Tech Musings - Currencies

In my previous two post on currencies written on 30th January 2015  I wrote the following, “DXY recently made a high of 95.5 and had almost hit the target level. If we see the long term chart of DXY we can see that it is trading at 36 years resistance line hence I expect some correction and pull back in DXY. Alternatively if DXY can break the resistance and move towards 100 levels then the target for DXY will be around 120.”

As expected DXY topped out at 100 and move sideways. Since then DXY had consolidated between 92 – 100 levels. 

In the update given on 8^th January 2016, “I expect the down trend in these currencies will continue and they will gradually depreciate against USD. Once DXY moves above 100 levels we can see sharp depreciation of these currencies against USD.” Finally in November 2016 after a long consolidation of 23 months DXY has recently broke above 100 levels.

If we look at the given chart of DXY it seems that DXY is ready to move up to 120 levels. If DXY closes above 100 levels by the end of December the target will be 120. 

 Euro has strong support at 1 – 1.05 levels. I expect that eventually Euro will break below them and target for Euro stays at 0.80

JPY is forming a large inverse head an shoulder patter and this years strengthening of JPY from high of 130+ to low of 100 was just the completion of the right shoulder. I expect JPY to break above 130 and move towards 150 – 160 levels

Similar to JPY SEK is also forming a large inverse head and shoulder and is nearing a breakout from the pattern.  The target for SEK is at 10 and 11.25

Summary:-

1.      I am expecting in next two to three years DXY will appreciate to 120, EURO will fall to 0.80, JPY will be trading at 150 – 160 levels.

2.      Similarly other currencies like CHF, CAD, AUD will also weaken significantly v/s USD in next two years. 

Tech Musings

In my previous post on Nifty written on 6^th September 2016 I wrote, “If we look at the current chart of Nifty we can see that the upside resistance exist between 9300 – 9500 levels. I don’t expect market to break above this resistance in short term. We may consolidate between 8000 – 9500 for next year or so before we finally break out of this zone and we have a bull market which will take nifty to 14000 -15000 levels by the end of 2020.”

When I wrote that blog Nifty was trading at 8895 and it peaked at around 8968 and has been correcting since then. Today Nifty closed at 8111 levels which is around 10% correction. 

If we look at the given chart of Sensex we can see that long term trend line support for Sensex lies at 24500 levels and long term resistance for Sensex is at around 30,000 levels. 

If we look at the yearly chart for Sensex it seems that index is forming a second consecutive doji.  As per my experience of technical analysis when an index or a stock is squeezed between long term trend line support and channel resistance the most like scenario is a breakout.  Hence I think next year can be a big bull market for Indian stocks. I would give a 65% probability to this scenario. The second possible scenario is a third consecutive doji which I think has less than 25% probability. 

In my previous post on INR written on 8^th January 2016, I wrote, “I expect the down trend in INR to continue it will gradually depreciate against USD due to inherent strength of the Indian economy and excellent management by the central government.”

Since then INR has been consolidating between 66 – 68. If we look at the current chart of INR it had broken out of the triangle pattern. The first resistance is at 69 and once that is taken we can see some serious depreciation in INR v.s USD

Summary:-

1.       Sensex should find long term support at 24500 levels

2.       If Sensex closes between 25000 – 26000 levels we can see a bull market in 2017

3.       The probability of a bull market is should be around 65% to  70%

4.       I won’t be surprised if index moves to 35000 levels in next two years.

5.       Expect INR to break above 69