By Ric Spooner, Chief Market Analyst, CMC Markets Australia It looks like another volatile week and with some solid moves so far this morning in the Asian time zone, I’d review of some of the major trading charts. This blog takes a look at EURUSD; AUDUSD; Germany 30 and the Australia 200 index Australia 200 The hourly chart looks of immediate interest in light of last week’s price action when the initial bearish move on weekend news was followed by a significant mid-week rally. Price has bounced neatly off the 78.6% Fibonacci retracement and an AB=CD level as I’ve drawn on the chart below. This morning’s rally in the Chinese stock market has no doubt helped here. The resistance formed by the low at “B” and the bottom of the gap formed by this morning’s high at 5490 might now be important. If it’s broken we could get a rally to perhaps fill the gap or beyond. On the other hand, failure below that level will be a sign of weakness. Time will tell However, at this stage the bigger picture trend remains down, with daily candles making lower highs and lower lows. A move back below the 78.6% retracement on the hourly chart from here would be seen as negative. A move below the recent low at 5382 would be even more negative. If this happens, then levels to have on the watch list as possible turning points could firstly be 5285. This is the 78.6% retracement of the October / March rally and also a possible AB=CD level as drawn on the chart. Another possibility is around 5160/5200. Here AB x 1.27 = CD (1.27 is a commonly used Fibonacci projection level). There might also be a trend line base formed around this zone as shown by the blue line on the daily chart below Euro The big picture weekly chart is trending down with recent candles making lower highs and lower lows. The slow stochastic in the box below the chart is also trending down with the black stochastic below its signal line However, the rally up to “A” has so far seen only a relatively shallow correction in the big picture. It stopped at the 38.2% retracement of the last major decline. Similarly the slow stochastic has not yet got up into the overbought zone. So right at the moment, the market appears to be trending in the direction of the big picture weekly downtrend. However, given the relatively shallow big picture correction so far, I am open to the possibility that the current move lower might just be a correction of the rally up to “A”. This possibility could come into play if the market looks like forming a base around the 78.6% retracement level at 1.0675. At this level AB x 1.27 = CD which lends further significance as a possible support zone. The level just under the previous low at 1.0820 is also worth keeping an eye on. Here AB=CD. Aussie Dollar I’ve posted the daily chart here. Like the Euro, Aussie is trending downward, so for trend followers it looks like a chart to be watching for opportunities. One area of interest might be the resistance formed by previous lows around .76. If we do return to that level over the next week or so then the 10 and 20 day moving averages are also likely to have arrived at that resistance zone, adding to its significance. Looking at possible levels of significance to the downside, the 73c area is the first on my radar. As things currently stand this could confirm a downward sloping support line as well as an AB=CD pattern (i.e. the CD swing on the chart below will be 100% of the AB swing) Germany 30 Again, the daily trend is down. The slow stochastic is likely to be heading down again but not yet over sold when the market opens this afternoon. However, the blue trend channel looks like it might be a useful feature of this chart. For potential buyers it could provide support at what might be a pretty interesting level. The area around 10,500 would see the channel support coincide with the 200 day moving average, the 61.8% retracement and a neat AB=CD pattern. However if price shows no signs of stopping at that support and just plummets straight through it, then areas of interest at lower levels include AB x 1.27 =CD at around 10,200 and the 78.6% Fibonacci retracement around 10,000 The bullish breakout scenario would be for price to form a base above the channel support and follow through with a break above the resistance
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