[Premium] Three Charts For The Week Ahead

JC Parets
September 27, 2022

We retired our "Five Bull Market Barometers" in 2020 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 500, Nifty IT/ Nifty 100, and Nifty Bank/ Nifty 100.

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

1. The first chart we’re looking at is the US Dollar Index along with the US 10-year yield. So we're looking at a chart that tells you why the market is under correction. DXY has an inverse relation with stocks and commodities and that is something we've talked about quite often. What is also bad for stocks and commodities is a rise in interest rates. The important distinction to remember is that it's not the increase in absolute value that is detrimental to market health. It is the rate at which the absolute value is changing that is harmful. And the chart below has both price trends making clear higher highs and higher lows with momentum. If this trend continues to play out, then stocks and commodities will just have to take a backseat.

Click on the chart to zoom in.

2. The second chart we're looking at is the USDINR currency pair. We've been tracking the trend in this chart and it has only been hinting at new highs for the pair and subsequently new all-time lows for the Indian Rupee. The price is currently halting close to the 161.8% Fibonacci Retracement level of 81.35. The price continues to make new lows as the Dollar Index continues to gain strength. If this resistance is breached the Rupee will have to prepare for a steep decline. The next target for the currency pair comes in at 87.

3. The third chart we're looking at is Nifty Financial Services. The price has failed to move past the overhead supply zone of 18,840. This was the fourth attempt whereby the price rolled over from these levels. As a result of this, the indicator too has moved away from strong bullish momentum. For a market rally to sustain, it is important that the Financials participate. They do not have to outperform the market, but it is imperative that they move with the larger trend.

Currently, the index is range bound between 18,840 and 14,695.

In our view, these charts will help set the tone for this week and provide 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

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