Market Update – April 28

S&P 500 FUTURES (ES) 4 HOUR

‘The market’ continues to levitate.  Each turn lower from a well-defined level (the most recent turn lower was from where the rally from the March low consisted of 2 equal legs) is met with another leg up.  Volume has died, as is tends to do when markets rally.  From here, I am paying attention to 2 levels for potential resistance.  The first is 2923/35 in ES.  This is the 61.8% retrace and 2020 VWAP.  In cash (chart is below), the 61.8% retrace is 2935.  The 2nd level to note is the 200 day average and July 2019 high on cash, which is 3007/28.

S&P 500 INDEX CASH DAILY

EURUSD HOURLY

I like EURUSD higher against Friday’s low of 1.0727.  As noted yesterday, action since the March low is 5 waves up and 3 waves down.  The first big level to pay attention to on the upside is 1.1043, which is where the rally from Friday’s low would equal 61.8% of the rally from the March low.  Proposed support for long entry is the 61.8% retrace of the rally from Friday’s low at 1.0778.  There are several observations on the daily chart that are worthy of note as well (daily chart is below).  Friday was a J-Spike, as was the day of the March low.  Friday’s low was also at daily reversal support (close of the low day on 3/23).  Daily RSI is bouncing along 40, which is a positive.  Finally, the 200 day average and April open are in line with the noted 1.1043!

4/26 – The EURUSD decline from the 3/27 high is in 3 waves.  Since this decline succeeds a 5 wave rally from the March low, it’s possible that the rally from last week’s low is either a C wave or a 3rd wave.  Last week’s low is also on the lower channel line from the 2019 high.  This line has provided support numerous times since September (zoomed out view of the channel is below).  Near term entry is unclear but keep an eye on the line off of the 3/27 and 4/14 highs for a breakout.

EURUSD DAILY

GBPUSD HOURLY

To summarize, the GBPUSD rally from the March low is impulsive.  My best near term guess is that the decline from 4/14 is an A wave and that the rally from 4/21 is a B wave.  Proposed resistance for wave B is the underside of the parallel that was support on 4/6 for wave 4.  This line intersects the 4/17 high at 1.2522 tomorrow.

USDJPY HOURLY

I like USDJPY lower as long as price is below last week’s high of 108.04.  Watch for resistance from the short term trendline confluence and 200 hour average at 107.60.

4/26 – USDJPY action since 4/14 resembles a small bearish flag.  The ‘break’ lower isn’t much of a break yet but I lean towards the short side as long as price is below the high volume level at 107.80.  Eventual downside focus is 104.62 (2 legs down from 3/25).  Another reason to like USDJPY lower is that Yen futures held VWAP support last week (see futures chart below and remember that support in Yen is resistance in USDJPY).

AUDUSD 4 HOUR

AUDUSD has taken out its 4/14 high and rally from the March low now consists of 5 waves.  The implication is that price drops in 3 waves in order to correct the 5 wave rally.  With price above .6449, ideal resistance is now the mentioned .6523 along with the underside of the red trendline and 3/11 high at .6540.  Bottom line, focus on .6523/40 for a high.

4/26 – A test of .6449 could complete 5 waves up from the March low.  In fact, the rally from 4/21 appears to be unfolding in 5 waves itself.  If AUDUSD takes out .6449, then be aware of 2020 VWAP (currently .6523…see futures chart below) for potential resistance.  Bottom line, I’m still partial to the short side in AUDUSD and awaiting either slightly higher or for a break under the short term red trendline.