issue 6 south asia april 2015 chartspeak · april 2015 gbpusd: monthly rsi forming a w bottom at...

SOUTH ASIA CHARTSPEAK April 2015

ISSUE 6 APRIL 2015


INDEX OF CONTENTS

Security Technical Picture Page USDINR (62.18) As long as prices are under 63, the dollar looks poised to test support in the 61.50 - 61.92 area 3 EURUSD (1.0947) Possible Inverted Head and Shoulders breakout, making the right shoulder low of 1.0713 critical 4

GBPUSD (1.4901) Monthly RSI tracing out a W bottom, but important resistance for cable bulls lies at 1.5275 5

USDJPY (119.55) Possible Head and Shoulders occurring on the daily; bulls will try to protect support at 118.40 6

AUDUSD (0.7618) Recent low at the lower line of an expanding triangle as RSI positively diverges with price 7

USDCAD (1.2470) Market trading in the vicinity of support at 1.2410 under which the immediate bias will turn weak 8

DXY (96.98)

Positive RSI reversal on the daily, but any print of 94 will mean that the decline is extending 9

NIFTY (8659) Failure of the lagging span to break the daily cloud is bullish, but burden of support is rising 10

BSEMDCAP (10869) Market bounces off the daily cloud, with the daily RSI yet again bottoming at bull market support 11

CSEALL (6917) Weekly Head and Shoulders validated and only a break above 7367 will reignite the bullish bias 12

DS30 (1685) Major resistance at the daily cloud at 1785, below which the trend will continue to be down 13

INDIA 10 YR (7.72) Double top confirmed at 7.81; As long as this level holds, the lows at 7.64 will come into play 14

US 10 YR (1.8970) Impulsive decline from the 7.26 high suggests that the path of least resistance is lower 15

GOLD (1213) Reverse Head and Shoulders breakout on the daily points to a measured objective of 1300 16

SILVER (16.94) Immediate resistance is the neckline from the reverse Head and Shoulders on the dailies 17

WTI CRUDE (51.75) Inverted Head and Shoulders forming on the daily with the RSI holding bull market support 18

BRENT (57.62) Bullish Head and Shoulders forming, but corrective structure needs break above the neckline 19

GASOLINE (538) Breakdown from a rising flag in a decline, but the RSI continues to hold onto bull market support 20

HEATING OIL (176.13) Holding above a major support line, but bears have the upper hand as long as 182 is resistance 21

NATURAL GAS (2.659) Prices are at the lower end of a descending triangle, with the RSI holding onto bull market support 22

BURSA PALM OIL (2233) Major support comes in at 2120, but medium term view stays bearish till 2340 is holding price 23

CBOT SOYA OIL (31.40) Daily chart right at cloud resistance and only a break of 33.50 will invalidate the bearish bias 24

LME COPPER (5980) Weekly Shooting Star and failure of the daily RSI to break bear market resistance is bearish 25

BLOOMBERG VISUALS Specials such as World Trends, Relative Rotation Graphs, Scatter Plots -


USDINR: Only a break above 63 will encourage dollar bulls; under 63, a test of 61.50 – 61.92 remains a possibility.

Technical outlook:

Lagging span is finding resistance from the daily cloud, and therefore, over the coming few days, the dollar will need a close above 62.59 to test the next level of resistance at 63. Any close above 63 will then test critical resistance in the 63.75 - 64 area. Immediate support lies at a fibonacci cluster around 61.92. Major support lies at 61.50 but a print of 61.25 is needed to encourage dollar bears. The S-T trendline rises at the rate of 7 paise per week this month (black dashed).

Indicators don't offer a clear "trend" bias here. The daily RSI is caught between bull market support and bear market resistance while the configuration for Slow Stochastics (5,3,3) is that it is looking to turn negative on the daily, with the weekly already negative.

Daily and weekly MACDs are bearish as the MACD line is trading under the signal line on both these intervals.

Wave structure suggests that since the rally from 61.66 is not a 5 wave move, a break of 61.92 will target the 61.50 area bringing major supports into play.


EURUSD: Likely Inverted Head & Shoulders break accompanied by waning bearish momentum on the weekly MACD.

Technical outlook:

Important trendline resistance drawn from the high of 1.1450 on 02/19 has been broken. This line also doubled up as the neckline of an Inverted Head & Shoulders pattern that suggests a measured objective of 1.1690 with major support at the right shoulder low of 1.0713, followed by the critical 1.0463 low.

Immediate resistance is in the 1.1052 - 1.1100 zone, and if the market breaks this level with 1.0864 holding, the next bout of resistance comes in at 1.1240 - 1.1260.

Daily RSI is trading between bull market support and bear market resistance, with slow stochastics having just turned positive. Weekly RSI has registered a triple bottom while weekly stochastics are generating positive divergence.

Daily MACD is bullish while weekly MACD is bearish - however, the negative difference is shrinking.

The rally from 1.0495 is not impulsive, which suggests that the EUR is only experiencing a bounce.


GBPUSD: Monthly RSI forming a W bottom at bull market support, but 1.5275 is a key hurdle for the cable bulls.

Technical outlook:

Break of 1.4994 eliminates a bearish Elliott wave triangle, so this is immediate resistance from current levels. In such a scenario, support will come in at 1.4689, and as long as this holds, the structure suggests that the market will target the 1.5166 high from 03/18. 1.5275 will be key resistance that bulls will have to break.

Critical support on a closing basis lies at 1.4746 - any close under this level with 1.5166 intact on the upside will be suggestive of the weekly downtrend continuing after a pause.

Daily RSI is neutral but the more interesting occurrence is a currently forming W bottom at bull market support on the monthly. Daily stochastics are currently bullish while the weekly configuration has just turned up.

Daily MACD has turned up post a simple positive divergence while the weekly MACD is currently bearish.

No impulsive recovery here either since the rally is not in 5 waves.


USDJPY: Daily RSI testing support in bull market territory, but stochastics are suggesting a weak dollar bias.

Technical outlook:

Daily lagging span will run into an important support zone between 118.80 & 119.10 in April; if the lagging span drops under the daily cloud, it will be indicative of some immediate dollar weakness. Also note the Head & Shoulders (brown) forming on the daily - neckline support lies at 118.40, under this, the measured objective targets 114.70, with more immediate supports at 117 & 116 as long as 120.37 is intact.

The daily base line is at 120.19, and a close above this with 118.40 intact will suggest that the market will try to test resistance at 121.50.

Daily RSI is back at bull market support which has held all the recent corrections in the USD, whereas both the daily and weekly slow stochastics are bearish.

Daily and the weekly MACDs are bearish, with the negative difference increasing on the latter.

Wave structure suggests that the drop is not impulsive, but corrective in nature.


AUDUSD: Expanding triangle forming on the daily, with the RSI exhibiting double positive divergence with price.

Technical outlook:

The early April low of 0.7532 occurred at major monthly support from the Ichimoku chart, so a bounce is warranted; Immediate resistance lies between 0.7740 & 0.7775 with the 0.7532 - 0.7495 area the first level of support. Under 0.7495, the market will target next major support only in the 0.7100 - 0.7150 area.

If the market rallies with 0.7495 intact, resistance above 0.7775 rests in the 0.7930 and 0.7960 area. Print of 0.7960 will move near term support up from 0.7532 to 0.7800.

Daily RSI is exhibiting double positive divergence with the price while the weekly RSI is oversold; Daily stochastics has just turned bullish while the weekly is looking to turn negative.

Daily MACD is positively diverging with price while weekly MACD has just generated a positive crossover at a prior bottoming area.

Expanding triangles are ending moves, but a 5 wave impulse from 0.7532 is needed to turn bullish.


USDCAD: Bullish contracting triangle still valid on the dailies, with 1.2410 key support for the bull case.

Technical outlook:

Current sideways price action is still consistent with a probable bullish contracting triangle being in play, but this will be confirmed only if the price stays above the 1.2410 low (03/26) and breaks 1.2784 on the upside.

Immediate resistance lies at 1.2650. Below 1.2410, supports lie at 1.2350 followed by 1.2292. Any print of 1.2350 will make 1.2500 strong resistance to overcome on the upside.

Note that the daily RSI is now at a reading where the prior two major bottoms had occurred for the dollar, while weekly stochastics is currently bearish with %D < %DS.

Weekly MACD has cut its signal line from above for the first time since turning positive in Aug 2014, which will be particularly bearish once 1.2410 is taken out on the downside.

Wave structure is bullish till 1.2410 holds; if this breaks, the correction will extend but the move down from the high is corrective and not impulsive.


DXY: Corrective pullback in the larger uptrend, but any dip below 94 will warn of a protracted decline.

Technical outlook:

The decline unfolding from 100.39 (quarterly cloud resistance) is not impulsive, and that means this decline is only a corrective dip within the larger upmove. This correction can be deep however.

Immediate resistance lies in the 97.40 - 97.60 area, which if broken, could target 98.70. 95.50 - 96 is first support, with critical support coming into play at 94 (note the positive RSI reversal).

Daily RSI is approaching bull market support, while the weekly RSI is testing bear market resistance from above (this area has served as resistance turned support in the past). Both daily and weekly slow stochastics are negative.

Daily MACD is trading with a negative configuration while the weekly MACD has just recorded the lowest positive difference since July 2014, suggesting weakness.

Wave structure implies the market is pulling back in 3 waves from the high, i.e. is a correction.


NIFTY: Lagging span fails to break underneath the cloud yet again on the dailies, but the burden of support is rising.

Technical outlook:

Last month's low of 8293 took support at exactly the monthly cloud conversion line. On the daily, the lagging span continues to trade above the cloud, whose leading span 2 will rise and start flat-lining beginning the 10th of April till the 15th of May. This level is 8480 - and the lagging span will have to continue to trade above this level till mid-May for the uptrend to continue.

Immediate resistances are at 8695, 8730 and 8855; supports lie at 8480, 8450, 8320 and 8240.

Daily RSI has broken below bull market support, held at the Dec'14 low and is now rallying - getting past bear market resistance will be key. Daily stochastics is bullish whereas weekly is bearish, nearing oversold.

Daily and weekly MACDs are bearish, with the former looking to turn positive.

No impulsive decline from 9119 - but a double zigzag could be forming warning of one more low as long as the high at 8788 holds.


BSEMDCAP: Recent bottom occurs at cloud support, with the daily lagging span continuing to trade above the cloud.

Technical outlook:

Current low of 10209 bottomed right at daily cloud support (10200) which coincided with weekly base line support (10189). The ensuing rally on the daily has broken above both the conversion and the base lines, flipping the S-T trend back to bullish.

There is a strong fibonacci cluster of resistance between 10838, 10918 & 10964. In case these levels break, next resistances lie at 11009 & 11180. Supports are at 10583, 10435 and the crucial 10188 level.

Daily RSI has bottomed exactly at bull market support, which reinforces the view that the trend is still up. Daily stochastics is bullish while weekly stochastics is negative.

The daily MACD has just turned positive while the weekly MACD is negative with the latter posting multiple negative divergences with price, suggesting momentum loss.

Decline is corrective and not impulsive, but the risk of one more low exists until 10965 remains intact on the upside.


CSEALL: Weekly Head and Shoulders validated, so bulls will have to overcome 7367 to flip the trend back to bullish.

Technical outlook:

6750 was support from the 50% retracement of the post triangle (Dec'12 to Feb'14) rally, with last month's low holding above it. However, a Head and Shoulders with a falling neckline has been validated on the weekly chart, with a measured objective of 6290, which will remain valid as long as the right shoulder high of 7367 is intact.

S-T resistance now lies in the 7000 - 7080 area followed by the 61.8% retracement resistance at 7135. Supports are at 6860 - 6750 - 6700. Any close this month below 6700 will suggest more weakness in May.

Daily RSI fell to bear market oversold while the weekly RSI is right at bull market support - holding this zone is the key for the L-T bull. Daily stochastics is positive but weekly stochastics is oversold though negative.

Daily & weekly MACDs are negative but the former is looking to turn up.

Decline not impulsive but a complex correction is in play and can extend.


DS30: Configuration on the daily cloud chart is bearish, with little to encourage bulls till 1785 holds on the upside.

Technical outlook:

Daily trend continues to be lower as both price and the lagging span are underneath the cloud, while prices are just about holding above the cloud on the weeklies.

Resistances are at 1758 - 1785, with a risk of dropping underneath 1658 as long as 1785 is intact on the upside. Immediate supports from current levels are at 1672 - 1658 - 1617. Critical long term support lies at 1582.

Daily RSI has failed to break past bear market resistance after falling to bear market support, with the weekly now arriving at bull market support. Daily stochastics is bearish, whereas weekly stochastics has turned positive.

Daily MACD has turned positive with the recent bounce but the weekly MACD continues to trade negatively.

The recovery since early March looks like a 3 and not a 5, so the odds remain high that as long as 1785 holds, new lows will be seen.


India 10 year: Double top on the daily chart has been confirmed, with the weekly RSI at risk of turning lower again.

Technical outlook:

Daily price action has confirmed a double top, with the recent low falling slightly under the low of the M at 7.73. Close under 7.73 will reinforce the view, with the potential to test 7.65 from current levels.

Immediate resistance is at 7.7620, followed by 7.7720, the recent high at 7.81 and 7.904 (key). Supports come in at 7.6830, 7.6480 and 7.45.

Daily RSI has retreated from bear market resistance while the weekly RSI is currently forming an M after arriving at bull market support from below. Any break below the low of the M will confirm the bearish bias.

Daily stochastics has turned negative, with the weekly also looking to do so.

Daily MACD has turned negative post S-T negative divergence while the weekly MACD is bullish.

The recovery since the 7.64 low is a 3 and not a 5 wave affair, increasing the odds that new lows will be seen as long as 7.81 is holding.


US 10 year: Bullish Wolfe wave configuration forming on the daily, but M-T bias will remain weak until 2.25 intact.

Technical outlook:

The daily chart is tracing out a bullish Wolfe wave, but often the wave 5 thrust breaks out of the 1-3 line so lower levels can be achieved. Notice that the upper falling trendline is still holding back prices, so a break above it along with a close above the cloud at 1.9668 should help the market recover towards resistance at 2.04 & 2.15. Unless 2.25 is printed though, the M-T bias will remain weak.

Immediate support lies in the 1.80 - 1.75 area with major support at 1.60.

Daily RSI is at bull market support but the previous two attempts to break bear market resistance have been unsuccessful. Slow stochastics on the daily & the weekly are bearish.

Daily MACD is bearish while the weekly configuration though bullish is losing momentum.

The fall from 2.2575 is in 5 waves, and that means as long as the 3 wave bounce stays under 2.2575, the market will look to test lower levels.


Spot Gold: Inverted Head and Shoulders forming on the daily, with a break above the neckline targeting the 1300 area.

Technical outlook:

Daily chart shows that a Reverse Head and Shoulders pattern has been validated with a target of 1300. This objective will remain valid till the right shoulder low of 1170 is intact.

Fibonacci resistances lie at 1229 - 1240 - 1260. 1260 is also where price will run into resistance from the weekly cloud.

Immediate support is at 1195 followed by 1178 and 1159.

RSI on the dailies is trading just shy of bear market resistance, going past which should encourage the bull, particularly with slow stochastics also positive. Weekly and monthly RSIs are currently holding bull market support, which suggests the market is bracing for a longer recovery.

Daily MACD is positive & looking to rally past zero, while the weekly MACD also has turned positive.

Wave structure shows that the rally from 1142 is impulsive, so the bias is for another impulse higher.


Spot Silver: Inverted Head and Shoulders on the daily, but the lagging span breaking above the cloud will be key.

Technical outlook:

Similar configuration to that of gold; there is a possible Inverted Head & Shoulders on the dailies that is currently in formation - any break above the neckline shown will be bullish, with immediate resistance coming into play at 17.31 for the lagging span. Notice that the price on the daily is holding up just above the cloud, suggesting that the market is searching for a rally to begin from current levels.

Beyond 17.31, resistances lie at 17.50, 18 and 18.50 while supports come in at 16.45 - 15.54 - 15.30.

Daily RSI is at bear market resistance while on the weeklies, it has just bounced off bull market support. Slow stochastics is bullish both on the dailies and weeklies.

Both MACDs, daily and weekly are currently positive, with the former above zero and the latter under it.

Wave structure is not clear in terms of an impulsive structure, so closing above the near horizontal neckline will be significant.


WTI Crude: Bullish Reverse Head & Shoulders on the daily with a measured objective of 63 if neckline breaks.

Technical outlook:

For the second time, prices broke underneath the long term trendline only to close above it, which suggests that the market is searching for a bottom. This view is reinforced by a potential Inverted Head and Shoulders forming on the daily chart, and a break of the neckline should validate this pattern with a measured objective at 63.

Resistances lie at 52.50 - 54.25 - 57.50 while supports are at 47.05 - 46 and 45.34.

Note that the daily RSI held bull market support despite a new low in price. Any break of bear market resistance by the RSI now will be bullish. Daily and weekly stochastics are currently bullish as %D>%DS.

MACD configuration across both the daily and weekly charts is bullish.

The recent lower low was the thrust out of a contracting triangle, and triangle thrusts are terminal. Also the wave structure has an impulsive look to it, so the rally might extend on the break of the neckline.


Brent Crude: Daily trendline holding for now with the cloud forecast suggesting a tight range before a coming breakout.

Technical outlook:

Brent is testing support from a rising trendline, so if the market is looking for a bottom, it must find one immediately. Also note that leading span 2 on the daily is forecasting support at 54.12 over the next several days, so this level is the key.

There is a S-T Inverted Head and Shoulders occurring on the daily, but this will be validated only on a break of the neckline with the low of the head at 52.50 intact. This is major support, under which the market will then target the 50.60 area. Resistances lie at 57.40 and 58.10.

Daily RSI is trading between bull market support & bear market resistance, while slow stochastics on both the daily and the weekly is looking to turn bullish.

MACD on the dailies is barely positive whereas the weekly MACD is above the signal line.

Wave structure looks more corrective for Brent, so bulls should wait for a clear close above the falling neckline.


Gasoline: Technical configuration on the daily cloud chart is negative, with 560 representing a major hurdle for bulls.

Technical outlook:

The recent recovery to 601 stalled exactly at resistance from leading span 2 on the daily chart with the market dropping swiftly lower.

Friday's break of the rising flag in a downtrend suggests that as long as the 550 - 560 area is intact, the market looks likely to test 490 followed by the major 450-460 zone.

Immediate resistance is at 550 - 560 followed by 600-610. The 550 - 560 area also represents the area where the daily Ichimoku base line is flattening out.

RSI on the daily chart is searching for a bottom at bull market support, while the recovery of the weekly RSI is stalling at that same bull market support. Slow stochastics on both the daily and the weekly is bearish.

The daily MACD is barely bearish while the weekly MACD is bullish.

Structure of the drop since 601 is impulsive, so a 3 wave pullback that ends below 601 should represent an opportunity for the bears.


Heating Oil: Holding above a major daily trendline, but the daily downtrend will be further confirmed below 165.

Technical outlook:

The market is finding support from a rising trendline for now, so any break of the trendline with 182 intact will turn the bias immediately bearish.

Further confirmation of the daily downtrend resuming will arrive on a break of 165 from current levels, which is a major support level.

Immediate resistances lie at 178 followed by the 180 - 185 area while supports come in at 165 - 156 - 151.

Notice that the daily RSI after tumbling to bear market support in Jan'15 could not break bear market resistance despite the rally, which is suggestive of the larger downtrend still being in play. Weekly RSI is trading listlessly at bull market support. Daily Stochastics has just turned up while the weekly is oversold.

Daily & weekly MACDs are positive.

The drop since the high at 192 has an impulsive look, and bears will use any rally to 182 to push prices lower.


Natural Gas: Clear downtrend on the dailies, with a descending triangle formation; major support lies at 2.4450.

Technical outlook:

Prices have traced out a descending triangle on the dailies, with prices holding horizontal support at 2.5670. Cloud configuration is also firmly bearish as prices and the lagging span are trading underneath the daily cloud.

Immediate resistance is at 2.800 while major resistance is at 3.0390, a break above which will confirm the double bottom at 2.5670 and pave the way for a measured objective of 3.5110. Prior support lies at 2.5670, a break below which would bring major supports at 2.4450 and 2.1810 into play.

Daily and weekly RSIs are both holding bull market support, with the daily stochastics bullish and the weekly stochastics bearish.

MACD on the daily is negative, but the weekly MACD is looking to turn positive as it attempts to climb above the signal line.

Wave structure suggests a contracting triangle with a downward breakout bias till 2.80 is intact.


Bursa Palm: Immediate resistance on the cloud chart is at 2253 – 2263, but M-T bias turns bullish only above 2340.

Technical outlook:

The market continues to hold above major support at 2120 and as long as this level is intact, one can expect a bounce that immediately targets the 2250 – 2263 area. Major resistance though lies at 2340, above which the bulls could wrest the initiative from the bears.

Resistances lie at 2263 – 2310 – 2340 and 2380.

Supports lie at 2160 - 2139 - 2120 - 2100.

RSI on the daily is holding above bull market support whereas the weekly RSI is purely range bound between bull market support and bear market resistance. Daily stochastics are positive while the weeklies are bearish.

MACD has just turned positive on the daily whereas the weekly MACD is trading under the signal line.

The drop since the high at 2400 has an impulsive look with the bounce corrective in nature, so 2263 is a level that bears will be watching very closely.


Soyabean Oil: Possibility of a bullish Head and Shoulders on the daily, but only a break of 33.50 will encourage bulls.

Technical outlook:

One of two patterns is occurring on the dailies - the market has largely been sideways to bearish recently which means that either an Inverted Head and Shoulders or a running contracting triangle is forming. This is where 33.50 becomes very important - if this level were to be broken with 29.56 holding, the market will turn bullish (H&S), whereas if 33.50 holds, the market will thrust to a new low.

Resistances are at 32.07 - 33.17 - 33.50 - 34. The falling neckline of the possible Reverse Head & Shoulders will also be resistance till it is broken. Supports are at 30.20 -29.56 and 28.16 (Dec'08 low)

Daily RSI is holding bull market support but has failed to break bear market resistance in the recent past. Daily Stochastics is bullish while weekly is looking to turn bullish.

Daily and weekly MACD have made a bullish hook and are positive.

Preferred wave count is a running bearish contracting triangle in play.


LME Copper: 3 swing recovery from the lows at 5339 suggests that a break under 5621 will terminate the rally.

Technical outlook:

On the weeklies, the recovery from the lows at 5339 to 6239 ended with a textbook shooting star with the subsequent bar closing underneath the shooting star's low of 6045 - this represents an exhaustion of the rally, which was up in 3 waves. Any failure to hold above 5621 from current levels will reinforce the view that this was a bounce and increase the risk of falling to new lows - therefore, 5621 is key support.

Resistances are at 6157 - 6295 - 6535 while supports come in at 5878 - 5765 - 5621.

Daily RSI after falling to bear market support should have been expected to peak at bear market resistance - this is exactly what it did. Weekly stochastics have just turned negative while daily readings are approaching oversold.

Weekly MACD is positive but the daily is looking to turn negative.

Nature of the recovery is corrective and runs the risk of being fully retraced if 5621 were to give way.


World Trends WT<go>

The above WT graph plots the members of the SENSEX and compares their price performance in the current month versus the previous month.

World Trends is a functionality that allows users to track two period (user definable) price performance in a visual format, with price change for the current period on the Y axis and price change for the prior period on the X axis. Consequently, there are 4 quadrants (top right and moving clockwise):

Trending Up:

Up in the prior period and up in the prior period

Reversing Down:

Up in the prior period and down in the current period

Trending Down:

Down in the prior period and down in the current period

Reversing Up:

Down in the prior period and up in the current period


Relative Rotation RRG<go>

Relative Rotation Graphs allow users to visualize the relative performance of a universe of securities against a benchmark. Individual securities are placed in one of 4 quadrants – Leading, Weakening, Lagging and Improving on the basis of two parameters – Relative Strength Ratio (X axis) and Relative Strength Momentum (Y axis).

Leading:

Positive relative strength and relative momentum reading. Outperforming the benchmark.

Weakening:

Positive relative strength but falling momentum. Outperforming the benchmark with reducing speed.

Lagging:

Falling relative strength and momentum. Underperforming the benchmark.

Improving:

Negative relative strength but improving momentum. Tomorrow’s outperformers against the benchmark.


Sectoral Relative Rotation RRG<go>

The BSE sectors’ rotation over the last 4 weeks against the SENSEX throws some interesting insights:

BSE Healthcare has clearly outperformed the SENSEX with increasing momentum (Relative Strength going from left to right, and momentum going from down to up)

Bse Metals and Bse Oil are recording negative relative strength readings, but over the last 4 weeks RS-Ratio has improved, while RS-Momentum has also risen.

Bankex has seen a decline in its RS-Ratio reading, while RS-M has also fallen from a higher value to a lower value. In other words, the sector is underperforming and is experiencing a loss of momentum.

Realty and FMCG indices are currently displaying positive relative strength, but their momentum is falling from a high reading to a low reading.


Scatter Plots GS<go>

Scatter Plots allow users to visualize a group of securities across 4 different metrics – X axis, Y axis, marker color and marker size. All the above parameters are user defined and support data available inside of {FLDS<go>}

In the example to the left, we have used the MSCI India Index which comprises of 10 sectors with each circle representing one sector.

Y axis: Plots the P/E ratio

X axis: Percent change over 1 month

Marker color: Daily RSI reading – brighter the green = more oversold, brighter the red = more overbought.

Marker size: Percent members > 200 day moving average

As an example, MXIN0UT, which is the utilities index has dropped nearly 8% in a month, has a PE closer to 14 with an RSI reading closer to oversold at 30 and has few members which are currently trading above the 200 day simple moving average.


NOTES:

Relative Strength Index, (RSI), is a momentum oscillator that defines the speed of price moves. The calculation behind the RSI makes the indicator

oscillate with a floor at zero and a cap at 100. Although traditionally, readings of 70 and 30 have been considered Overbought and Oversold,

subsequent research has revealed that the RSI behaves differently in Bull and Bear markets. Bull market resistance is defined between 80 and 85

(Red zone), Bull market support falls between 33.33 and 40 (Green zone), Bear market resistance is between 60 and 66.67 (Magenta zone) and

Bear market support lies between 20 and 25 (Blue zone).

Ichimoku cloud (GOC) charts are a Japanese trend following technique that uses five lines to assess the bias in a trend. These are:

Conversion line which is the midpoint of the 9 bar highest high and lowest low (Magenta)

Base line which is the 26 bar highest high and lowest low midpoint (Orange)

Lagging span, which is the current price pushed back 26 periods (Black)

Leading Span 1, which is the sum of the conversion line and base line pushed forward 26 periods (Dark Green)

Leading Span 2, the sum of the highest high and lowest low for the last 52 sessions, pushed forward 26 bars (Red)

Moving Average Convergence Divergence (MACD) is a commonly used indicator which plots the difference between two exponential moving

averages (12 and 26 periods) and an exponential moving average (9 period) of this difference. The former is called the MACD line with the latter

called the Signal line. When MACD > Signal line, the trend is bullish and when the MACD < Signal line, the trend is bearish.

Slow Stochastics (TAS) is an oscillator that compares the current close with the N day high - low range. Raw Stochastics is made up of the %K

(Faster) and the %D lines (Slower), with the reading bullish when %K crosses above %D & bearish when %K falls under %D. Slow Stochastics is

made less volatile by further smoothening the %D line, and uses the %DS and the %DSS lines. For this report, %K = 5, %D = 3 period SMA of %K

and %DS = 3 period SMA of %D and %DSS = 3 period SMA of %DS. Readings over 80 = Overbought and Readings under 20 = Oversold.


For Feedback & Suggestions, write in to:

Akshay Chinchalkar

Technical Analysis and Commodities Specialist

Email: [email protected]

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