- WE'RE JUST RANDOM SPECKS OF DUST IN A TORNADO TO THE MARKETS .......
- CHARTISTS MUST PUT ALL BIAS ASIDE AND LET THE CHARTS DO THE TALKING OR WE'LL SEE ONLY WHAT WE WANT TO SEE
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Friday, 4 February 2011

Egypt Burning

The market is a funny thing. Last Friday riots in Egypt were a major market-moving event and this week those worsening riots are old news. I read that Egypt is the world's largest importer of wheat and that much of the unrest is due to rising food prices. Looking at the wheat chart I see that prices have doubled since the low last June and show little sign of turning down anytime soon. Is this inflation exported from America in the shape of another worldwide commodity bubble? More than likely and if it continues no doubt we will see more unrest in poor countries.
We've been tapping up against resistance on ES and NQ for several days now and that resistance looks likely to break soon. More than likely that will happen today. On NQ there is a clearly established broadening descending wedge, and that's a bullish pattern with a 79% probability of breaking up. Though it's a big pattern it only actually indicates back to the January high on NQ, and that's at 2346.75. It's safest to take this long after the resistance trendline breaks as the lower trendline of the wedge is now in the 2230 area:
On ES we have the rising channel from the November lows. Channel support is in the 1272 area, and the upside target is in the 1324 area, but main ES rising resistance is in the 1314-6 area and I'm expecting this next push up to reverse there:
EURUSD has reversed again, and this time it looks as though it may be for real, backed up by the ECB pouring cold water on a rises in european interest rates in the near future. The obvious next move is to form an H&S with the neckline in the 1.357 area. After that the right shoulder would have a target in the 1.376 area:
 On silver there has been a clean break up from the declining channel and a gently narrowing rising wedge has formed with three touches on the upper trendline. The next upside target is in the 30 area:
Copper has also established a gently narrowing rising wedge and the next upside target is in the 480 area. There is very serious multi-year resistance in the current area, but copper has stabbed through that once already this week. Once copper clears 460 it will be in breakout territory:
I'm leaning long today but I'm waiting for upside resistance to break on ES and NQ. Once NQ retakes 2326 though, the next move up should be starting.

I've written a post on the very interesting setup in the long term treasuries market and I'll post that after the close today as a weekend post.

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