announcement has come and there won’t be any significantly liquidity event taking place in next few months. Then if we look at signals from US or Europe it seems that growth is slowing down significantly. 

Conditions in India are different due to some reforms pushed by central government and possible RBI easing which may push domestic market. Keeping all this contradiction in perspective it would be advisable to keep tight stop loss for long position, stay nimble and hold cash.

Nifty Monthly chart

Next chart is a monthly chart of S&P500. We can see that S&P500 is moving in a rising wedge pattern which is inherently a bearish pattern. The support for S&P500 is around 1300 levels while resistance is at around 1500 levels.

S&P500 - Monthly chart

Next is the daily chart of S&P500, We can see that even in a daily chart S&P500 is forming a rising wedge. S&P500 is already trading near resistance at 1480 levels. Support for S&P500 is at 1380 -1400 level. 

S&P500 - Daily chart

Next chart is of Nasdaq 100, we can see that Nasdaq is trading at the upper end of the long term channel, any break out from this channel will result explosive up move, I think it is highly unlikely and difficult for Nasdaq to break out of this channel.

Nasdaq 100

Next chart is the weekly chart of Italy 10 year yield. We can see that yield took support at 5% level and has bounced back from there. If Yield fails to fall below 5%, it may move up from here which will signal risk off trade and bad news coming out of Europe.

Italy 10 year yield

 Last chart is of INR. INR broke below the trend line which I felt was highly unlikely event. Since INR has given a monthly closing below 54 the breakout should be considered to be conclusive. In this case INR may fall further to 52 and 50.50 levels going forward. But my long term view on INR remains unchanged and I think INR will depreciate sharply going forward.

INR weekly chart