Technicals | Jul 14 2011
By Rudi Filapek-Vandyck
If currencies continue leading financial markets…
Technical market analysts at Barclays have picked up on the theme that has featured some of my personal market analyses over the past years: if currencies continue leading other markets, then, maybe, the outlook is not so bad after all?
The analysts at Barlays certainly think so. They have zoomed in on the fact that so-called "resources currencies", including the South African Rand, the Australian dollar and the Chilean peso, to name but a few, have merely stabilised ("consolidated") over the months past and not sold off in a similar fashion as equities and commodities.
This, suspect the analysts, is a positive signal. It indicates the world is not losing its bottle and the second half rally in risk assets remains on the cards.
This observation supports the analysts' view that most risk assets are now poised for price rises, including gold, oil and copper – the main ones.
The anticipation is that Brent ("true" oil) is going to break past resistance at US$120/bbl on its ultimate route towards the US$127 highs. WTI should be on its way to US$100/bbl. (Note this implies significant further widening of the spread between the two).
The analysts observe gold has now broken to new all-time highs over US$1577/oz, and this means the next target is the US$1610-area.
Copper needs to break above US$9830/t to confirm the view it is back on track to target the previous all-time high at US$10,190/t. Aluminum, reports the team, currently enjoys technical support near US$2450. The target for aluminium remains US$2600/t.
Technical limitations
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