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Chart Signals: Divergences and candlesticks suggest momentum changing

The last several weeks have been dominated by USD and US stocks soaring while JPY, gold and other currencies have been crushed. While many markets  became overextend they have remained overbought and oversold. Now,  however, divergences between prices and momentum indicators have emerged in many markets. In addition candles like dojis and shooting stars suggest that the tide of momentum may be turning. JPY and gold appear to be rebounding while US indices look exhausted. NZD and AUD broke down Friday it remains to be seen if these were washouts or the start of new downlegs.  

Asia Pacific indices

Australia 200 failed to clear channel resistance near 5,600 and has started to roll over sliding toward 5,530 with next potential support near 5,500 then the 50-day average near 5,400. RSI falling toward 50 confirms upward momentum fading. 

Hong Kong 50 is breaking down falling fellow 22,000 which may become new resistance toward 21,900 before bouncing back near 21,960. Next potential support at the 200-day average near 21,760. RSI confirms downward pressure increasing. 

Japan 225 is coming off an inside day that saw it consolidate near 19,330 within a 19,130 to 19,540 range. RSI overbought and rolling over indicates uptrend overextended and vulnerable to a correction back toward 19,000. 

North American and European Indices

US 30 tried to stage a rebound but failed and remains mired in the 19,840 to 19,900 area short of 19,940 and 20,000 resistance. RSI remains really overbought indicating high potential for a correction with initial support near 19,780 then 19,620. 

US SPX 500 is consolidating recent gains between 2,255 and 2,268 with more resistance possible near 2,278 and next support possible near 2,250 then 2,244 the low end of the current trading range. 

US NDAQ 100 is still stuck between its 4,900 breakout point and the 5,000 round number trading between 4,910 and 4,960. RSI still increasing indicates this as a pause within a larger uptrend. 

UK 100 continues to climb retaking the 7,000 round number and advancing on 7,040 before falling back for a retest with support rising toward 6,990 from 6,925. Rising RSI confirms upward momentum increasing. Next potential resistance near 7,110 on trend. 

Germany 30 tested its highest level in over a year, testing 11,445 before sliding back into the 11,390 to 11,410 area above 11,350 prior support. Next potential resistance near 11,500 then 11,600. Overbought RSI suggests potential for a pause. 


Gold finally has found some support near $1,120 and has bounced back up into the $1,132 to $1,136 area with next potential rebound resistance near $1,145. RSI remains oversold but it has been for quite a while now. 

Crude Oil WTI is on the rebound, climbing from near $50.40 toward $51.80 with support rising toward $50.90. WTI appears to be settling into a $49.00 to $53.00 trading range with higher lows indicating underlying accumulation remains intact through trading swings


US Dollar Index peaked near 103.60 and has dropped back under 103.00 as it corrects and consolidates recent advances. A negative RSI divergence indicates upward momentum peaked and has started to fade. Next downside support possible near 102.50 then 102.00. 

EURUSD found support near $1.0360 and has staged a relief rally up into the $1.0430 to $1.0470 area. It needs to retake $1.0500 to signal an upturn but a positive RSI divergence and head and shoulders bottom in the RSI suggest momentum turning.  

GBPUSD held its 50-day average near $1.2400 and channel support near $1.2355 and has bounced back up toward $1.2475. On a rebound initial resistance may appear near $1.2500 then $1.2555 its recent breakdown point.  

NZDUSD is breaking to the downside taking out $0.7000 to complete a head and shoulders top with falling RSI confirming downward pressure increasing. Next potential support tests near $0.6900 then $0.6840. 

AUDUSD has broken down below $0.7300 signalling the start of a new downleg with next potential closer to $0.7200. A potential positive RSI divergence suggests downward pressure may have peaked. 

USDSGD touched $1.4500 a new high on trend but resistance held there and the pair has dropped back toward $1.4460 with next potential support near $1.4360 then $1.4220. A negative divergence in the RSI indicates upward momentum weakening. 

USDJPY has paused just below 118.60 trading between 117.90 and 118.40. RSI remains extremely overbought while a negative divergence suggests the recent uptrend may be peaking. Initial correction support possible near 116.90 then 116.00 and 115.00. 

GBPJPY has paused for a rest near 146.40 a Fibonacci level having encountered resistance near 148.35. A shooting star last Thursday and a negative RSI divergence indicate recent uptrend exhausted and a correction starting that could retest the 200-day average near 142.75.  

EURJPY met resistance near 124.00 with more possible at the 125.00 round number and has dropped back toward 123.00 with initial support at the 50-day average near 122.00. A negative divergence and overbought RSI indicate uptrend overdone and a correction possible. 

USDCAD was unable to hold above $1.3400 and has dropped back into the $1.3340 to $1.3380 zone above the 50-day average after peaking near $1.3420 with more resistance possible near $1.3500. Next potential support in a pullback near $1.3300 a Fibonacci level.

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