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Today's Highlights - 06-21-11
Today's Highlights - 06-21-11
Technical Developments in the Foreign Exchange and Asset Markets 21 June 2011 Tom Fitzpatrick (1-212-723-1344) Shyam Devani (44-207-986-3453) Alex Good (1-212- 723-3469) CitiFX.Technicals@citi.com
Todays Highlights
The Shanghai Composite went through 2661 supports suggesting lower levels in Chinese equities The Dow Transportation Index has been holding its long term trend channel on a daily close basis for the last 5 days. A push through the 55 day at 5330 would question our short term bearish view. The S&P 500s 200 day moving average has held at 1258 European Bank Stocks held important supports in the 150-152 area EURUSD has broken out of declining highs. The last time it did this it tested the 55 day moving average (now 1.4410) and then moved lower GBPUSD has held the neckline of its head and shoulders at 1.6110 that targets 1.53 AUDJPY is hovering above pivotal 84.55 supports EURAUD has bounced off 2 76.4% retracements with a neckline at 1.3850 USDBRL paused at its long term base. A push through downward sloping tops near 1.6150 would open the way higher to 1.6450 Crude posted a morning star candle, reversing momentum at a number of key supports. Last year we chopped around the 200 day moving average before falling again Gold looks poised to push through its triangular consolidation and move to the 1575 highs
Chart of the Day: Shanghai Composite Index (China)
As we pointed out in our note yesterday the Shanghai Composite went through 2661 supports suggesting lower levels in Chinese equities The first good support is the channel base at 2550. An acceleration through there opens the way to 2319 which is another 76.4% neckline which if broken could see the SHCOMP back to the 1716 lows last seen in 2008
CitiFX Technicals
21 June 2011
The Dow Transportation Index has been holding its long term trend channel on a daily close basis for the last 5 days. This support would be breached if we see a close below 5100. Given our focus on this Index as a leading indicator for asset markets in general, a close beneath the 5000 area would be a bearish signal opening the way to the May 2010 4800 pivot level Continued bullish price action especially would question our short term bearish view given the hold of supports S&P 500
The S&P 500 Index will look very vulnerable if it breaks through 1250 supports that correspond with the March lows and the upward sloping trend channel We held the 200 day moving average on 16 June, at 1258. It appears that the price action is consolidating in front of supports similar to the Dow Jones Transportation Index
CitiFX Technicals
European Banking Stocks
21 June 2011
The European Banking Index has held repeated supports in the 150-152 area and look poised for a bounce given the hold EURUSD
The 76.4% pullback on Euro has continued to hold and weve broken the 55 day moving average which now serves as resistance at 1.4410 The Euro has broken out of its pattern of recent declining highs. The last time it did this, it tested the 55 day moving average and then fell sharply again 1.3970 remains the key level to watch on the downside, a level that we still feel will ultimately give way.
CitiFX Technicals
GBPUSD
21 June 2011
GBPUSD is testing the neckline of a head and shoulders pattern at 1.6110. A break below here would target the 1.53 area. The hold of supports could argue a short term bounce AUDJPY
84.55: Support
AUDJPY is testing the 84.40 support area that was pivotal in both February,May and June. A breach of this level should open the way to at least 83.41, the 200 day moving average A push below 83.41 would see AUDJPY without any obvious supports until the 61.8% retracement of its move at 80.44
CitiFX Technicals
EURAUD
21 June 2011
Double 76.4%
EURAUD has bounced of 2 76.4% retracements suggesting a potential push higher especially if we see a move through 1.3850 USDBRL
USDBRL paused at its long term base at 1.5540 and has since headed higher off a 76.4% retracement at the lows. A push through the downward sloping tops near 1.6150 would open the way for a move to horizontal resistance (off which the 76.4% retracement was formed) at 1.6450.
CitiFX Technicals
Crude Oil
21 June 2011
Crude held an important support near its head and shoulders neckline, the 200 day moving average and the base of a downward sloping trend channel with a top near $100 A push through $92.58 would argue for a big push lower- the head and shoulders targets $75 Last year when oil fell we traded in a choppy fashion around the 200 day moving average and then went lower again Crude Oil (2010 Chart)
Brief consolidation around 200 DMA in May 2010 before big push lower
In 2010 Crude made a head and shoulders at the high, dropped, and then consolidated near the 200 day moving average before making its next leg lower. Crude is currently consolidating near the 200 day moving average
CitiFX Technicals
Gold
21 June 2011
Gold looks poised to push through its triangular consolidation that has been forming for several months. A close through $1545 will open the way to the highs at $1575
CitiFX Technicals
21 June 2011
PLEASE NOTE THAT: The tables and information specified below under Short Term Conviction views, Long Term Conviction views, CitiFX Technicals Portfolio, Strategic Portfolio, and Tactical Portfolio ARE NOT INTENDED AS, AND DO NOT CONSTITUTE, AN OFFER, RECOMMENDATION, ADVICE OR A SOLICITATION TO BUY, SELL OR TO ENGAGE IN ANY STRATEGY, WHATSOEVER, IN ANY FOREIGN CURRENCY CONRACT OR ANY INSTRUMENT OR INVESTMENT. EACH DECISION BY YOU TO ENTER INTO ANY FOREIGN CURRENCY CONRACT OR TO INVEST IN ANY INSTRUMENT OR ENGAGE IN ANY STRATEGY MUST BE BASED ON DILIGENCE AND ANALYSIS INDEPENDENTLY UNDERTAKEN BY YOU AND YOUR ADVISORS. PLEASE CAREFULLY REVIEW THE DISCLAIMERS AT THE LAST PAGE OF THIS DOCUMENT.
Instrument
View
Target
Level today
Crude
Bearish daily reversal at the highs and breach of near term supports suggest short term weakness
13 April
* $93 Target Met and extended to $83.40 (200 week moving average)** In addition a move to $75 (Head and shoulders target) cannot be ruled out.
$94.25
EURUSD
09 May
1.4372
CRB Index
Weekly reversal at the highs, momentum diveirgence and large 55-200 day moving average gap
09 May
338
NDX
Breached the 55 day and trend support arguing for a move to the 200 day
24 May
2,200
2,204
EURCHF
23 May
1.16
1.2133
EURGBP
Breached 55 day and 50% retrace of the rally from Jan. Setups in Fixed Income spreads also argue for a move lower
25 May
0.8450
0.8873
USDJPY
76.4 against the highs and close below 80.70 suggests lower levels ahead
06 June
80.15
Convictions represent the views of the CitiFX Technical staff and not actual trades.
CitiFX Technicals
21 June 2011
Source: CitFXTechnicals Views 21 June 2011
Instrument
Level today
S&P 500
Bearish year with double digit percentage down close of 15-16 % (1,055-1070) expected. Intra year bear market (High to low fall of 20%+ ) also a danger. Peak could well come in the opening days of the year.
Strong
Strong
1278
10 year yields to head towards 4% and possibly 4.5% by end of year. 30 year yields to head towards 5%
Strong
Strong
Crude
Strong
$94.45
Gold
Strong
Strong
$1,544
Palladium
Strong
Strong
$746
EURUSD
A move to high 1.40s (1.4850) by end of year) with possible 1.50+ and even 1.60+ in early 2012
Strong
Weak. We have now changed our year end view and believe that the move seen to 1.4372 1.4940 on 04 May has established a long term peak earlier than we thought. Data as at 21 June 2011
CitiFX Technicals
21 June 2011
Strategic Portfolio
Data as at 21 June 2010
Instrument
Position
Date established
Comment
Entry
Target
Present level
Tactical Portfolio
Data as at 21 June 2010
Instrument
Position
Date established
Comment
Entry
Target
Present level
EURCHF
Short
23 May 2011
EURGBP
Long 0.8450 Put Option (expiry 06 July) Long 1.40 Put option (Expiry 28 June)
25 May 2011
5 month consolidation seems over and the double top argues for further losses Price action is similar to that seen at the highs in October 2010 suggesting further losses Short term price action looks corrective and the setups still remind us of Nov 2010
1.2375
1.2520
1.2133
Premium paid
0.8450
0.8873
EURUSD
27 May 2011
Premium paid
Sub 1.40
1.4372
CitiFX Technicals
21 June 2011
CitiFX Technicals
21 June 2011
FX Technicals
Tom Fitzpatrick New York 1-212-723-1344 thomas.fitzpatrick@citi.com
Structuring Group
Stephane Knauf London 44-20-7986-9486 stephane.knauf@citi.com
CitiFX Technicals
21 June 2011
CitiFX Technicals
21 June 2011
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