Monday, August 15, 2011

Weekly Technical Analysis - August 15-19, 2011

The stock markets closed another negative week but with a sense of optimism. Things looked much worst on the beginning of the previous week and the long shadow of the weekly candlestick might indicate that we saw the bottom. However, the storm has not necessary over yet, as France and Italy are making sounds of another debt crisis.

During the week we explained that extreme crashes are great opportunities for the gap-systems trading, in which you look for a bottom to enter and aim to opened gaps from above. All indices closed the gap that was opened on previous Monday and because the direction is usually changed when gaps are closed, it is possible that we will see declines on the beginning of the week.  Obviously, good news might help the positive momentum to last.


The Euro is still unclear and it seems that investors are waiting for some kind of a trigger to determine the direction. Monday is French & Italian holidays, so the Euro might by numb until Tuesday. Then, there is an important data such as the German GDP and building permits in the US.

The 200 SMA is still a strong supportive area for the Euro, and as long as it remains above that support it will have better chances for rising towards 1.44 and above.  A break-down can take the Euro down to 1.385.


The Australian currency had strong plunges that erased everything it gained since the beginning of the year. No doubt that a correction-up is requested here, though the bearish movement might not be over yet. The RBA Monetary Policy Meeting Minutes on Tuesday morning will put light on the RBA’s intentions regarding the interest rate.

It is hard to point out on an accurate level, but a break-up of the ascending triangle at 1.038-1.04 can pull the buyers back to the game. If it is a strong break-up, the Aussie can reach to 1.06, but much of it depends on Wall Street.


The gold made an amazing movement since the American crisis has begun, and the more the fear spreads among the investors, the more the demand for gold is getting higher. Last week we demonstrated how it was possible to look for potential trade-ideas basing on the intraday charts. Now, after the correction on Thursday-Friday, it is possible to look for a reversal up in the daily chart.

The gold corrected almost 50% of the way it did since it broke up at 1600$, which is a proper level for reversing, in technical analysis terms. The correction might still go on this week, but if the gold crosses above Friday’s pick at 1770$/oz, it might jump again to the fresh climax at 1815 $/oz.