Market Update – September 8

S&P 500 FUTURES (ES) WEEKLY

ES made a bearish weekly volume reversal last week.  Since the 2009 low, there have been 3 other bearish reversals and 1 bullish reversal.  Reversals in 2010 and early 2018 identified interim highs.  A reversal in May 2017 would have been a false signal.  The bullish reversal in January 2016 was spot on.  I’m inclined to ‘believe’ this reversal given that price cut through the line off of the January 2018 and and February 2020 highs (not shown on this chart…see the 9/2 update).  The bounce on Friday retraced a little over 38.2% of the preceding decline so a lower high may already be in place.  I’m watching near term QQQ action for evidence of a break though (next chart).

9/2 – SPY and SPX (looking at SPX today to show more price history) traded through the line off of the January 2018 and February 2020 highs today.  Let’s see where we finish the week though.  Extending the line back in time reveals a lot of important pivots around or right at the line…I call this an ‘angle influence’.  The monthly chart below shows that the line tags the 1932 and 1942 lows as well!  Finally, I’ve shared several charts of tech names that made bearish volume reversals today (tech has been the high flyer).

QQQ HOURLY

XLY WEEKLY

XLY (consumer discretionary ETF) made a bearish weekly reversal last week.  This is the 4th reversal since the 2009 low.  The previous 3 identified interim highs.  Consumer discretionary is one of the more important sectors, composing 10.5% of the S&P 500.  Also, AMZN is 25% of XLY!

GXC WEEKLY

GXC (S&P China ETF) also made a bearish weekly reversal last week.  This is just the 3rd reversal in the last 10 years with volume requirements that occurred last week.  The previous 2 were a bullish reversal at the 2011 low and a bearish reversal at the 2015 high.  Worth paying attention to!

DXY 4 HOUR

DXY is attempting to break the wedge described last week.  Price is sitting right at the ‘decision point’ as I type during quiet Labor day hours here in the U.S.  I’d go with strength from the current level once more active trading gets underway.  Initial upside focus is the line off of the March and May highs near the 7/23 high at 95.18.

9/1 – DXY traded 91.75 today before turning (exact midpoint between 91.50 and 92.00 by the way) higher.  A daily volume reversal triggered in the process!  We now have 2 triggers since 7/31, which is similar to the 2 triggers in January 2018 and summer 2018.  Additional signals occurred in May 2016 and May 2014 (these are all circled on the chart below).  Strength above 93.04 (high volume level from Powell’s Jackson Hole speech last Thursday) would break a 1 month wedge and suggest that the trend has reversed (hourly chart is below too).

EURUSD 4 HOUR

EURUSD is sitting just above the breakdown level described last week.  If price bounces off of this level, then proposed resistance remains 1.1900/10.  However, I’m also willing to go with weakness under 1.1780 now.  Downside focus is on old highs at 1.1423 and 1.1496.

9/2 – EURUSD followed through on Tuesday’s reversal and 1.1750 remains the key level to break in order to indicate a trend change.  In the interim, pay attention to 1.1900/10 for resistance.  This zone includes highs in late July/early August and the spike high after Powell’s Jackson Hole speech.

USDNOK WEEKLY

USDNOK reversed sharply last week from the line off of the 2016 and 2018 highs.  This line was precise resistance AND support in 2019.  The area around last week’s low has been a major horizontal level since 2016.  I also like that the 200 week average is just under the low.  General upside focus is 9.87-9.98.  This is the former 4th wave high (5 waves down from the March high) and 38.2% retrace of the drop.

AUDUSD 4 HOUR

.7400-.7500 proved important again in AUDUSD.  Friday’s drop tested the lower channel line from the 6/15 low.  A break below would be indicate an important behavior change and put focus on the channel extension line, which intersects .7065 (June high and 7/24 low) late this week.  If price bounces here, then .7340 should provide resistance.

08/31 – AUDUSD poked above the December 2018 high today at .7394 and pulled back slightly.  Generally speaking, .7400-.7500 was an important zone from 2017-2018 so it could be important again.  Near term, price is pressing the top of the short term channel (see below).  Below .7300 (center line within the short term channel) is needed in order to suggest that price is reversing lower.  RBA is tonight.

NZDUSD HOURLY

Kiwi turned from its long term well-defined .6750-.6800 zone.  The drop counts in 5 waves and an up-down sequence is visible since the low.  As such, a rally that takes out .6735 is possible before the next leg lower.  Short orders just above that level are appropriate.  Initial downside focus is the line off of the 6/30 and 8/20 lows.  This line intersects the 6/23 high at .6533 this week.

9/2 – NZDUSD remains firm (7th up day in a row today) as it tests the noted .6750-.6800 zone.   Aside from the pivots mentioned last week, this is also the 200 week average and just above the 61.8% retrace of the decline from 2017.  There is zero reason to be short here.  I’m simply aware of the level as significant and will alert if reversal evidence arises.