A round-up of this year's trends so far
I could have written about the obvious important event of the week, the Brexit vote, but I’m pretty sure this is being well covered elsewhere. So as we complete the first six months of the year I thought I would examine this year’s trends.
Many stock markets have trended sideways throughout the first half of 2016. The DAX 30 index managed a recovery from a February low to an April high but, when you look at the trend over the March-June period on the daily chart below, it is clear we have been trading sideways. This week we managed a strong bounce from April/March lows.
The E-mini Dow Jones daily chart below shows a clear sideways trend from mid-March as you can see from the red trendlines. The 100 and 200-day moving averages were trending sideways throughout this period to reinforce this message, but have started to turn higher now, although price is still very much within the trendlines.
Also, bear in mind this short-term trend is forming within a much larger two-year sideways trend from 15500 up to 18100/300.
The E-mini Nasdaq is a similar picture with no clear direction. In fact we have been hovering around an important level where the 200-day moving average meets the 23.6% Fibonacci at 4415/10 but have been unable to break away decisively from this area.
The sideways-moving blue 100-day moving average and the purple 55-day moving average are also working quite well as support and resistance at this stage.
EUR/USD is quite a confusing picture on the daily chart below. Overall there is a very gradual up-trend for the year but it probably does not feel like much of a bull trend to those holding long position. Big pullbacks in February, April and May have ensured that bulls have really had to battle hard and in fact we are only trading around February/March highs as of today, so this is barely a bull trend at all.
Despite all the Brexit mayhem in recent months the GBP/USD has had surprisingly little direction. Volatile all year of course and increasingly so as we approach the vote this week, but throughout June so far we have held late-February/early-April lows and are so far holding May highs. The only clear trend is again sideways since January.
Gold was my big bullish tip for this year and, although we did see a strong recovery in the first three months, this market is also only managing to trend sideways in Q2. Note that we have held the 200-week moving average resistance at 1313 perfectly this week. This has kept prices from a bullish breakout to start a new leg higher. Gold remains trapped as we hover around late-March highs of 1282 this morning, again reinforcing the three-month sideways trend.
WTI crude oil has been more fun for bulls as we stage a V-shaped recovery this year from double bottom lows in January/February. A small correction in the first half of June eased overbought conditions and held important Fibonacci and 55-day moving average support, as you can see in the daily chart below, keeping bulls in control at this stage.
EUR/JPY has been in a strong negative trend for the whole of the first half but note how we have held important 61.8% Fibonacci and trendline support on the weekly chart below. A short-term recovery in the early part of the summer is now looking likely, unless of course the support at 115.40/30 fails to hold.
NZD/USD has staged a decent correction so far this year, but is now being held by the 100-week moving average as you can see in the chart below, risking a resumption of the longer-term negative trend which started in mid 2014.
And finally, USD/JPY has been in a strong negative trend since mid-2015, as we can see in the chart below. The break of important support at 105.60/50 now appears to reinforce the bear trend at this stage.
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