Mar 292010
 

Is China the Next Global Resource Glutton?

UPDATE:  Gold has continued its appreciation today. Overall commodities and emerging markets were the main driver. The key chart today is copper which broke out to make new highs on the year (and since August 2008 for that matter).

Indicator suggests CHINA RISK RISING

Given what we have been stressing on the triangle observed in the Shanghai composite and AUDCAD, this could be a major development. In parallel to this break in Copper, AUDCAD actually broke out of its triangle to the upside. Two things to keep in mind though:

a/ Flase breaks for triangle are extremely frequent

b/ Copper had a major false break into new highs in July 08 before experiencing a virtually uninterrupted 70% sell-off

A follow through in today’s price action is therefore key, but as of now it seems the market is gearing up for the next leg higher in commodity prices and EM equities. We will use 0.9464 as the confirmation level on AUDCAD. If that level is bypassed the market will at least test parity, and we have upside targets getween 1.0680 and 1.840.

Good luck trading,

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