Inter-market Technical Analysis using algorithmic pattern detection
FRIDAY JANUARY 15, 2010 03:44 ET
Equities have continued their gradual ascent and the S&P 500 managed to establish an intraday print above 1150 in yesterday’s session. The index closed at 1148.46 for a marginal improvement on its multi-month high achieved in Monday’s session and still the bulls seem to retain their control of the agenda.
In FX trading there has been a resumption of US dollar weakness - although the euro remains somewhat fragilely poised as discussed below. One of the most interesting pairs is the US Dollar versus the Japanese yen - USD/JPY - which as the chart reveals is approaching a fundamental support level in the context of a descending triangle. There has been a violation of the uptrend line drawn on the chart for the latter part of 2009 and a break below 90.40 would suggest that a return towards the 88.50 level could be back in play.
The 240 minute EUR/USD chart reveals some noticeable negative divergences on the RSI segment and the Eurozone currency is once again revealing signs of weakness. From the Ichimoku cloud perspective the absence of a relatively thick cloud support layer suggests that if the euro does not find support at the $1.4350 level it could sink rather quickly back towards recent lows in the 1.42 area.
The chart for the exchange traded fund for the gold mining sector, GDX, has produced a positive Ichimoku crossover within the cloud formation and also a notable hammer formation which tagged the base of the cloud and the 50 day EMA. The metal itself seems to be treading water at present although there are intraday patterns which resemble the cup and handle pattern which preceded the major breakout in early October.
At present I would keep an eye on the mining sector for entry opportunities on the long side but I remain neutral in the near term on spot gold with a longer term bullish bias.
COW is an exchange traded fund which is designed to reflect the performance of livestock. The index is composed of two futures contracts, lean hogs and live cattle.
The pattern has a bullish wedge formation and a break out from the current levels would point to a revisit to the $30 level.
TRADE OPPORTUNITIES/SETUPS FOR FRIDAY JANUARY 15, 2010
The patterns identified below should be considered as indicative of eventual price direction in forthcoming trading sessions.
None of these setups should be seen as specifically opportune for the current trading session.
For a more comprehensive listing of price formations detected by our pattern recognition algorithms please visit TradeWithForm
BSX Boston Scientific Corp.
Boston Scientific (BSX) moved up by 3.9% yesterday on above average volume and has emerged from the pink cloud formation suggesting that key overhead resistance has been overcome.
CPSL China Precision Steel Inc.
China Precision Steel (CPSL) has a bullish flag formation and the close yesterday coincided with the 50 day EMA as well as the base of the Ichimoku cloud formation.
EBAY eBay Inc.
The chart for EBAY shows technical weakness as the stock broke below its 50 day EMA on an uptick in volume and has also broken below the cloud formation.
IGT International Game Tech.
International Game Technology (IGT) has the mirror image characteristics to those seen for EBAY and a target of $22 at least now seems feasible.
CTV Commscope Inc
CommScope (CTV) is also revealing technical strength and has broken above a descending trend-line through highs extending back to mid September (not illustrated).
NFLX Netflix Inc.
Having broken below the green cloud formation on substantial volume, Netflix (NFLX) could now be headed for a test of support/resistance at the $48 level.