Chart Signals: Summer corrections appear to be starting as trends near exhaustion

Late (northern hemisphere) summer is often a time of reassessment and reckoning for markets around the world. Having rallied in recent weeks, stocks look tired and have started to slide.

Late summer is often a time of reassessment and reckoning for markets around the world. Having rallied in recent weeks, stocks look tired and have started to slide. Meanwhile, gold continues its summer consolidation and oil pauses after going on a tear last week.

Asia Pacific indices

Australia 200 continues to pause between 5,485 Fibonacci support and 5,600 round number resistance. RSI back at 50 indicates overbought conditions have eased and underlying uptrend intact but a downturn possible with next support near 5,435 a previous resistance level.

Hong Kong 50 is hanging around the 23,000 round number where its rally appears to be stalling. A head and shoulders top in the RSI suggests upward momentum may be peaking. Initial support in a correction possible near 22,850 then 22,750. 

Japan 225 continues to roll over, falling away from 17,000 and dropping into the 16,430 to 16,530 zone with next potential support near 16,325 then the 50-day average near 16,215. RSI testing 50 where a break would signal a downturn in momentum.

North American and European Indices

US 30 is bouncing around between sliding back toward 18,490 and 18,580 as it continues to trend sideways between 18,475 and 18,675 following a double top. RSI drifting toward 50 indicates momentum downshifting from upward to sideways.

US NDAQ 100 is still sitting around 4,800 with RSI falling away from 70 indicating a consolidation phase underway to work off an overbought RSI with the potential for a correction back toward 4,740 a previous resistance level.

US SPX 500 is sitting on 2,180 in the middle of a 2,170 to 2,190 consolidation range. RSI falling toward 50 indicates upward momentum weakening and a correction back toward the 50-day average near 2,135 possible.

UK 100 has picked up support at a higher level near 6.850 having dropped back from 6,965 over the last few days. RSI indicates overbought conditions have eased but upward momentum continues to weaken. Next support possible near 6,775 in a retrenchment.

Germany 30 has successfully retested 10,500 a recent breakout point as new support keeping its underlying uptrend intact through the current correction. The index has stabilized in the 10,530 to 10,560 area with next resistance possible near 10,620. 

Commodities

Gold is holding steady in the $1,340 to $1,350 area. A symmetrical triangle of higher lows and lower highs, RSI holding 50 and the price holding its 50-day average combine to indicate this as a normal consolidation phase within an ongoing uptrend.

Crude Oil WTI has paused near $48.00 after trading up toward $48.75. RSI approaching overbought just at the price approached $50.00 channel resistance suggests near term upside limited and a correction possible with initial support near $46.85.

FX

US Dollar Index has bounced up off of 94.00 channel support toward 94.50 but it would really need to retake 95.00 to call off the current downtrend. For now it’s having an inside consolidation day.

EURUSD has levelled off to consolidate recent gains near $1.1320 after encountering resistance near $1.1365 with more possible near $1.1400. Initial support possible near $1.1285. 

GBPUSD ran into resistance at $1.3200 on the pair and 50 on the RSI on its first breakout attempt and has dropped back toward $1.3075 in what looks like a normal trading correction above $1.3000 round number support. Initial resistance drops into the $1.3110 to $1.3150 area.

NZDUSD is still testing $0.7300 overhead resistance trading near $0.7270. higher lows in the pair and the RSI indicate continued accumulation and increasing upward momentum. Next potential resistance near $0.7345 then $0.7400.

AUDUSD is starting to roll over, falling away form a recent high near $0.7750 toward $0.7600 with next potential support at the 50-day average near $0.7535 then the $0.7500 round number. RSI testing 50 which could confirm the underlying uptrend or signal a downturn.

USDSGD is bumping up against its 50-day average near $1.3500 and 50 on the RSI where breakouts would signal the start of a recovery trend out of a triple bottom base which has been forming above $1.3340. Next potential resistance near $1.3635.

USDJPY continues to attract support at the 100.00 round number. An emerging positive RSI divergence and potential double bottom suggest the recent downtrend may be over and base building underway. Initial resistance possible near 101.00 and 102.35 with initial support near 99.50. 

GBPJPY is consolidating an initial bounce up off 130.00 and completion of a double bottom, trading near 131.00 with next resistance near 132.40. RSI suggests downward pressure starting to ease.

EURJPY continues to base build in the 112.00 to 114.00 range while RSI creeping toward 50 indicates downward pressure fading and an upturn pending. Next potential resistance near the 115.00 round number on a breakout.

CADJPY is still hanging around 78.00 trying to decide if it’s base building or if this is another pause within an ongoing downtrend. Next resistance near 78.80 then the 50-day average near 79.40 with next support near 77.60.

USDCAD has bounced up off of $1.2820 toward $1.2900 with a run at the $1.3000 round number possible if it can clear that hurdle.