Financial Markets Trend Report #11

Global Financial Markets trend analysis – issue 11, October edition. Based on market data from Oct 11-14, 2019. Focusing on monthly and weekly timeframes. Long term buy and sell signals based on plain technical trend analysis. Global stocks, bonds, forex, crypto, commodities. Subjective, for information only, no investment advice.

How it works:

Depending on your investment time horizon, monthly, weekly or daily analysis might be useful. For example, if you focus on medium-term investments from a few months to a year, you might prioritize weekly charts and signals and use the bigger monthly picture for reference or confirmation. Daily charts can add value in timing entries and exits in this case. The technical picture may vary between timeframes and present itself either conflicting or confirming.

definitions:

uptrend = price > 200 day/40 week/10 month moving average. Uptrend stronger, if supported by rising moving averages and RSI.

downtrend = price < 200 day moving average. Downtrend stronger, if moving averages and RSI falling.

Weekly Trend Buy signal = 4 week exponential moving average (EMA 4) crosses 40 week/200 day moving average (SMA 200) from below.

Weekly Trend Sell signal = 4 week exponential moving average (EMA 4) crosses 40 week/200 day moving average (SMA 200) from above.

Monthly Trend Buy Signal: price climbing above 10 month/200 day moving average (SMA 200).

Monthly Trend Sell Signal: price falling below 10 month moving average.

price data: for trend changes as well as buy and sell signals, closing prices are considered (on each timeframe).

Click on charts to enlarge.

I) Global stock markets

US – S&P500 – SPX

S&P 500 long-term view – monthly chart

SPX monthly chart – Oct 11, 2019.

status: uptrend with monthly trend buy signal active since June 2019.
outlook: SPX is contained in an up-channel since mid-2009, which would lead to around 3600 on the upside and approx. 2700 on the downside. The last test occured on the downside in December 2018 at 2450. For now, the bearish divergence of RSI with price is ongoing. Since 2018, every new high in price was accompanied by lower RSI levels, signalling underlying technical weakness.

S&P 500 intermediate-term view – weekly chart

SPX weekly chart – Oct 11, 2019.

status: uptrend with weekly trend buy signal from February 2019 still active.
outlook: price broke the 2019 uptrendline but bounced on the 40 week/200day-moving average with RSI showing continued bearish divergence.

US – Russell 2000 – RUT

Russell 2000 long-term view – monthly chart

Russell 2000 monthly chart – Oct 11, 2019.

status: downtrend with monthly trend sell signal active since August 31, 2019.
outlook: price slightly below its 10 month moving average and close to its uptrendline from 2009, at the lower end of a big upward channel. If it shall remain intact, 1400 should not be broken to the downside. On the upside, 2000 would be a logical target for a new all time high and a test of the upper channel line. From this perspective reward/risk for Longs in RUT seems not too bad.

Russell 2000 intermediate term-view weekly chart

RUT weekly chart – Oct 11, 2019.

status: downtrend with weekly trend sell signal active since Sep 30, 2019.
outlook: 2019 trendline broken to the downside with price trading slightly below its 40 week/200 day moving average. 1600 is to break for Bulls on a weekly close, whereas 1400 seems to be the line in the sand to the downside.

Europe – Eurostoxx50 – ESTX50

Eurostoxx 50 long-term view – monthly chart

Eurostoxx 50 monthly chart – Oct 11, 2019.

status: uptrend with monthly buy signal active since March 2019.
outlook: A monthly close above the 2009 downtrendline would be important for Bulls. The 10 month moving average has been valid support in recent months.

Eurostoxx 50 intermediate term view – weekly chart

Eurostoxx 50 weekly chart - October 14, 2019.
Eurostoxx 50 weekly chart – October 14, 2019.

status: uptrend with weekly buy signal from March 11, 2019 still active.

Germany – DAX

DAX long-term view – monthly chart

DAX monthly chart – Oct 11, 2019.

status: uptrend with monthly trend buy signal active since April 2019.
outlook: 10 month moving average acting as support with price trying to break above the 2017/2018 downtrendline. DAX has broken its multi-year uptrend from 2009 in October 2018 – a retest of this important trendline from below would more or less coincide with a retest of the All-time-highs around 13500.

DAX intermediate term view – weekly chart

DAX weekly chart – Oct 11, 2019.

status: uptrend with weekly trend buy signal from April 1, 2019 still active.
outlook: RSI lagging behind price for a smal divergence, no breakout above the downtrendline yet. 11700-11900 is a strong support zone which should hold for the bullish case to remain valid.

Emerging Markets – EEM

EEM long-term view – monthly chart

EEM monthly chart – Oct 11, 2019.

status: downtrend with monthly trend sell signal active since August 2019.
status: market trying to stay above its long-term downtrend-line (part of a massive ascending triangle that formed since 2008), right below the 200 day moving average. Holding the uptrend-line in RSI may be key to realize a lasting breakout. The 35-36 area is crucial on the downside (2009 uptrendline).

EEM intermediate term view – weekly chart

EEM weekly chart – Oct 11, 2019.

status: downtrend with weekly trend sell signal active since Aug 5, 2019.
outlook: price is right at resistance below the 40 week average. A break above 43 would be very bullish. If we reverse to the downside, 35-36 would be a logical initial target area for a retest of the long-term uptrendline from 2009 (see monthly chart above).

II) Bonds

Long-term 20+ years US treasury bonds – TLT

TLT monthly chart

TLT monthly chart – Oct 11, 2019.

status: strong uptrend with monthly trend buy signal from December 2018 still active.
outlook: RSI in overbought zone increasing the likelyhood for a deeper correction of more than 15% like in 2009 and 2015, which may already be on the way. The upper trendline from 2009 indicates a little more upside into 150-160 though.

TLT weekly chart

TLT weekly chart – Oct 11, 2019.

status: uptrend with weekly buy signal active since December 24, 2018.
outlook: RSI broke its uptrendline from 2018, so a retest of the 130-135 area, where 40 week moving average and 2018 uptrendline meet, seems likely.

US intermediate term bonds 7-10yr IEF

IEF monthly chart

IEF monthly chart – Oct 11, 2019.

status: uptrend with monthly trend buy signal active since December 2018.

IEF weekly chart

IEF weekly chart – Oct 11, 2019.

status: strong uptrend with weekly trend buy signal active since December 3, 2018.
outlook: RSI already came down from overbought zone significantly with price holding its steep uptrendline so far.

Eurozone Bonds – VETY EUR GOV ETF

VETY weekly chart

VETY Eurozone Government Bonds weekly chart – Oct 11, 2019.

status: uptrend with active trend buy signal since week of December 17, 2018.
outlook: RSI in correction mode leading price towards a retest of the 2018 uptrendline and potentially its 40 week moving average.

Emerging Markets Bonds – VDET ETF

VDET weekly chart

VDET weekly chart – Oct 11, 2019.

status: uptrend with trend buy signal active since week of Jan 14, 2019.
status: price has broken its steep 2018/2019 uptrendline (dotted now) along with RSI. A retest of the 40 week moving average could be next.

III) Metals & Commodities

Gold

Gold monthly chart

Gold monthly chart – Oct 11, 2019.

status: uptrend with monthly trend buy signal active since end of December 2018.
outlook: Gold broke out of its multi-year downtrend at the end of 2017 and has been rising since mid 2018. Slightly overbought right now but not overextended. The 10 month moving average currently at 1382 should hold for a continued rise.

Gold weekly chart

Gold weekly chart – Oct 11, 2019.

status: strong uptrend with weekly trend buy signal active since week of December 24, 2019.
outlook: RSI heading down from overbought levels.

Copper

Copper long-term view – monthly chart

Copper monthly chart – Oct 11, 2019.

status: downtrend with monthly trend sell signal active since May 2019.
outlook: Copper is below the 10 month moving average, nearing its long-term uptrend-line from 2009. A break of the trendline at 2.40-2.45 would be very bearish. For Bulls to gain control, a breakout of the giant triangle and above 3.10 would be needed. The copper price (“Doctor Copper“) still seems to be a key indicator for Equities, so interesting to watch how it reacts in this decision zone.

Copper intermediate-term view – weekly chart

Copper weekly chart – Oct 11, 2019.

status: downtrend with weekly trend sell signal active since May 24, 2019.
outlook: As seen on the monthly chart, Copper tries to bounce from its long-term uptrend-line. On the other hand, we are clearly in a downtrend since mid-2018 and price has broken the 2016 uptrend-line, which is very significant due to multiple successful tests in the last three years. The short-term bullishness could be seen as a retest of this trendline from below. It coincides with the 200 day/40 week-moving average above, so there is quite some resistance for the Bulls to overcome.

Crude Oil – WTI

Crude Oil monthly chart

Crude Oil monthly chart – Oct 14, 2019.

status: downtrend with monthly sell signal active since August 31, 2019.
outlook: Crude Oil hit a low in early 2016, rising from 25 USD to over 70 USD. However, we are seeing lower highs since the peak in 2008. Price is now approaching an uptrendline from 2016 – $50-51 should hold if Bulls want to get in control again and aim for another full retest of the upper channel line at around $80. Below $42-43 the low $20s might be open for a test of the lower boundary.

Crude Oil weekly chart

Crude Oil weekly chart – Oct 14, 2019.

status: downtrend with weekly trend sell signal active since Aug 2, 2019.
outlook: RSI broke its uptrend slightly and price below 40 week moving average. $50-51 area should hold for a bullish scenario to play out in the coming weeks.

IV) FX Markets

Euro/US-Dollar – EURUSD

EURUSD monthly chart

EURUSD monthly chart – Oct 14, 2019.

status: downtrend with monthly trend sell signal active since July 2019.
outlook: Multi-year downtrend with lower highs and lower lows marked by a big downtrend-channel. Currently around 1.20 and 1.00 are logical targets up and down, with the latter being more likely as long as price stays below its 10 month moving average.

EURUSD weekly chart

EURUSD weekly chart – Oct 14, 2019.

status: downtrend with weekly trend sell signal active since May 18, 2018.
outlook: lower trendline of the 2018 falling wedge tested and bounce. A break above the 40 week average would come along with a bullish breakout of the wedge.

British Pound/US-Dollar – GBPUSD

GBPUSD monthly chart

GBPUSD monthly chart – Oct 14, 2019.

status: downtrend with monthly trend sell signal active since May 2019.
outlook: The big falling wedge since 2008 marks the upper and lower boundaries in the big picture. Below its 10 month moving average, GBPUSD could be headed for 1.14 and below. However, the downtrendline from 2014 has been broken to the upside and still acts as support in the 1.19-1.20 area. If it holds and Bulls can recapture the 10 month average currently around 1.27 and falling, 1.40-1.45 is the bigger target on the upside.

GBPUSD weekly chart

GBPUSD weekly chart – Oct 14, 2019.

status: downtrend with weekly trend sell signal active since May 17, 2019.
outlook: Bulls are close to catching the 200 day moving average and break out above the 2018 downtrendline. On the downside, 1.19-1.20 is the line in the sand and upon a break 1.14 and lower is open.

V) Crypto Markets

Bitcoin/US-Dollar – BTCUSD (Bitstamp)

BTCUSD weekly chart

BTCUSD weekly chart – Oct 14, 2019.

status: uptrend with weekly buy signal active since May 3, 2019.
outlook: Price is very close to the 40 week moving average (currently around 7400 and rising), which should for the bullish case to remain valid.

Ethereum/US-Dollar – ETHUSD (Bitfinex)

ETHUSD weekly chart

ETHUSD weekly chart – Oct 14, 2019.

status: downtrend with weekly sell signal active since September 23, 2019.
outlook: price has dropped below the 40 week moving average end of September but is still sticking around. Bulls would need to recapture 200 and ultimately overcome the downtrendline around 240-250 in order to start another big run to the upside.

Ripple/US-Dollar – XRPUSD (Bitstamp)

XRPUSD weekly chart

XRPUSD weekly chart – Oct 14, 2019.

status: downtrend with weekly sell signal active since Jul 19, 2019.
outlook: The important 0.22-0.23 level held so far, with the 40 week average currently at 0.32 representing the next upside target. A new uptrend with price trading above the 40 week average together with overcoming the 2018 downtrendline around 0.40-0.45 would be very bullish long-term.

XRPBTC weekly chart

XRPBTC weekly chart – Oct 14, 2019.

status: downtrend with weekly sell signal active since April 5, 2019.
outlook: Very interesting chart as XRPBTC tested its long-term uptrendline recently and started to advance again, breaking the 2019 downtrendline but still well below its 40 week average. If you are bullish on XRP long-term, this is a logical buy spot, as long trades have a great reward/risk-ratio here, provided the upper channel-line is the long-term target.

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