[Premium] Three Charts For The Week Ahead

June 19, 2021

We retired our "Five Bull Market Barometers" in mid-July to make room for a new weekly post that's focused on the three most important charts for the week ahead.

This is that post, so let's jump into this week's edition.

Last week we focused on Nifty Small Cap-100 S&P 500 & the CRB Index .

Let's move into this week's topics.

1. The first chart we're looking at is The Dollar Index. What we have here is a bounce-back in the DXY. Of course, its a completely logical level for price to halt its correction. Why is it so? Because look at the price memory at the level of 89 that traces back at least 12 years! It would take a world of weakness for the Dollar to slip below that level.

For now, we're seeing a bounce-back that could potentially move towards 94.50. But that's the thing. Until it breaks out of either of these levels we're mere spectators. There's a neat positive divergence that can be observed in the indicator as well that adds to the narrative of the bounce back. So for us, the level to track would be 94.50.

Click on chart to enlarge view.

2. The second chart we're looking at is Dr.Copper. Copper has been a big positive over the last year and has breached multiple crucial resistances. But what we're seeing now are signs of a failed breakout. The fact that the base metal is unable to hold on above 4.65 is negative. And it's a negative that we've been keeping an eye on for quite some time. And we know that from failed moves come fast moves in the opposite direction.

The implication of this is that the other base metals will feel the heat of this move as well. Copper has been the leader of the pack and once the leader is off-course, the pack generally goes adrift. So until Copper decides to move above the level of 4.65, we're staying away from it.

3. The third chart we're looking at is the Aussie/Yen currency pair. This risk-on indicator just switched off. What we saw in the week gone by was a refusal to move past 84.50 and an ensuing correction in price. We've been staring at this chart for too long to get some signal and I'm guessing this is as good as it gets for now.

This currency pair rolling over is indicating that the sentiment in the market may be taking a turn towards a risk-off environment.

The next level to track would be 80, but sentimentally speaking, this is a negative for the market rally in the immediate term.