Market Update – May 6

USDJPY HOURLY

USDJPY is nearing the center line of the channel from the 4/6 high.  When a market is nearing the center line, I’m always on the lookout for acceleration in the trend…in this case that’s lower.  Focus remains towards the lower channel and 61.8% retrace of the rally from the March low at 105.19.  Also, BoJ assets are significantly lagging Fed assets, which should pressure the cross lower (see below).

5/3 – 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).

BOJ VS. FED ASSETS

AUSTRALIAN DOLLAR FUTURES 4 HOUR

AUDUSD traded up to .6476 today, which is in the middle of the cited zone.  However, I’m respecting potential for slightly higher levels.  The underside of the April trendline, 2020 VWAP, and the most recent high volume level are at .6520.  If AUDUSD is headed there then the week open at .6412 should hold as support.  Finally, AUDUSD seasonal tendencies are now extremely bearish (see below).

5/4 – AUDUSD bounced today from the center line from the channel off of the 2011 high (isn’t it awesome how precise these long term channel lines are as support/resistance!?).  Broad focus is lower in order to correct the 5 wave rally from the March low.  Near term resistance should be either .6450 or .6490s (38.2% and 61.8% retrace of recent drop).  RBA is tonight so fading a spike higher into one of these levels is an option.

AUDUSD WEEKLY SEASONALITY

NEW ZEALAND DOLLAR FUTURES 4 HOUR

NZDUSD has failed near .6070 but here too I’m wondering if price holds up a bit more to test .6127/38, which is the month open, 4/14 high, and most recent high volume level.  Pattern since the 4/14 high is likely a flat (also flats in USDOLLAR, GBPUSD, and USDCAD).  The implication is that price trades below the 4/23 low (wave A low).  That said, .5950 (trendline and VWAP off of the low) is a level to pay attention to.  Here too, seasonal tendencies are now bearish (see below).

4/30 – NZDUSD reversed from 2020 trendline resistance today.  I’m not sure what’s going on from a pattern perspective but levels are clean.  Former lows at .6190-.6200 are likely resistance if reached and .6070 is a level to know for a short term bounce (see hourly chart below).  For now, just focus on the levels.

NZDUSD WEEKLY SEASONALITY

USDCAD DAILY

No change to USDCAD other than reinforcing the importance of 1.3945/66 as potential support.  The 50 day average is 1.3967 and the month open is 1.3950.  Watch for resistance now from the week open at 1.4085.  The preferred wave count is a flat from the 4/13 low.  The implication is that price trades above the 4/21 high at 1.4265 and possibly into the 3/31 high (wave 4 high) at 1.4349.

5/4 – USDCAD is a decent option for playing the expected short term USD pullback following the show of resistance at the line off of the 3/19 and 4/21 highs.  I also like that CAD futures held VWAP off of the March low (remember that CAD support is USDCAD resistance).  Proposed USDCAD support now is 1.3945/66 (daily reversal support and 61.8% of rally from last week’s low).

EURAUD 4 HOUR

EURAUD has broken through the wedge and the top side of the wedge line is now proposed support along with the 78.6% retrace at 1.6680.  Remember, price turned up last week from just above the 200 day average.  If price finds a higher low, then upside levels of interest will be 1.7308, 1.7784, and eventually 1.8435-1.8608!

4/28 – Recent EURAUD weakness is confined to a wedge.  The bottom of the wedge is about 1.6450.  This is just under the 200 day average, which is currently 1.6520 (see below).  Strength above the wedge resistance line near 1.7000 would warrant a bullish stance.  So, watch for support in the 1.6450-1.6520 zone but the real setup here is to get bullish above 1.7000.