Market Update – June 11

QQQ DAILY

QQQ is running into lines that extend off of highs over the last 9 years.  A close-up view is above.  The red line extends off of the December 2014 and March 2018 highs.  That line was resistance for the August 2018 and February tops.  It was reached today.  The line that originates at the February 2011 high is slightly higher…about 251.70 in QQQ.

QQQ DAILY

DXY DAILY

DXY is testing the 25 line of the channel from the 2011 low.  This line was support at the March low.  Also, the June 2019 low is 95.84.  DXY closed today at 96.08 after making low at 95.72.  That’s right…DXY is almost exactly flat over the last year.  At risk of sounding like a broken record, ‘this is a good spot for a rally attempt’.  Markets (stocks down and USD bounce) started to fade after the Fed so I’ll stick with yesterday’s ‘sell the news’ call.

6/9 – Stephen Roach, former Morgan Stanley economist and currently employed by Yale, published A Crash in the Dollar Is Coming yesterday.  He may be correct but these types of articles are usually published at near term price extremes (in this case a USD low).  Technically, this is the perfect spot (December low) for a bounce.  Also, DXY made a slight new low today but EURUSD did not make a new high.  This non-confirmation is typical at turns.  Back to 98.27 or so wouldn’t be a surprise.  Finally, consider the extreme short term sentiment readings (DSI readings from Monday) in front of FOMC on Wednesday.  The narrative heading into FOMC is that there is no limit to the Fed’s balance sheet.  What else can they say that would ‘surprise’ markets in that direction?  Risk for tomorrow seems like a classic ‘sell the news’ event.

GBPUSD 4 HOUR

GBPUSD traded 1.2813 today before fading.  High is just under the median line of the fork from the September low.  This line was resistance in April.  If GBPUSD inches higher, then pay attention to 1.2849 (February 20th low).  I remain of the mind that price is due to pull back and that the blue parallels will be in line for support near 1.2550/80.

6/8 – GBPUSD continues to grind higher.  Best guess at this point is that price tests the median line confluence above 1.2800 before pulling back.  These lines intersect well-defined horizontal levels at 1.2824 and 1.2872 over the next few days.  Pay attention to that zone for a reaction.  Support is probably still close to former resistance at 1.2485.

AUDUSD 4 HOUR

AUDUSD spiked to a new high again before fading late.  Nothing has changed from yesterday’s view that price is going to pull back and that focus for supports will be .6855 and .6685.  Also, price has been testing the year open for the last 5 days.  One of my favorite (and simple) setups is to simply trade reactions off of the year open.  Examples are highlighted below (wouldn’t have worked in 2016).  If AUDUSD keeps grinding higher then be aware of .7132/48, which is the 61.8% retrace of the decline from the 2018 high and June 2016 low.

6/9 – AUDUSD made a bearish outside day today after taking out the 12/31 high at .7032.  I’m looking lower with focus on the well-defined .6685.  The center line of the channel shown is possible support near .6855.

AUDUSD DAILY

USDCAD DAILY

USDCAD tagged 1.3329 today (low was 1.3315) before rallying to close more or less unchanged and form a doji in the process.  The 78.6% retrace is 1.3319 and the decline from the high consists of 2 equal legs (1.3329).  The lower parallel from the channel was also support today.  Bottom line, there is a lot of technical consideration for support so I’m looking higher.  Initial resistance is 1.3570.

6/9 – If USDCAD continues to bounce then the center line at 1.3600 is still in line for resistance.  From an Elliott standpoint, the bounce would fit as a small 4th wave.  In other words, USDCAD would drop once more to complete the 5 wave decline from 1.4141.  A downside level of interest to keep in mind then is 1.3329.