[Premium] Three Charts For The Week Ahead

Last week we focused on US Dollar Index, India 10 year bond yield, & AUDJPY.

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 All Country World Index and the US Dollar Index. The relationship between the two is evident when you see the chart. Both share an inverse relationship. This means that when one rises, the other falls and vice versa. We shared the crucial levels to track for the Dollar Index in our post last week, and the consequences are here to be felt.

The All Country World Index has now rolled over and the Dollar Index has broken out. The impact of this development is that the equity market will find it difficult to sustain and hold its ground. The Dollar Index has broken out of a seven-year base! With that kinda move in place, it doesn't seem that the Dollar is going to stop anytime soon.

One can expect more pain in global markets as the Dollar continues to march on ahead. It is clear that for the stocks to catch a bid, DXY has to cool off. And there is no indication of that unfolding soon.

Click on the chart to zoom in.

2. The second chart we're looking at is USDINR. The direct impact of the Dollar Index rallying is the INR making new all-time lows. As the dollar gains from strength to strength, the INR continues to mark new lows with every passing day. The currency pair is trading at an all-time high (low for INR). The price broke out of a two-year base, as it moved past 77.80. If the DXY rally continues, then the next level to track on this chart would be 81.25.

The economic repercussions of this move will be much larger. The balance of trade, forex reserves, domestic savings, and debt repayment will all become bigger issues than they are already.

But the biggest takeaway is don't fight the trend. If this breakout holds, then 81.25 is the next level to track.

3. The third chart we're looking at is Nifty 50. The index has been resilient compared to other global indices. But when the Dollar gest going, the impact is felt across the board. The index has experienced a sharp correction and we're here to reiterate the levels that we're tracking on the index.

The support for the index comes in at 14,470-15,500. That's the level that the price has respected before and is holding on to dear life right now. A breach of this level puts the index in the bearish market territory if the price makes lower highs and lower lows. By the looks of it, the next few days and weeks are going to be quite volatile and may result in giving us a direction with regard to the trend.

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