[Premium] Three Charts For The Week Ahead

Last week we focused on Crude Oil, US Dollar Index & Copper.

Let's move into this week's topics. We have big important breakouts to track this week.

1.  The first chart we're looking at is the Australian Dollar relative to the Japanese Yen. This is one of our favorite risk metrics that we track here at ASC. This currency pair tends to move higher when the market sentiment turns risk-on and vice versa.

For close to a year this ratio has moved in a narrow range. The barrier at 84.50 has been in place since 2018, so this is definitely an important level to track. Plenty of price memory here! We have, however, had a couple of false breakouts above this level, so the fact that the price moved above the level of 84.50 isn't sufficient at this point. What's more important is whether or not this breakout sustains. The indicator is yet to play catch up with this move.

If this breakout is here to stay then the next level to track would be 90. So we're definitely keeping a close watch on this one!

2. The second chart we're looking at is that of the Nifty 500 and its relation to the percentage of stocks trading above the 50-day moving averages. We're looking at a 10-year price trend here so keep in mind that this is a long-term chart.

In the lower panel is the percentage of Nifty 500 stocks that are trading above their respective 50-day moving averages. Now what we found here is that every time the indicator went into oversold territory (below 10) and turned around, the index rallied in the days after. There have been 14 instances in the past ten years, and this trend has played out in 9 out of the 14 instances.

What is also interesting, is that the average return over the following 20 trading sessions has been 2.28% while the average return over the following 30 sessions has been 5.08%. Now if we go by the weight of the evidence, one would be more inclined towards taking this signal as positive.

Let's observe what the market does over the next 20 and 30 sessions, you know as much as we do now!

3. The third chart we're looking at is Nifty Media. While most thematic indices have held onto their support in the week gone by, Media didn't give up its support at 2,000, to begin with. Now with a sector like Media that was the underperformer for the longest time to show such strength is definitely worth noting.

2,000 continues to be our risk management level here, but the strength in Media has been pretty incredible to watch. Next target to track would be 2,645.

In our view, these charts will help set the tone for this week and provide us with information on how we should approach the market in the coming weeks.

Also, make sure to check out our other weekly post, "Trade Of The Week."

Thanks for reading and please let us know if you have any questions.

Allstarcharts Team