Charts of Interest: Falling Markets 8/08/11

Article originally published on and republished here with permission

Hello. Stocks and many currencies are in free-fall, Gold – that thing Bernanke called “not money” – is changing hands at over $1,700 as the markets are, again, out of control.

Here are some charts you should keep an eye on:

S&P 500 – As you can see in the chart below, we are retesting support formed by 2010′s open. What’s more important is that the index is now below the levels when QE2 was announced. This means that the Fed is now expected to come to the rescue of Wall Street and announce QE3. You can click on charts to enlarge them.

SPX Weekly Chart 8-8-2011SPX Weekly Chart 8-8-2011

Last daily candles are telling the horror story: It’s not media hype, it’s not panic – it’s a FACT

SPX Daily Chart 8-8-2011SPX Daily Chart 8-8-2011

Next chart of interest is Gold. I guess it’s not a secret to anyone that Fed’s policy has been the main catalyst of gold’s rally. Therefore, as the collapsing equity markets are in desperate need of new fuel – the ongoing decline of global markets is rather a prelude to QE3. As you can see in the chart below, Gold is currently quite far from support zone formed by the multi-month rising trendline. Pullbacks will probably find interim support into mid $1,550 (previous top).

Gold Weekly Chart 8-8-2011Gold Weekly Chart 8-8-2011

EURUSD – pulling back even more after filling the opening gap today. With so much uncertainty and fears surrounding the markets these days, I think that technical levels are becoming useless. Anyway, $1.400 is still a good support after several tests and maybe it will stay intact.

EUR Vs. Dollar Daily Chart 8-8-2011EUR Vs. Dollar Daily Chart 8-8-2011

AUDUSD – notice that AUD follows equities, breaking below recent bottom zone. Not looking good… dropping at current rate we’ll get back to parity in a matter of days – and I’m being optimistic here, it could be hours

Australian Dollar Vs. US Dollar Daily Chart 8-8-2011Australian Dollar Vs. US Dollar Daily Chart 8-8-2011

AUDJPY – last but not least, the risk meter! I don’t want to sound like one of those “I told you so!” people (I really hate that), but you know I’ve been keeping a close eye on AUDJPY since it was testing support @ 84.50 for countless times – see this, this and especially this – quote from post:

I’ve been watching this level for several weeks and I still think that a real breakdown below this level could turn violent (read: equity markets imploding)” – Aug. 2

I’d say we had some big warning signs on the charts and it’s not a coincidence that things turned really ugly once the break below 84.50 was confirmed – especially after the BoJ’s total failure to weaken the Yen (the short-lived recovery above 84.50 that lasted only for a few hours)

Australian Dollar Vs. Japanese Yen Daily Chart 8-8-2011Australian Dollar Vs. Japanese Yen Daily Chart 8-8-2011

This is all for now, thanks for reading. Share comments, don’t be shy – and be extra careful what you do with your hard-earned money in the coming days as we’re living in times of trouble and uncertainty.


About abwehra group

The Art&Science of Trading Gold
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