Global Macro Daily Form for March 23, 2011

Inter-market Technical Analysis using algorithmic pattern detection

WEDNESDAY MARCH 23, 2011       11:34:00 GMT

The 240 minute chart for AUD/USD is revealing a succession of slightly lower highs. The $1.0140 level is a crucial hurdle for the Aussie to overcome and I would wait to see whether a failure pattern is registered on an attempt to penetrate this level.

In the next few sessions I would be looking for another test of parity should the pattern of descending highs be confirmed in trading later today.

I would also like to mention that I shall be a keynote speaker at the Traders Expo to be held in London on April 8/9 and if you click here you can register at no charge as my guest!

EUR/USD has performed pretty much in line with expectations expressed here since early March and which I also discussed on CNBC’s European Closing Bell on the same day. I shall be a guest again tomorrow on the show and will reiterate the view that it would not be surprising to see the market sell on the news that the ECB hikes its short term rate by 25 bps at its next meeting in early April.

The daily chart for EUR/CHF reveals a clear downward sloping trend line through highs over the last several weeks and the suggestion is that any move back towards the dotted line indicated - which also coincides with the upper layer of the cloud formation - would provide a good entry opportunity on the short side.

The old joke about whether one wants to hear the good or the bad news first really doesn’t apply to the UK economy. Rather it is a question of whether one wants the bad news first or the really bad news.
Within the last 48 hours the Institute of Fiscal Studies in the UK (IFS) has documented the fact that the median income for families in the UK has declined by more than 1.5% in the last year, the ONS released data showing that the RPI is currently registering a 5.5% annualized rate and the government’s net borrowing requirement for February came in at a much higher than anticipated figure in excess of £11 bn.

While sterling rallied on the news, which cannot be good for the notion that increased exports will supply the engine of growth to replace the hundreds of thousands of public sector jobs that will be disappearing over the next few years, the FTSE is struggling to make it back above the pivotal 5800 level which also marks overhead resistance from the cloud formation. While the FTSE is more of a global index than a reflection of the domestic economy, a development that would raise concern for the bulls would be to see the index drop again below the 200 day EMA (the green line on the chart).

The Sao Paulo Bovespa index looks relatively attractive and I would anticipate a break out above the level indicated on the chart which could see the index retrace a path back towards the 70,000 level.


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

TAN  Global Solar Energy Index ETF  

TAN, an exchange traded fund which provides exposure to the solar energy sector, has a rather notable bullish flag pattern with supporting high volume on the flag pole event and the near term target level of approximately $9 is indicated by the arrow on the chart.

EWK  iShares MSCI Belgium Investable Mkt Idx  

EWK, a sector fund which tracks the MSCI Belgian equity index, shows a rather notable negative MFI divergence.

XOP  SPDR Oil and Gas Exploration  

The comment below comes from the Daily Form commentary of March 17th

XOP, the exchange traded fund for the oil and gas exploration sector, shows a turn around in the MFI values and has one of the more favorable looking formations for the long side.

Going long the fund would have returned more than 5% if purchased on the open on the 17th and sold at yesterday's high, and in view of the tiny doji star registered in yesterday's session I would look to complete the exit in today's session.