Silver price surges higher following breakout

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Silver price surges higher following breakout

September silver futures daily chart and market analysis
September silver futures – daily chart

The price consolidation that has been a feature of gold, has also been reflected in the silver market, with silver futures trading in a narrow range, testing $26 per ounce to the downside and $28.50 to the upside, and developing a strong area of price congestion as a result. Both these levels have been clearly defined by Hawkeye with a series  of isolated highs and isolated lows with the yellow pivots. The September silver futures contract ended the week at $31.37 per ounce.

The breakout finally arrived two weeks ago, and was in fact signalled early with the Hawkeye Roadkill delivering an aggressive volume entry, followed shortly after by a conservative trend entry, which was also coupled with rising volume on the daily chart, a strong sign that the breakout was valid. The three day trend duly followed suit moving from congestion into bullish momentum, giving added significance to the move higher.

With such a strong series of signal in place, and the Hawkeye heatmap confirming the bullish tone, we can expect to see silver prices continue to climb higher, and a test of the $36 per ounce region, last seen in March this year, now seems likely. With the strong platform of support in place, this is adding further to the bullish outlook for silver in the short to medium term, which reflects the picture for gold.

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September soy bean futures continue bullish trend

september soy bean futures on the daily chart
September soybean futures – daily chart

The daily soybean chart has been in a strong bullish uptrend since the breakout of late June and indeed has been one of our star performers in the soft commodities sector.The initial breakout on the daily soybean chart was first signaled by Hawkeye back in mid June and following a period of sideways consolidation finally breaking through the $1450 cents per bushel, which has since provided a strong platform of support for the surge higher.

Throughout July and August the commodity then consolidated in the $1550 to $1690 per bushel area, which was well defined  by the Hawkeye pivots to both the upside and the downside.  The next leg up in the move was once again confirmed by Hawkeye with a conservative volume signal which arrived five days ago on the daily chart and with bullish volume in both timeframes and a bullish trend on our three day chart, soybeans now look set to test the $1800 cents per bushel price point in due course. The September soy bean futures closed on Friday at $1764.50 per bushel.

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Duke energy continues in bearish tone on daily chart

day trading stock chart for Duke Energy using hawkeye indicators
Duke Energy – daily chart using Hawkeye

Duke energy shares continued to move lower on Friday, closing the US trading session at $64.78, and adding further pressure to the move lower. The sell off in the stock was given additional momentum following the news that one of Duke Energies subsidiary companies in Florida, Progress Energy Florida, has recently filed requests to reduce customer bills which if approved would see the average household utility bill fall by approximately 6% from the first billing cycle in the new year.

From a technical perspective, Hawkeye delivered an early entry signal to the short side, with a conservative trend Roadkill signal on the 21st August with the stock trading at $66.87, as it finally broke below a short term area of price congestion. Since then both the volume on the daily chart and the 3 day chart have remained firmly bearish, although it is important to note that the daily volumes are light. However this could merely be reflecting the summer period, and a general lack of volumes in all markets, as with the US labor day now ahead we can expect to see a return to more normal volumes as traders return from their summer holidays.

With a red Heatmap and red trend in both timeframes, the stock now looks set to break lower, and indeed on Friday Hawkeye delivered a further confirming signal with a volume Roadkill re-entry signal, suggesting that the current bearish trend has some way to go. The key level now is defined by the Hawkeye pivot in the $64 region, and if this is breached, then we can expect to see this stock move lower to test the $62 – $63 level in due course.

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Apple stock fails to rise following victory over Samsung

Apple on the daily chart
Apple ($APPL) – daily chart using Hawkeye

Apple’s recent patent victory over Samsung appears to have little impact on its share price, which hit a high of $680 on Monday before ending the week lower at $665.24.

This temporary pullback was signaled on the daily chart with two Hawkeye isolated pivot highs, the first on Monday and the second on Wednesday with the share price moving lower as a result. Despite this, however, the overall picture for Apple remains bullish with the chart displaying a bright green Heatmap and a green Trend on the daily and three day chart.

However, it is important to note that over the last two weeks we have seen volume on the daily chart declining and, in addition, this has also appeared as no demand volume, i.e. white, perhaps giving us an early warning signal of a potential reversal for the stock. Indeed on Friday, on the daily chart, we also saw selling volume appearing for the first time since early August adding further weight to this view. This pullback may be only temporary in the longer term bullish trend, but once again Hawkeye is giving an early warning signal of a possible reversal for the stock in due course.

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Citigroup shares continue to grind higher

daily stock chart for citigroup on the us stock markets
Citigroup ( $C ) – daily stock chart

Despite the recent bullish momentum in equity markets in general, Citigroup shares have remained relatively flat over the last few weeks, and closed Friday’s US trading session at $29.71 having traded in a narrow range for much of the day. The price is now consolidating into a pennant formation on the daily chart, with the Hawkeye pivots once again defining the congestion area, with both pivot highs and pivot lows in much the same way as in early August, which duly saw the stock break out from a narrow trading range.

Despite the flattening of the Hawkeye trend dots on the daily chart, the three day trend continues to remain firmly bullish supported by strongly bullish volume, and a bright green Heatmap, all suggesting a breakout to the upside is imminent. The price action in the current area is also significant with a series of higher lows over the last few days, suggesting that we should see the stock break higher in due course. With the strong platform of support in the $28 price area, this should provide a springboard for a move higher for the stock in due course with a test of the resistance in the $32.50 region now looking likely as volumes increase following the end of the summer holiday period.

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Forecast for the daily VIX

VIX daily chart using Hawkeye indicators
VIX daily chart

Alongside the USD index, the VIX is another of those powerful indices, which gives clear signals of the broad market sentiment which ebbs and flows on a daily basis. The VIX is often referred to as the fear index, as it displays the market mood and whether market players are in ‘risk on’, or ‘risk off’ territory. It is based on the balance of calls and puts in the options market, and therefore gives a powerful insight into whether traders and speculators are protecting their risky assets with puts, or buying calls anticipating a rise in the markets. As a result the VIX works inversely to equity markets, with the VIX falling as stock markets rise and the VIX rising as stock markets fall. All of this is governed by the old adage, when the VIX is low it’s time to go ( or sell ). So where are with in today’s market.

The daily VIX has been falling steadily since the peak of early June when the index hit a daily high of 28, before falling steadily, to close on Friday at 17.47 following the statement from Jackson Hole by Fed Chairman Ben Bernanke. Equity markets had been hoping for some clearer statement from Mr Bernanke, but the only hint given was that the FED was ready an willing to ‘pull the trigger’. Whilst the Hawkeye daily trend has turned bullish, the three day trend remains firmly bearish, and despite the recent buying volume of the last few days, it is interesting to note that Friday’s bar closed with white volume of ‘no demand’, possibly hinting that the recent move higher for the VIX could now be running out of steam. Any further move higher will need to breach the 21 price region where strong resistance awaits. To the downside, the platform of support is now in place in the 13 area on the chart, and should this be breached then we can expect to see further strong gains for equity markets towards the end of the year, but as always, once the VIX moves into single figures, then  this will signal the end of the bull run, and a possible sharp sell of in due course.

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Where next for the YM mini Dow

The YM mini dow index on the daily chart
YM Mini Dow – daily chart

Like many of the major equity markets around the world, the mini Dow index has now reached a critical level, with the daily September contract closing at 13,079 ahead of the 3 day weekend with markets closed on Monday for the US labor day.

Since March, the index has flirted with the 13,200 level on several occasions and each time, Hawkeye has delivered an isolated pivot high, giving a clear signal of future weakness at this level. These pivots have now created a strong level of price resistance in this area, and if the recent bullish momentum is to continue, then we will need to see a clear break and hold above this level. Friday’s price action suggests something different in the short term however, with the first red trend dot appearing on the daily YM chart, coupled with a transition in the Hawkeye Heatmap from dark green to bright red, a strong bearish signal.

This change in sentiment has also been accompanied by rising selling volume over the last few days, once again suggesting a bearish move lower, with the isolated pivot high of Monday adding more weight to this analysis. All of this has been reflected in the VIX which has been rising strongly over the last few days, and with the FED sitting firmly on the fence for the time being, we are in for some interesting times for equity markets and the YM in particular as traders and investors return to the markets with a vengeance following the long summer recess.

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The USD index turns firmly bearish

dollar index daily chart using Hawkeye
USD index daily chart – September futures contract

Whatever the market you are trading, either as an investor or as a speculator, having a view on the US dollar is key to longer term trading success, which is where the USD index steps in. The US dollar is the currency of first reserve and underpins all the principle capital markets, and the dollar index gives us a clear view of dollar strength or weakness against a basket of major currencies. As a result the daily dollar index chart gives us powerful signals as to the future direction for all the major markets, since all are interrelated by the associated currency flows both from and to the US dollar.

Over the last few months, the USD index has traded in a relatively narrow range, testing the 85 price point to the upside and the 81 region to the downside on the September futures contract. Much of this sideways price action was as a result of the markets waiting for some clear signals from the Federal Reserve, and Ben Bernanke in particular on any future stimulus for the US economy, which is still struggling to recover, with stagnant growth and a mountain of debt, coupled with insufficient new jobs. Indeed, whilst the headline unemployment rate is quoted at around 9%, the true figure is far more shocking, and believed to be well into double figures. Conservative estimates put the figure nearer 20% rather than 10%. It is against this backdrop that the FED has been waiting to act, hinting at a further round of quantitative easing, or QE3 – printing money which are then converted to bonds.

Friday’s long awaited statement from Mr Bernanke failed to deliver any clear statements, but merely hinted at further stimulus, and that the Federal Reserve was ‘ready to pull the rigger’. This was sufficient to weaken the US dollar on the daily chart, with the USD index closing the session at 81.21, it’s lowest level for three months, as the index now tests this key support region which is now a critical price level.

Hawkeye has been giving us strong signals of this bearish sentiment as far back as the second week in August when an aggressive Roadkill signal appeared on the chart. Since then the daily trend has continued to remain red, with the three day trend now moving into white congestion and likely to follow suit shortly. With bearish volume in both timeframes and further confirming Roadkill signals, the outlook is bearish for the US dollar, and this is likely to be reflected in gains for all the major commodities, as well as strength in the related currency majors, bullish equity markets and outflows from bonds.

If the index breaks and holds below the 80.00 level on the daily chart, then we can expect to see the dollar index move to test the 78.50 lows of earlier this year in due course.

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Gold bullish following recent breakout

gold futures daily chart
Gold futures – daily chart

Gold bugs are once again happy this week, and the recent breakout for gold continues to signal further bullish momentum, with spot gold just failing to touch a high of $1700 per ounce this week for the first time since March, and finally closing the week at $1691.18. Gold futures ofcourse reflected this bullish momentum, and indeed Hawkeye gave us an early entry signal on the daily chart, with a conservative trend Roadkill. This upwards momentum was almost inevitable following the extended period of sideways congestion, and in particular with the strong platform of support in the $1550 per ounce region, clearly defined by the Hawkeye pivots, a level that was never tested.

The other contributory factor is of course the short term weakness in the US dollar which is likely as a result of the FED’s clear signal of further stimulus to the economy, and should this weaken the US dollar further, then gold prices are likely to extend the recent breakout into a longer term trend. As mentioned above, Hawkeye has already given us an initial entry signal, and with the Hawkeye Heatmap now bright green and coupled with buying volume in both timeframes, we can now expect to see gold prices breach the $1700 per ounce level next week, and extend gains further, with a bullish trend which could see the precious metal test the $1800 per ounce level in due course.

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Bearish tone for the AUD/USD

aud/usd daily forex chart
AUD/USD daily Forex chart

The recent bullish sentiment for the AUD/USD on the daily chart, appears to have run out of steam in the last few days, with the Hawkeye trend dots flattening in the 1.0600 region, and subsequently moving into a short period of sideways consolidation. The bearish tone that is now evident was also firmly signaled with the Hawkeye isolated pivot highs to this price area, adding further weight to the downside momentum. In the last 6 days, the Hawkeye trend has finally turned red on the daily chart, but the longer term 3 day trend remains bullish for the time being. However, on Wednesday this week, Hawkeye delivered an aggressive volume roadkill signal, the cyan dot, which coincided with selling volume in both timeframes and a change in the Hawkeye Heatmap to bright red.

The key support level is now clearly defined in the 1.0200 area, and if this is breached then we can expect to see a re-test of parity in due course.

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GBP/USD bullish on the daily chart

gbp/usd daily Forex chart
GBP/USD daily chart

Following several weeks of sideways consolidation the GBP/USD has now finally broken out this area of price congestion on the daily chart, and now looks set to move firmly higher in the next few weeks. To the downside, the support level was clearly defined at the 1.5400 region whilst to the up side, 1.5700 region had been tested on several occasions. The breakout finally occurred last week with the GBP/USD now moving towards the 1.5850 region and beyond, and with this strong platform of support now below, cable looks set to test the 1.6000 region, and if this breached then we should see a test of the 1.6250 region in due course.

The bullish tone for the GBP/USD was signaled by Hawkeye as early as the 14th August with a volume Roadkill signal signalling an aggressive entry, with the two day trend, still remaining in consolidation, confirmed with the white trend dots. Should this follow through, then this will add further momentum to the bullish picture, and with the USD looking set to weaken on the dollar index, as a further round of quantitative easing is announced, expect to see further strength for sterling in the  next few months.

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Scalp trade on the EUR/USD

eur/usd 2 minute chart
Hawkeye – EUR/USD 2 minute chart

Trading success in the Forex market depends on several factors, but staying in the trend to maximize the profit available is perhaps the most important, and this is where most traders fail. Staying in a trend requires discipline and the ability to manage the fear that we all have when a potential profit is on the table. Markets never move higher or lower in a straight line, and the key to success is to continue holding during these minor pullbacks and reversals, and this is where Hawkeye is so powerful, and the EUR/USD on Friday, gave us another excellent example, this time on scalping 2 minute chart for the pair. Indeed this was a trade we were watching during the London open, and just after 9am UK time, Hawkeye duly delivered a Roadkill signal for a bullish move higher.

This trade continued almost unbroken throughout the morning, with further roadkill signals confirming the trend, coupled with the Hawkeye Heatmap, and buying volume in both timeframes. The move finally ran out of steam almost three hours later ahead of the speech by Ben Bernanke, an eagerly awaited event with the markets expecting an announcement on a further round of quantitative easing.

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