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The Currency Commodity Intermarket Relationship

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This week had bearish overtures for my view of the markets.

Probably the one I worry about the most is the commodities Index, the $CRB. The break below the 5 year trend line is particularly disconcerting.
One week does not make a new trend, but one week can start a trend. After breaking out to the upside, the $CRB has made 8 weeks of lower highs. Not only has it fallen below the trend line, it has now fallen below the five year support line. So, we have had 8 weeks of lower highs, which is a trend. We have had one week closing below the 5 year support, which is not a trend.

$CRB 20131103 5 year

While everything else seems to be perking along, there were a lot of inter market relationships that got beat up.
The Canadian and Australian currencies are a good methodology for looking at the commodities.
Both of the charts failed at the 40 WMA which is down sloping. Live link here. When prices retest a down sloping 40 WMA, investors should respect the price action either direction.

$CDW 20131103 2 year chart

Here is the Australia Dollar Chart. The live link is here.

$XAD 20131103 2 year chart

All the indicators on this chart say we are in a larger bear trend. This was just a bear market rally in the commodities until proven otherwise.
For a detailed explanation of the commodity currencies and the relationship to the commodities, a long thorough posting is on The Canadian Technician Blog.
It can be found here. Currencies Ring A Pessimism Bell.

Good Trading,
Greg Schnell, CMT


Greg Schnell
About the author: , CMT, is a Senior Technical Analyst at StockCharts.com specializing in intermarket and commodities analysis. Based in Calgary, he is a board member of the Canadian Society of Technical Analysts (CSTA) and the chairman of the CSTA Calgary chapter. He is an active member of both the Market Technicians Association (MTA) and the International Federation of Technical Analysts (IFTA).

Greg is also the co-author of Stock Charts for Dummies (Wiley, 2018). Greg joined StockCharts.com in 2012 and has be instrumental in helping launch a variety of new blogs and other commentary platforms. Presently, Greg contributes market analysis commentary to The Canadian Technician, Commodities Countdown and Don't Ignore This Chart blogs. Learn More
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