ThinkTechnical 27 July - Macro Ed.

We'll kick of this week's ThinkTechnical series with a macro (i.e., bigger picture) view. We'll start by looking at the technical picture for the ASX200 Share Price Index Futures (SPI), and then some of its key drivers, the Australian Dollar vs US Dollar (AUDUSD), Spot Gold, and finally, West Texas Intermediate Crude Oil.

Spot gold in particular has been in the headlines this morning, taking out its September 2011 high of US$1920.30/oz and trading at new all-time highs. We have been very bullish on Spot Gold, and indeed on Gold stocks in ThinkTechnical, having called longs since 26 June when it was trading around US$1800/oz.

 

ASX200 Share Price Index Futures (SPI) is in well-defined short term uptrend, as evidenced by the 21 EMA located above the 34 EMA and with each EMA rising. In contrast, the long term trend is down. It is well-defined, as evidenced by the 144 EMA located below the 233 EMA and with each EMA declining.

Static resistance will be encountered at the 22 Jul 2020 high of 6144, the 09 Jun 2020 high of 6199, and then at the 16 Aug 2019 low of 6304.

Static support will be encountered at the 21 Jul 2020 low of 5951, and then at the 10 Jul 2020 low of 5857.

Note that static support at 5951 coincides with dynamic support expected to be encountered in the zone defined by the 21-34 EMAs, projected between 5935 and 5970. Whenever multiple support factors coincide, the market response at the zone defined by these factors tends to be stronger.

The price has been consistently rebounding out of the short term dynamic support zone since the short term uptrend began in May. This highlights the importance of this zone as a future area of potential dynamic support moving forwards.

Targets are to the 09 Jun 2020 high of 6199. The next key target is 6303. 

Traders may wish to buy at the static and dynamic support zones with stops set below these levels. If this cannot be achieved, then traders may have to consider buying on a breach of 6199.

 

Australian Dollar Vs US Dollar is in well-defined short term uptrend, as evidenced by the 21 EMA located above the 34 EMA and with each EMA rising. The long term trend is undefined, as evidenced by the 144 EMA located below the 233 EMA but with each EMA rising. It is likely that these EMAs cross in the near future, therefore initiating a new long term uptrend.

Static resistance will be encountered at the 22 Jul 2020 high of 0.7182, and then at the 18 Apr 2019 high of 0.7205.

Static support will be encountered at the 19 Jul 2019 high of 0.7082, the 10 Jun 2020 low of 0.7061, and then at the 01 Jan 2020 high of 0.7031, which coincides with the 0.7000 round number. Whenever multiple support factors coincide, the market response at the zone defined by these factors tends to be stronger.

Note that static support at 0.7031 coincides with dynamic support expected to be encountered in the zone defined by the 21-34 EMAs, projected between 0.6970 and 0.7040. The price has been consistently rebounding out of the short term dynamic support zone since the short term uptrend began in April. This highlights the importance of this zone as a future area of potential dynamic support moving forwards.

Targets are to the 31 Jan 2019 high of 0.7295. 

Traders may wish to buy at the static and dynamic support zones with stops set below these levels. If this cannot be achieved, then traders may have to consider buying on a breach of 0.7205.
 

Spot Gold is in well-defined short term uptrend, as evidenced by the 21 EMA located above the 34 EMA and with each EMA rising. The long term uptrend is also well-defined, as evidenced by the 144 EMA located above the 233 EMA and with each EMA rising.

Static resistance will be encountered at the 06 Sep 2011 high of 1920.30.

Static support will be encountered at the 08 Jul 2020 high of 1817.71, the 08 Nov 2011 high of 1802.60, the 05 Oct 2012 high of 1795.69, and then at the 14 Jul 2020 low of 1790.77.

Note that static support at 1817.71 coincides with dynamic support expected to be encountered in the zone defined by the 21-34 EMAs, projected between 1820.00 and 1850.00.

Given the distance Spot Gold is now trading away from static and dynamic support levels, traders may wish to wait until they can once again buy at these levels. This will allow for an entry closer to levels where tight stops can be set with confidence, and also, facilitate future long trades with good reward to risk.
 

West Texas Intermediate Crude Oil is in well-defined short term uptrend, as evidenced by the 21 EMA located above the 34 EMA and with each EMA rising. In contrast, the long term trend is down. It is well-defined, as evidenced by the 144 EMA located below the 233 EMA and with each EMA delining.

Static resistance will be encountered at the 24 Dec 2018 high of 42.39, which coincides with the 21 Jul 2020 high of 42.40. Whenever multiple support factors coincide, the market response at the zone defined by these factors tends to be stronger.

Static support will be encountered at the 20 Jul 2020 low of 39.83, which coincides with the 40.00 round number, and then at the 10 Jul 2020 low of 38.54.

Note that static support at 39.83 coincides with dynamic support expected to be encountered in the zone defined by the 21-34 EMAs, projected between 39.20 and 40.40. Whenever multiple support factors coincide, the market response at the zone defined by these factors tends to be stronger.

Targets are to the 03 Mar 2020 high of 48.66. The next key target is 49.31. 

Traders may wish to buy at the static and dynamic support zones with stops set below these levels. If this cannot be achieved, then traders may have to consider buying on a breach of 42.40.