No change to the 7/7 comments and ‘view’ of reversal risk in the Nasdaq. I’m simply pointing out that NQ made another 8 hour volume reversal today.
7/7 – QQQ is trading above the line (magenta line) that connects virtually every high since 2011 but reversed lower today. Dropping back below the line would suggest that the rally was terminal. Near term (see below), QQQ reversed from the top of a short term channel. The bottom of the channel is about 246.30. A break below would be a sell signal. Finally, futures made an 8 hour volume reversal today (2 charts down). These reversals haven’t worked since Q4 2018 (nailed the highs then). As always, follow through is key.
Silver traded into and reversed off of the line from the July 2016 and September 2019 highs. The rally from the March low is in 5 waves and is confined to a Schiff fork from the low (see below). A break under the lower parallel would indicate a behavior change and suggest that a larger corrective process is underway. An initial level for possible support would be the 4th wave low at 17.02.
USDOLLAR turned down on 6/30 but price may have put in a low today. For YEARS, parallels off of the 2011-2014 trendline have provided support and resistance. Today’s low is right at the parallel that extends off of the March low (we call these sliding parallels in median line analysis). A close up view is below. Simply, I’m open to higher levels as long as price is above today’s low.
6/30 – USDOLLAR traded 12383 today, not quite reaching the proposed resistance zone. However, that may be the end of the counter trend bounce. Price reversed right at the upper parallel from a Schiff fork, the 200 period average on the 4 hour chart, and at a level that has been support and resistance since May 2019 (red line). As long as today’s high is in place, risk is lower in my opinion.
USDSEK rolled over just before the upper parallel noted in June. Price remains within the channel but a break above the upper parallel would indicate a behavior change and favor higher prices. Remember that I view USDSEK as a barometer of USD direction generally so a break above would be viewed as broadly USD bullish.
6/18 – Pay attention to USDSEK over the next few sessions. Price is nearing the noted 9.50. The 200 period average on the 4 hour chart is currently 9.5390. The next USD high could occur with USDSEK into this resistance zone. However, sentiment needs to change for me to return to a USD bearish stance. Roach’s article from 6/8 (2 days before the USD low) is still plastered all over the internet. Simply google ‘US Dollar’ and see for yourself (also posted below). The USD is not going to ‘crash’ if the most widely read article regarding the USD is about a USD crash.
AUDUSD traded back into and reversed from daily reversal resistance but the fact that price rolled over before reaching the 25 line indicates a weakening uptrend and warns of a break (similar logic to prolonged RSI divergence). When a parallel has provided support/resistance for an extended period of time and price fails to reach that parallel before reversing, it’s called a ‘space’. The original term was a gap but traders know gaps as something completely different. Below .6920 is the short signal.
7/7 – AUDUSD traded into noted support today but I don’t think it holds given the view on copper and FCX. High today was at daily reversal resistance (6/10 close) and price remains under the year open (.7015). The 25 line continues to provide resistance as well. This is a warning that price will indeed break the lower parallel and head towards the full channel extension. I’ll short a break under .6920 and look towards .6680s or so.
NZDUSD took out the June high before reversing lower today. Now there is a non-confirmation between NZDUSD (new high) and AUDUSD (not a new high), which often occurs at important pivots in both pairs. There was also an 8 hour volume reversal on the futures chart (see below), which also favors the idea of a top. Finally, the rally from the March low consist of 5 waves. Waves 3-5 equal wave 1, which isn’t uncommon with V-bottoms (large 1st waves).
7/7 – NZDUSD tagged the line off of the April 2018-December 2019 highs today and made a doji in the process. Focus is lower towards the bottom of the ‘box’ and lower parallel of the channel from the March low at .6380 then reassess. I like the AUDUSD short better. AUDNZD (not shown) sports a head and shoulders top since late April.
Just a quick update to yesterday’s comments. Price traded through but reversed below 2020 VWAP, which I view as a negative. The spot chart below shows that price also reversed near the April highs. I’m thinking eventual support now near 1.2500, which is where VWAP from the June high and low intersect. The 38.2% retrace of the rally is 1.2510, so keep an eye on 1.2500/10.
7/8 – I remain broadly constructive GBPUSD but price could pull back from the current level, which is defined by 2020 VWAP (see 2 charts down). I’m showing 2 technical interpretations. An Elliott interpretation is that 5 waves up are complete or nearly so and that price should pull back towards the area of the prior 4th wave. 1.2460s, which is a clear horizontal level and near VWAP from the June high and June low, would be of interest for support. An alternate interpretation is shown below in which a head and shoulders bottom completed today. Under this scenario, support should be 1.2565/75 and the objective is 1.2808 (in line with the June high). Bottom line, be aware of 1.2565/75 as the initial level for support. If price reacts at that level, then there’s the opportunity to buy with a tight stop.