[Premium] Three Charts For The Week Ahead

JC Parets
December 28, 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 DJIA, VEU, Pharma

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 US dollar Index $DXY. $DXY finds its footing after experiencing significant downside pressure in recent weeks. Price currently tests a critical level of former resistance marked by a shelf of former highs.
With so much price memory here, this area represents a logical level for demand to absorb the supply. So far, that's the case as former resistance has become support.
If the DXY begins to mean revert in the coming days, we can expect risk assets to come under increased selling pressure.
On the other hand, a downside violation of this critical level will likely result in a tailwind for stocks and risk assets.

Click on the chart to zoom in.

2. The second chart we're looking at is Gold. The US Dollar is the world's dominant reserve currency, so it has its impact across the assets.
What if we treated Gold like another currency instead of a commodity? It certainly acts more like a currency. Just look at the recent moves in Commodities, both up and down. Gold hasn't exactly followed along.
So if Gold wants to behave like a currency, maybe we should treat it like one.
In the chart, we've shown Gold priced in some very important currencies. In other words, this is what Gold looks like if you remove your US Dollar bias. Certainly, this base formation is very positive to keep an eye on.

3. Nifty Auto had a big base breakout this year above 2017 highs. This level has acted as resistance multiple times. Now the retest makes a critical polarity level. It is to note that momentum has always been strong throughout the rally starting in March 2020. Sustenance above it would be bullish for the Auto sector stocks.

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, 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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