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An early 2016 look at currencies around the world

January 5, 2016

Here is the latest update from our friend Peter Brandt. I always have time for what Peter says because from the first time we met I understood that he keeps emotion completely out of his investing. He is purely technical so for those who do not like reading up on technicals this is probably not the post for you.

Happy New Year to you all.

The markets have started out with a big bang on the first trading day of 2016. A review of some charts is in order.

I hate to become bearish on days of big weakness and bullish on bulges in the stock indexes, but the global stock indexes are set up in a very ugly way.

The daily graph of theMSCI Emerging Market Index is forming a continuation H&S pattern. Support at the 740 level will be extremely important.

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The major U.S. stock indexes are also attempting to form massive top patterns — a H&S top in NASDAQ, a rectangle in the Dow and a horn top in the S&Ps.

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The FTSE also exhibits a continuation H&S pattern.

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Ditto Singapore.

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The global stock indexes appear poised to make significant tops — but the tops are not yet in and anything can happen in the meanwhile.

Swiss Franc futures have successfully retested the overhead symmetrical triangle, although some additional backing and filling may occur. Factor shorted the overnight rally in CHF.

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USD/SGD has completed a very rare diamond pattern. I continue to emphasize that diamonds are reversal patterns in the vast majority of cases. Continuation diamonds are rare. Factor is long despite this fact, but I will guard my position very carefully.

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I continue to view the possible H&S bottom in NZD/SEK with great interest. Keep in mind that this must be considered as a coincidental pattern — it is hard to imagine a strong global macro reason to be long Kiwi and short Sweden. I will not work this trade in the overnight market for fears of being filled in a vacuum. This chart is as classic as it gets.

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The daily chart of the Dec 2016 Eurodollars (interest rate, not the currency) has completed a H&S top. I have my neckline drawn as shown. The rally today retested the neckline. Factor is short, but I am not giving this trade much room to dig into my pockets. The monthly continuation chart of the Eurodollars can only be described with one word — UGLY. Support exists at 99.17 (83 basis points).

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I have featured and traded the devaluation of the Peso since Oct 2014. The target remains in the low .05000s on the monthly graph. The daily chart appears to be in the right shoulder of a continuation H&S pattern. Further right shoulder development is possible. I would consider a rally toward .05900 to be a selling opportunity.

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There is a possibility that the Aussie Dollar is in a bottoming pattern taking the form of an ascending triangle on the daily and weekly charts. There is no doubt but that the burden is on the bulls, but if the current decline can hold above .7100 a bottom might have a chance.

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Finally, my bearish stance on Soybeans has been continuous and unwaivering for 18 months. I would view a new low in Mar Soybeans as a sign the market will continue to work lower.

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Discussion
4 Comments
    Jan 05, 2016 05:50 AM

    Thanks Cory, awesome interesting charts!

    Jan 05, 2016 05:27 AM

    Will the Dow reach its 1999 top versus commodities? I doubt it.
    http://schrts.co/K6SlAU

    Jan 05, 2016 05:04 AM

    Hi, do we have real h&s topping patterns in US markets or will markets test highs again as this pattern is not valid as stated on your site.

    Jan 05, 2016 05:32 PM

    Bubble meet pin.