If you want to get an idea of where the intermediate-term trend is headed, use weekly price bars. Weekly price bars filter out a lot of the noise contained in daily price bar information, allowing chart-readers to better see the forest for the trees.
Chart patterns work in all time frames, but the larger the time frame, the more significant the price bar. Just as daily continuation or reversal bars are more important than intraday ones, weekly bars are generally more significant and reliable than daily bars.
Let's go to the charts for weekly setups that are indicating the end of up-trends in gold and soybeans.
(GCQ2:COMEX) has been getting absolutely crushed since smacking into the resistance I pointed out in
last Tuesday's column. The weekly decline is the worst in more than 30 months, and it leaves a weekly bar that strongly suggests the current trend is over.
However, since the contract held at such a tight clustering of Fibonacci retracement levels, coupled with the 50-week exponential moving average on Friday, there could be a healthy-reaction rally this week. Notice that the following chart is for
(GCZ2:COMEX). If the market continues up from here, significant resistance -- and the opportunity to get short at a higher level and participate in the weekly reversal -- resides at 314.3 to 315.2 and then at 318.5.
The weekly bar patterns in soybeans and soybean meal also strongly suggest an intermediate-term top is in place in these markets.
(SX2:CBOT) closed the week ending July 26 in an outside bar. Notice how the prior week's shooting-star candlestick (a bar that gaps to a new high after a rally where the opening and closing prices are approximately the same), which traded to a one-year high, was completely "engulfed" by this week's selling, leaving the gap closed in a very bearish pattern.
December soybean meal
(SMZ2:CBOT), the pattern was similar but even more ominous. Soybean meal's outside bar engulfed last week's range as well as the previous three weeks' ranges, leaving this market at a one-month low.
S&P 500 futures
dollar index futures
(DXU2:NYBOT) finished the week in positive territory. Rallies in American assets played a role in gold's decline as well as in the weekly loss in
September euro FX
(ECU2:CME) futures. Compare the weekly results of the major indices in the U.S. and Europe. The
gained about 1% each on the week, while Germany's
lost 10.2% and 6.2%, respectively. A loss of that size -- 10% in a week -- should prompt fund mangers to pull money out of Europe.
The euro FX also showed weekly technical signs of topping, but the daily price action was more telling. The single-currency futures failed to fill two overhead gaps and failed to regain and remain above its 10-day moving average in signs that the uptrend will reverse for the next few weeks.
Also in daily action in the energies,
September natural gas
(NGU2:NYMEX) failed to trade into an overhead gap etched on July 8 and left an outside bar down Thursday that closed below its 10-day moving average. On Friday, natural gas made a lower low. This action suggests the market will be capped by resistance at 2.925 and will trigger out of a pullback from a low situation on its next move below 2.860.
Marc Dupee is an independent trader and co-author of the book
The Best: Conversations With Top Traders. Dupee was formerly markets analyst and futures editor for TradingMarkets Financial Group. At time of publication, he held no positions in any securities mentioned in this column, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. While he cannot provide investment advice or recommendations, he invites you to send your feedback to
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