Focus on technical analysis
Interview: CandleCharts.Com ---Nison, Steve---President
>> the price of crude oil in new york fell on speculation the organization of petroleum exporting countries will leave production quotas unchanged at a meeting this week. oil closed at $30 a barrel. there you are looking at the one-year chart. moving on. silver futures in new york rose to a three-year high on optimism that economic growth in the u.s. will accelerate boosting demand for that metal. silver for september delivery rose 12 cents or 2.4%, to around $5.20 an ounce. thoots the highest close for silver since february, 2000. checking gold prices, the august contract rose to just over -- rose just over $2 to $364.90 an ounce. over the past two prices for gold and sis ver have moved almost in lock step candle charts have been a form of technical analysis that investors and traders have used dating back senturesy, beginning in japan. in light of recent moves in the stock and bond market this form of technical analysis may be a good way to detect trends in the market. steve nis sen is president of can’t kanl charts.com with a closer look at this form of analysis and joins me on set. thanks for being on the program.
>> my pleasure.
>> let’s begin with a look at candle charts. we drew a one-year chart from the s&p 500. why don’t you tell us what we are looking at and describe what a candle chart is and what it shows.
>> candlestick chart, described by the word, candlestick and candle charts are used interchangeably rkts candle charts use the open, high and low close. japanese bar charpts place more on the opening and close. candlestick lines are rectangular portion. the rectangular portion porgs is the real body and could be black or blue. if you have a white or empty real body it means that the open is under the close.
>> so right now we are looking at a chart on screen here. so tell us again what this chart is showing us, i guess describe what the blue box is.
>> the blue box is the real body is always the relationship between the opening and closing. if we have a blue box, the close is under the open. so the top of the blue box is the open of the session, and the bottom of the blue box is the bottom of the session.
>> that would be a bearish indicator. this is the s&p 500 for 12 months. so i guess your point here is when we are seeing the blue boxes they correspond with downward moves in the overall index.
>> right.
>> apart from that, in the sense of when you look at the s&p 500 chart in terms of support levels what does this chart show you?
>> one of the great things about the candle sticks is that they give you reversal signals in as little as one or two or three sessions. so, for example, this weekly chart in early june we had a session that looks like a cross. there is no rectangular portion, right over here. this is called a dojer. the japanese would say the market is tired. so this doji.
>> let me draw it here on the screen.
>> it’s over here. the japanese will say the market is losing its breath. the next session with that long upper shadow, that’s showing tus market is rejecting higher levels. this was the first sign that the market was losing steam. >> i see.
>> but as for your question for support, one of the great things about the candle sticks you use all western signals. one of the things i’m looking for is based on a western principle technique, nooul resistance becomes support. we had resistance in august over here.
>> ok. i’ll draw this here. we can go tight and show the viewers. you are saying this level here resistance.
>> then again here, a little higher over here. so if we connect these lines here, if we swing it over. ok? old resistance becomes new support.
>> i see.
>> so my feeling is we are kind of in a short term trading range with the support level of 950 defined by what i call change of polarity or resistance becoming support and the shooting star. my upside target is 1,160. i get at looking at the height of this. if we break under 950 that target is voided.
>> let’s move on quickly, the big story today was bonds. we saw yields spiking upward. let me bring in a monthly chart of the 10-year treasury yield. if i type the right code it will come up. and there we have it. once again it goes back a few months here. actually a few years here. it goes back from 1999. this 10-year treasury yield here what are you seeing.
>> i’m usually a little more focused on the price. i’ve been looking at the 10-year bond and the futures. i’m not sure what the yield converts, the equivalent of this. i would be looking for the late 2002, early 2003 support level on bond prices. if i remember correctly, that was around 112 and a half to 1.1125 area. whatever corresponds with this in late 2002, early 2003. >> let me give you a nasdaq chart and have you talk to that. this, the candle chart of the nasdaq, this is going back. this is a three month chart for the nasdaq. go ahead.
>> quickly, i’m looking for very good support around 1,685. again, the change of polarity, visually drawing it here, the old resistance over here becomes support.
>> this is the old resistance.
>> exactly. very basic, and upside resistance area, 1,785.
>> very well, steve nisen, president of candle charts.com.
>> when we come back after this quick break, we’ll have more of the program. stay with us.
