There is a general theme this week that I want to tie a bunch of charts together with. A lot of the charts from today started their rally with the lows of late January and early February. Now it seems like this uptrend is being threatened on many of the charts. Even if they don't all change direction on the same day, it is important to note that we could be looking at a major investor rotation away from some of the trends that have been with us most of the year. Two of the most notable trend lines that snapped this week were the British Pound and the Japanese Yen. However, Gold, Oil, Natural Gas, the US Ten Year bond, and many other charts are changing or testing meaningful 6-month trend lines.
I'll start with the Yen ($XJY). The Yen has been tucked in a trading range for the last two months. While this week's action was still within the trading range, a couple of technical signals fired. First, the uptrend line was broken. Secondly, the 65 SMA in green was also broken. Both had been meaningful support for the currency. Looking at the zoom box, this week's price action actually rolled the 65 SMA over and it now is sloping down. Typically the Nikkei ($NIKK) strengthens when the Yen weakens. This may cause the Nikkei to move higher out of the trading range it has been in for the last two months and it could break out meaningfully from the 8 months of resistance around the 17000 level shown in blue. Notice the Nikkei changed trend around the end of January. I have placed two circles on the currency chart. The Yen broke out above the trend line in December, pulled back and then started to move higher. That major change in the Yen happened while the US market came under heavy selling pressure from the end of December to February 10. Now we are on the other end of the trend.