Posts Tagged ‘RSI Index’
The Euro Is Bottoming Out Against the Japanese Yen
If one gives a brief glance at the Charts of major currencies as they are currently being traded against the Euro, there can be observed a certain change, maybe even a trend-reversal in the making. This is especially true when you see the EUR/JPY cross rates in the Chart below:
The June Double Bottom can be clearly seen as a W shaped bottom built in a classically-shaped pattern. What makes the bottom even more commanding is the long and extremely proving negative divergence that I show in blue from the beginning of May to the start of June. The RSI trend, as shown by the blue line below, is in an upwards trend, while the prices are in a definite downwards trend, as shown by the blue line above. This lends credence to my thesis of a W bottom having formed on this Chart.
All of this is good news for the Euro, which had little good news to smile at lately. And, considering the 6-8 possible bottoming patterns I have seen in Charts depicting trading of the major currencies vs. the Euro, this may be indeed the time to invest in what I see is a relatively cheap Euro that in my mind has been bashed enough and is now in turn for better days.
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China Res-Land: The Big Giant Goes Astray
For the last month and a half, the Chinese giant China Res-Land has been on a very promising road upwards. Exactly at the end of the last month, for some obscure reason, she went off her beaten track and broke her uptrend. In 3 days of trading she lost more than 8%. Quickly the M.A.C.D Histogram made a dive under the zero mark, a clear sell signal. The RSI also shows this with its own sell signal after dipping below 50% to selling territory. This is not however a short-sell yet as she has to pass a strong support at 14.0. But, keep watching this lady, and if she breaks 14.0, the short-sell would then be indicated.
This is way the Chart looks:
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Is The FTSE 100 Index Headed Down?
The FTSE 100 is close to providing the major bear signal needed to prompt a sustained break below the 5000.00 level, which in turn would attract a fresh wave of bear pressure to 4365.00, but potentially 4160.00. The index of the U.K.’s blue-chip companies has been on the back foot ever since the collapse off the 2010 high at 5833.73 in mid-April. The age-old adage suggesting stock investors should sell in May and go away has been an accurate one this year, and a series of lower highs and lower lows has been evident since then. However, since the beginning of May, the lower lows have met an unusual and very strong negative divergence in the RSI, a possible foretell of a bullish break that is so unexpected by most Market Analysts and Technicians. For details, see the FTSE 100 daily chart for details.
This is the way the Chart looks:
This setback can be broken down into impulsive and subdividing downwards moving waves, where the May 7 reaction low at 5045.30 marks the first impulsive wave low, followed by the corrective rally to 5435.99. The subsequent impulsive move downwards then starts to subdivide after setting a lower low at 4898.49 on May 25, before correcting higher to 5262.50 last week.
Looking closely at that June 3 reaction high at 5262.50 reveals it to be a bull failure/bull trap high, and dominant bears are looking to force a break below this week’s low at 4984.66 to expose the 4898.49 reaction low. A break through this 4898.49 low would provide the strong sell signal, as a subdivided third wave decline is usually a very powerful destructive wave, initially exposing the 4647.00 area where an equality target and the 50% Fibonacci Retracement levels of the 3460.71/5833.73 rally coincide.
However, wave extensions larger than 1:1 are usually associated with this type of decline, exposing congested support between 4365.00 and 4392.82, and possibly the 4160.00 target, being a 1.618 extension target projected off the 5435.99 lower reaction high. Meeting this 4160.00 target would represent a decline of approximately 18% from current levels.
To question the intensity of the prospective bearish outlook, a break above the 5262.50 bull failure high is needed. However, to completely negate the bear threat would require a break above the 5435.99 high. As I mentioned above, the strength of the break possibility is heightened by the RSI divergence and other important technical factors. If one looks at the world picture, he sees bottoming and retesting supports all over. The turnaround of the World Markets may be coming and there is ample reason to believe in this.