Interesting charts
Comment of the Day

February 27 2014

Commentary by David Fuller

Interesting charts

Price chart action is important because nothing else reflects an up-to-date combination of fundamental expectations, against the background of liquidity and market fashion, determining the weight of supply versus demand for financial instruments.  These factors are a constantly changing and often self-feeding influence, not least because seeing is an important part of believing in market trends. 

David Fuller's view

Ireland’s ISEQ (weekly & daily) is one of Europe’s leading performers since base formation completion in 2012.  It is somewhat overextended relative to its 200-day moving average but has plenty of medium to longer-term upside potential.  Note the approximately equal-sized reactions since the beginning of 2013.  Another is now due but it will take either a clearly bigger setback or break in the progression of higher reaction lows to signal a medium-term corrective phase.

The USA’s S&P 500 (weekly & daily), Nasdaq 100 (weekly & daily) and Nasdaq Composite (weekly & daily) all reached new closing highs today.  This is impressive relative performance.  They are short-term overbought and somewhat overextended, albeit less so than before January’s reaction.  Overbought conditions by consistently trending markets can persist for longer than most people expect.  Watch for eventual clear downward dynamics and possibly a churning trading range to signal the next corrective phase of consequence. 

Palm oil (weekly & daily) surges on drought and forest fire conditions.  Here is another bullish agricultural commodity pattern.  Note the V-bottom with right-hand extension base formation and the first step above the base, as taught at The Chart Seminar, before the run of the last three weeks.  Palm oil is overextended in the short term and has reached the first area of potential overhead resistance, so a temporary pullback would not be surprising.  Nevertheless, it also has medium-term upward scope.  The message from food commodities – we will be paying more for our groceries this year.

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