Technical Analysis: Weekly Market Strategy
This is the next installment of a weekly, exclusive, series of technical analyses that DeFinity is proud to share with its community.
The analysis is completed by renowned, experienced financial analyst and successful global podcaster, Paul Rodriguez.
Paul Rodriguez lectured at the City University in London on the subject of Technical Analysis whilst working as an award winning analyst at NatWest Global Financial Markets (Now RBS) in the 1990’s, pioneering and promoting the education and use of technical analysis to City professionals and private investors. Paul set up Think Trading to continue that education and consultancy having appeared frequently on financial news channels seeking his views. He set up the State of The Markets Podcast with fund Manager Tim Price three years ago, which consistently tops the top 50 UK business podcasts and has a global audience. He provides bespoke research and consultancy to market-leading firms.
SUMMARY:
We highlighted the Fed’s move as the likely confirmation event of a change in the US dollar trend. Evidence of a top came in before the announcement, but the muted response from the DXY supports our view that the trend has been saturated and the market is looking at a more doveish interest rate profile from September. Risk-on trades such as the S&P500 were discussed last week together with base and precious metals entering what we anticipated as ‘good risk/reward’ zones. US 10-year yields continue to project lower, but oil may be ready to stage another bull leg very soon. This is a fly-in the ointment for a complete reversal of the US dollar trend.
Despite this, the balance of risks favours a top and we continue to anticipate risk-on trades to strengthen over the coming weeks. This includes crypto assets which have reacted positively to a risk-on environment. It is important that the markets build on these gains and we discuss the levels to watch in this week’s document.
DXY
We maintain the view that evidence points to a top in the US dollar. The reaction from Wednesday’s rate rise was as expected and we look for a further decline in 10-year yields along with a move towards (and below) key support is at 105.82. This could still be an interim correction, but for the moment we are calling this the top. A break of 104.58 (medium term m.a.) and trendline would solidify this view.
US 10 Year Yield
A completion of a major reversal pattern (Head and Shoulders) which we have been tracking for some weeks keeps our focus on the 2.25% targets. Interim support is at 2.49%. Only a reversal through 3.24% would negate the bearish view. We would expect to see an extended move lower this week, stalling being the first sign of failure in a trend change.
Gold
Last week we highlighted that gold was close to major support and a reversal could be at hand. A minor head and shoulders reversal pattern has formed, giving weight to the prospects that a major low is in. A sharp ‘impulse’ to move higher is required from here and we look for 1800 as a potential short-term objective. Long-term potential will be discussed in due course.
SP500
Last week we discussed the potential for a test (and break) of the intermediate downward trendline. Given that short-term traders from last week may take profits ahead of the weekend, it may take a few weeks to clear this resistance. However, we now look for an extension towards the 4114 key resistance and will maintain a bullish view whilst 3945 is not breached from a closing basis.
Ethereum
The prospects of a major low have increased, but there is still major resistance at 1720 and 2144 to cross. Despite this, we maintain a bullish view whilst support at 1280 is intact and look for support from the fledgling bullish trendline highlighted above.
Bitcoin Daily
Whilst further evidence of a major low is needed 28,547, we maintain short-term objectives at 28,547. The medium-term m.a. has capped the rallies so far, consequently, any break beyond would raise the bullish probability. Key trendline resistance stands in the way of our bullish targets so a further consolidation can not be ruled out, but we can annotate a primary upward trendline and will hold a bullish view whilst above it.
Bitcoin Weekly
Building on the current gains and accelerating higher this week would raise the prospects we have seen a major low. BTC is trying to hold over the 200-week m.a. and putting some distance between this metric will be key over the coming weeks. We maintain a bullish view whilst above 19666.
This report is superficial in nature and may contain errors. No warranty is given to the accuracy of the data or text and any reader must understand that it should not in anyway form part of an investment process — that is reserved for that individual/business and an investment professional. No positions should be taken, exited or otherwise considered on the basis of this research. This is a condition of reading this document. The main function is of education into how different chart patterns might indicate a future trend (or lack thereof) and not for the purposes of speculation or investment.
Transcribed to Medium
Original Technical Analysis provided by
Paul Rodriguez — ThinkTrading.com
DeFinity Crypto Market Anomaly Detection!
DeFinity token holders can now gain free & exclusive access to deep learning AI-powered risk management insights ordinarily reserved for top tier institutional investors, via the clarity app.
https://clarity.definity.network
Stay up to date with DeFinity:
· Telegram Official Community — https://t.me/DeFinity_Community
· Telegram Announcements — https://t.me/DeFinity_ANN
· Medium — https://medium.com/definity-network
· LinkedIn — https://www.linkedin.com/company/definitynetwork
· Twitter — https://twitter.com/definitynetwork
