News and Analysis

Market Update – May 28

GBPUSD DAILY

GBPUSD erased most of yesterday’s rally but I remain constructive.  In fact, price found support near the short term trendline that originates at the 5/18 low.  I want to see strength above 1.2300 (blue line) before committing capital to the upside again though.  In general, this level has been support and resistance for a little over a month.

5/26 – GBPUSD low last week was 1.2161 and my view is that a 3rd wave in underway towards much higher levels.  Initial focus, and only for a pause, is the center line near 1.2770.  Support should be 1.2250-1.2300 now.  The top of this zone is a high volume level from today along with VWAP from the 4/30 high, which was previously resistance (see futures chart below).

COPPER 4 HOUR

Copper traded into proposed support today (low was 2.3585!).  As long as today’s low holds, respect upside in copper.  I’m watching this closely because a break lower would be a strong sign that AUDUSD is in for a deeper drop too.

5/20 – Even if copper is headed to 2.53-2.56 (2 equal legs up would be 2.5350), price could pull back to 2.3580 or so (blue line) before resuming higher.  Maybe a bigger pullback in AUDUSD too?

AUSTRALIAN DOLLAR FUTURES DAILY

AUDUSD made a daily volume reversal today.  Volume on futures the last 2 days were both more than 1.5 x the 20 day average.  Reversals with this much volume are rare.  In fact, the last bearish volume reversal with this volume profile (1.5x) was on 3/9/2005!  That ended up being an important top.  If today was a top, then .6637 should provide resistance.  Possible supports are now .6550 and .6506 (see hourly chart below).  As noted, keep an eye on copper.

5/26 – The current level in AUDUSD is significant so a ‘surprise’ failure isn’t out of the question.  Given my USDOLLAR bearish view though, I lean towards the idea that AUDUSD is headed towards the next big level at .6823 (gap).  .6600 is proposed support (see chart term channel below).

AUDUSD HOURLY

NEW ZEALAND DOLLAR FUTURES DAILY

NZDUSD also reversed from a massive level.  The last bearish daily volume reversal was 1/25/2018.  That ended identifying a major high.  Price did hold the level noted for support (.6156) but if today is some sort of high then resistance should be .6200.  NZDUSD could pull back to .6120s or even .6040 and still be considered in a broader uptrend.  A chart highlighting these levels is below.

5/26 – NZDUSD is also into a massive level.  High today was right at VWAP from the December high and 2020 VWAP.  Similar to AUDUSD, I am ‘thinking’ that this breakout is for real and that NZDUSD is headed towards .6448 (3/9 high and upper parallel of channel from the March low).  Watch for support .6156.

NZDUSD HOURLY

AUDNZD DAILY

I’ll concentrate on AUDUSD for a short entry because AUDNZD is correcting a 5 wave rally from the March low.  A level to keep in mind for eventual support is the March high at 1.0532, which is in line with the 50 and 200 day averages.  These averages are on the verge of a ‘golden cross’ (not a great timing tool but rather a description of longer term trend dynamics).

GBPJPY 4 HOUR

GBPJPY pulled back and held support today.  I’m bullish against today’s low.  There is nothing else to address regarding this clean setup.

5/26 – GBPJPY broke out from a head and shoulders bottom today.  There is resistance up to 133.18 (5/11 high) so respect potential for a minor pullback.  Support should be near 132 (top side of the neckline and lows in late April).  As is the case with GBPUSD, upside potential is significant.  A move to 140.80 would be nothing more than a rally to the top of the channel and 2 equal legs up from the March low.