ThinkTechnical 10 August - Macro Ed.


A topical look at technical analysis factors for a number of key markets, and ASX stocks of interest for 10 August.



In today's ThinkTechnical we'll take a look at the technical picture for the local ASX200 Share Price Index Futures (SPI/YAP), and major US stock indices the NASDAQ Composite (COMP), Russell 2000 Index (RUT), and S&P 500 (SPX).

Technically not a stock index, but certainly related to how US stocks are behaving, we'll also take a look at the US Volatility Index (VIX). The VIX is derived from the prices of the S&P 500 index options, and measures investors' expectations of volatility approximately one month into the future. Typically, the higher the VIX, the more nervous investors are about the prospects for stocks, and vice versa. A VIX reading below 20 is usually associated with calmer investing conditions.

We'll also consider how some of the macroeconomic drivers such as the Australian Dollar vs US Dollar (AUDUSD), Iron Ore China September (Y/t), Spot Gold (USD/oz), Spot Silver (US$/oz), and West Texas Intermediate Crude Oil (USD/barrel) are travelling.

 

ASX200 Share Price Index Futures (SPI/YAP)

ASX200 Share Price Index Futures (SPI) 10 Aug 2020

The short term trend of the ASX200 Share Price Index Futures contract undefined, as evidenced by the 21 EMA located above the 34 EMA but with each EMA failing to show increasing prices for at least 5 trading sessions. The long term trend is undefined, as evidenced 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 6144, the 09 Jun 2020 high of 6199, the 16 Aug 2019 low of 6304, and then at the 20 Feb 2020 high of 7148.

Static support will be encountered at the 03 Aug 2020 low of 5815, and then at the 15 Jun 2020 low of 5710.

The dynamic short term support zone is defined by the 21-34 EMAs, projected between 5975 and 5950. The price has been consistently rebounding higher 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 short term resistance going forwards.

The dynamic long term support zone is defined by the 21-34 EMAs, projected between 5965 and 6060. The price has been consistently rebounding lower out of the long term dynamic resistance zone since the long term uptrend began in March.

Short term traders may wish to anticipate a resumption of the short term uptrend and buy at static support and at the dynamic short term support zone with stops set below these levels. Given the uncertainty in relation to the long term trend, long term traders should remain neutral.

 

NASDAQ Composite (COMP)

NASDAQ Composite (COMP) 7 Aug 2020

The NASDAQ Comp is in a 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 07 Aug 2020 high of 11126.

Static support will be encountered at the 21 Jul 2020 high of 10839, which coincides with the 13 Jul 2020 high of 10825. Whenever multiple support factors coincide, the market response at the zone defined by these factors tends to be stronger.

The dynamic short term support zone is defined by the 21-34 EMAs, projected between 10500 and 10685. The price has been consistently rebounding higher 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 short term support going forwards.

Beyond 11126, COMP is at all-time highs, and therefore targets are open ended. Note however, static resistance will likely be ecountered at the 12000 round number.

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 11126.

 

S&P 500 (SPX)

S&P 500 (SPX) 7 Aug 2020

The S&P 500 is in a 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 19 Feb 2020 high of 3394.

Static support will be encountered at the 23 Jul 2020 high of 3280, and then at the 08 Jun 2020 high of 3233.

The dynamic short term support zone is defined by the 21-34 EMAs, projected between 3220 and 3265. The price has been consistently rebounding higher 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 short term support going forwards.

Beyond 3394, SPX is at all-time highs, and therefore targets are open ended. Note however, static resistance will likely be ecountered at the 3500 round number.

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 3394.

 

Russell 2000 Index (RUT)

Russell 2000 Index (RUT) 7 Aug 2020

The Russell 2000 is in a 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 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 31 Jan 2020 low of 1610, and then at the 20 Feb 2020 high of 1699, and also the 17 Jan 2020 high of 1715.

Static support will be encountered at the 08 Jun 2020 high of 1538, and then at the 23 Jul 2020 high of 1507.

The dynamic short term support zone is defined by the 21-34 EMAs, projected between 1475 and 1500. The price has been consistently rebounding higher 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 short term support going forwards.

Targets are to the 17 Jan 2020 high of 1715. Beyond 1715, RUT is at all-time highs, and therefore targets are open ended. Note however, static resistance will likely be ecountered at the 2000 round number.

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 today's high of 1570.

 

Volatility Index USA (VIX)

Volatility Index USA (VIX) 7 Aug 2020

The Volatility Index Usa is in a well-defined short term downtrend, as evidenced by the 21 EMA located below the 34 EMA and with each EMA declining. The long term trend is undefined, as evidenced the 144 EMA located above the 233 EMA but with each EMA declining. It is likely that these EMAs cross in the near future, therefore initiating a new long term downtrend.

Static support will be encountered at the 31 Jan 2020 high of 19.99.

Static resistance will be encountered at the 05 Jun 2020 low of 23.54, and then at the 24 Jul 2020 high of 28.58.

The dynamic short term resistance zone is defined by the 21-34 EMAs, projected between 25.25 and 26.50. The price has been consistently rebounding lower out of the short term dynamic resistance zone since the short term uptrend began in April. This highlights the importance of this zone as a future area of potential dynamic short term resistance going forwards.

The dynamic long term support zone is defined by the 21-34 EMAs, projected between 27.20 and 29.20. The key issue now, is that the price is currently trading below this zone. If this situation continues, the zone may well switch from offering dynamic long term support to offering dynamic long term resistance.

Targets are to the 14 Feb 2020 low of 13.38. 

Traders may wish to sell at the static and dynamic support zones with stops set below these levels. If this cannot be achieved, then traders may have to consider shorting selling on a breach of the 6 Aug 2020 low of 20.97.

 

Australian Dollar vs US Dollar (AUDUSD)

Australian Dollar vs US Dollar (AUDUSD) 10 Aug 2020

The Australian Dollar vs US Dollar is in a 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 up, as evidenced by the 144 EMA located above the 233 EMA and with each EMA rising.

Static resistance will be encountered at the 31 Jan 2019 high of 0.7295, and then at the 04 Dec 2018 high of 0.7393.

Static support will be encountered at the 19 Jul 2019 high of 0.7082, and then at the 10 Jun 2020 high of 0.7061.

The dynamic short term support zone is defined by the 21-34 EMAs, projected between 0.7050 and 0.7120.

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 the 7 Aug 2020 high of 0.7243.

 

Iron Ore China September (Y/t)

Iron Ore China September (Y/t) 10 Aug 2020

Iron Ore China September is in a 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 06 Aug 2020 high of 915.

Static support will be encountered at the 22 Jul 2020 high of 861.5.

The dynamic short term support zone is defined by the 21-34 EMAs, projected between 825 and 850. The price has been consistently rebounding higher 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 short term support going forwards.

Beyond 915, Y/t has little in the way of key price action-based static resistance points to impede upside progress. Note however, static resistance will likely be ecountered at the 1000 round number.

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 915.

 

Spot Gold (USD/oz)

Spot Gold (USD/oz) 10 Aug 2020

Spot Gold is in a 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 07 Aug 2020 high of 2072.50.

Static support will be encountered at the 28 Jul 2020 high of 1980.57, and then at the 30 Jul 2020 low of 1939.17.

The dynamic short term support zone is defined by the 21-34 EMAs, projected between 1890.00 and 1940.00.

Traders may wish to buy at the static and dynamic support zones with stops set below these levels. 

 

Spot Silver (US$/oz)

Spot Silver (US$/oz) 10 Aug 2020

Spot Silver is in a 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 07 Aug 2020 high of 29.84, which coincides with the 30.00 round number.

Static support will be encountered at the 28 Jul 2020 high of 26.19, which coincides with the 27 Sep 2011 high of 26.04. Whenever multiple support factors coincide, the market response at the zone defined by these factors tends to be stronger.

The dynamic short term support zone is defined by the 21-34 EMAs, projected between 22.15 and 23.75.

Traders may wish to buy at the static and dynamic support zones with stops set below these levels.

 

West Texas Intermediate Crude Oil (USD/barrel)

West Texas Intermediate Crude Oil (USD/barrel) 10 Aug 2020

West Texas Intermediate Crude Oil is in a 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 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 05 Aug 2020 high of 43.52.

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

The dynamic short term support zone is defined by the 21-34 EMAs, projected between 40.00 and 41.00. The price has been consistently rebounding higher 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 short term support going forwards.

The dynamic long term support zone is defined by the 21-34 EMAs, projected between 39.00 and 42.20. This highlights the importance of this zone as a future area of potential dynamic long term resistance going forwards.

Targets are to the 05 Aug 2020 high of 43.52. Beyond 43.52, USD/barrel has little in the way of key price action-based static resistance points to impede upside progress until the 4 Feb 2020 low of $49.54. Note however, static resistance will likely be ecountered at the 45.00 round number.

Short term traders may wish to buy at static support and at the dynamic short term support zone with stops set below these levels. If this cannot be achieved, then traders may have to consider buying on a breach of 43.52.

Alternatively, long term traders may wish to short at static resistance and at the dynamic long term resistance zone with stops set above these levels.



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