Monthly Charts in Focus: June 2022

So we need to be clear about something. The market is still messy. There has been no change there. It's important to focus on charts that are displaying clear direction with regard to the trend. So we're going to go with the evidence in front of us.

Let's take a look, shall we?

A lot of speculation has been made about where the USDINR pair is headed as the price marked new all-time lows for the INR. All said and done, the fact remains that this is a zone overhead supply. And what do we know about the overhead supply? These are logical points for the price rise to pause. So while the currency pair is trading at all-time highs, there is a likelihood that the price finds some resistance here.

Keep in mind that the Dollar index has paused on a monthly chart (in May) after four consecutive months in the green. A continued rally in the dollar could result in new lows in the INR relative to the USD.

The level that we're tracking is 77.50. A breakout above this level lould take the price towards 79. If the price halts here, however, the price will remain in a broader trading rang between 77.50 & 75.

Click on the chart to zoom in.

Next up we're looking at Energy. This sector gave up an emphatic breakout signal in the month of April, but failed to follow through in May. At this point, the price has moved below the breakout point of 26,975. With the price not looking like its in a hurry to correct this correction, we may have to be vary of this trend. So far, the broader market trend of Energy has been up since the lows of 2020. Is this just another consolidation? Can't say. But the fact that the price did not follow through after the breakout is information.

Another sector making a turn to the downside last month was Metal. We saw the price consolidate sideways for almost a year with a minor uptick coming through. In May, specifically end of May, the prices reacted sharply and turned lower below the support zone of 5,495. Another breakout that hasn't seen the typical follow through. Another piece of important information to us.

Let's take a look at some commodities now.

Crude Oil has been a part of every discussion since early this year. We now have a new all-time closing level. The price bounced back from the support of 7,785 and looks good as it continues to hold above the important level of 7,785. A consistent trend here could take the price higher towards 11,480. This however, is a monthly chart. So the price may not make a dash towards its price right away. The important factor here is that the price continues to hold above its prior highs made in 2013.

One of the most successful commodity trade setup has been that seen in Cotton. The strength in Cotton has been relentless and doesn't seem to be in a mood to slow down. The price over here, has been making dash towards the target of 53,730 as Cotton marked its third consecutive bullish month in May. Take a look at the market as well other commodities and take a look at Cotton. It seems like they're on opposing teams!

Natural Gas is another name that has broken out above its resistance zone of 585. Currently trading near its all-time highs, the price is now holding above the breakout level. As long as the price trades above the crucial level of 585, the next target to track would be 878.

So this was a roundup of the charts that were displaying a clear trend as of May's closing. Could these charts change their course in June? Of course they can! Is there a high likelihood of that happening? Now that's what we're looking at. The odds aren't in favour of a reversal at this point.

At times when the market seems confusing, you just have to go with the weight of the evidence. And the weight of the evidence hasn't pushed us into a clear direction of market trend yet.