Market Update – May 4

A flat is still possible.  Thursday’s low would compose wave B.  If this interpretation is correct then wave C should carry above 12593.  The most likely spot for resistance remains the wave 4 and red parallel at 12692.  Bottom line, USDOLLAR reacted at critical support (l0ng term magenta trendline) so focus is higher as long as price is above last week’s low.

4/28 – To review, USDOLLAR dropped in 5 waves from the March high.  The 4/14 low was right on the 61.8% retrace of the rally from the March low.  At that point, I was looking for a 3 wave rally back to 12692.  Instead, USDOLLAR has traded in a tight range.  Price is nearing the 4/14 low.  It’s not impossible that the rally into the 4/21 high at 12593 is the entire correction but the correction would be awfully small in both time and price retracement.  So, it’s possible that a flat is unfolding.  Under this scenario, a C wave rally (probably sharp) will begin from nearby levels (may or may not take out the 4/14 first).

GBPUSD DAILY

GBPUSD carried higher than I thought it would but focus remains lower in proposed wave C towards the 4/7 low at 1.2166.  Last week’s high is right at the 200 day average, which reinforces the idea that GBPUSD put in a B wave high.  Watch for resistance near 1.2520/30 (highs from 4/28, 4/16-4/17).

USDJPY 4 HOUR

There isn’t much to add to USDJPY analysis other than noting the action on futures (see below).  Yen futures (futures trade as JPYUSD, which is the inverse of spot so know that Yen support is the same as USDJPY resistance) held the high volume close from 2/28, which reinforces the idea that Yen is headed higher (USDJPY lower).

4/30 – USDJPY spiked into the top of the noted zone for resistance (high today was 107.50).  The high is ticks below the short term trendline (line off of the 4/6 and 4/23 highs).  Today’s spike serves to clear the market of weak shorts that chased the breakdown into month end and I consider it a trap.  Initial focus on 105.05/20 (61.8% retrace and 3/16 low).

JAPANESE YEN FUTURES DAILY

AUDUSD 4 HOUR

AUDUSD finally cracked and near term focus is on .6164-.6214.  This zone is defined by the 38.2% retrace of the rally from the March low, 3/31 high, and 200 period average on the 4 hour chart.  Proposed resistance is .6444/72, which is the underside of the line off of the 4/3 and 4/21 lows, the 4/14 high, and 4/27 high.

4/29 – AUDUSD is at ‘a level’ but reversal evidence is lacking.  When I take a step back, it’s clear that the major level is .6685 (goes back to August lows).  Price could pull back from the current level, which is the center line of the channel from the April low.  If it does, then watch for support from the 25 line (magenta line), which is .6485-6500 on Thursday and/or the lower parallel and 4/14 high at .6445.