Market Update – May 7

GBPUSD 4 HOUR

BoE is tomorrow and it looks like the bounce to 1.2484 is the extent of the corrective bounce in wave 2 of C.  Proposed resistance is now 1.2405/20, which is a well-defined horizontal level and the neckline of a short term head and shoulders.  I am looking to short into that zone with downside focus on 1.2130/64.

5/4 – Wave C lower is underway in GBPUSD towards the former wave 4 low at 1.2164, which is also the 38.2% retrace of the rally from the March low.  Near term resistance should be 1.2522/52 (April resistance and 61.8% of drop from last week’s high).

AUSTRALIAN DOLLAR FUTURES HOURLY

VWAP from the 4/30 high was resistance, which favors the idea that Tuesday’s high is the lower high in AUDUSD…specifically wave 2 of C (same as GBPUSD, NZDUSD, and USDCAD (inverse)).  Downside focus is towards .6200 (VWAP from the low and near the 3/31 high).  Resistance for short entry is .6434 (4/28 low and 5/4 high).

5/5 – 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).

NEW ZEALAND DOLLAR FUTURES HOURLY

VWAP from the 4/30 high was also resistance in NZDUSD, which allows shorts against Tuesday’s high.  There are a number of daily highs/lows since 4/21 at .6033/45 so watch for resistance in that zone.  Price could bounce from the mentioned .5950 but remember that wave C should draw price beneath the former 4th wave low at .5844.

5/5 – 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).

GBPJPY 4 HOUR

It’s possible that GBPJPY is headed lower in a 5th wave within the 5 wave cycle from the December high.  Near term, watch for resistance from former support in the 132.47-133.18 zone.  Levels that could provide support before the March low are weekly and daily reversal levels at 129.16 and 127.15.  I’ll probably just focus on GBPUSD with BoE tomorrow, especially since I’m already running USDJPY shorts.

NZDJPY 4 HOUR

There is a clean short setup in NZDJPY following the break under the line off of the 4/2 and 4/23 lows.  The underside of this line is now proposed resistance near 64.20, which is reinforced by the median line from a short term bearish fork.  The lower parallel from this fork serves as the target along with daily reversal support at 62.69.