News and Analysis

Market Update: October 22

TLT DAILY

TLT Daily

Bonds have been the big mover leading up to the U.S. election.  TLT is under the 200 day average for the first time since December 2018.  The next critical level to pay attention to is 153-154.  This is the bottom of a short term channel, the June low, and the long term upper parallel from the channel that originates at the 2007 low (magenta line).  The upper parallel nailed tops in 2012, 2015, and 2016 and the low in June.  A long term chart is below.  Expect the level to act as support BUT a break below would indicate a major behavior change in TLT (and bonds generally).

TLT WEEKLY

TLT Weekly

SPOT GOLD 4 HOUR

Spot Gold 4 Hour

Gold continues to trade around the 2011 high.  Price just turned down from that level (again) as well as short term channel resistance.  I maintain a bearish stance as long as price is within this channel.  Again, 1760 is a major level to know for possible support.

10/13 – Gold has turned down from the 200 period average on the 4 hour chart, short term trendline, and 2011 high.  Notice the action around the 2011 high over the last few months…gold remembers!  Focus remains lower.  1760 appears critical for longer term support.  This is the May high, near the 200 day average (daily chart is below), and is a parallel that crosses highs and lows since August 2019.

EURUSD 4 HOUR

EURUSD 4 Hour

EURUSD has gone basically nowhere for 3 months.  Most of the trading has taken place between 1.1700 and 1.1900.  The high on Wednesday is right at the line that crosses highs in March and June.  This line was precise support on 9/17 and has been resistance since early October.  I ‘like’ EURUSD lower here but am waiting for a clean 5 waves down from Wednesday’s high.  Stay tuned.

10/20 – EURUSD took out last week’s high today and tagged the upper parallel of the bearish fork that we’ve been following in the process.  Proposed resistance is now to 1.1870.  EURUSD needs to roll over between now and then in order to maintain a near term bearish stance.  1.1870 is the 9/18 amd 9/21 highs.  The line that extends off of highs in March and June is up there too.  That line crossed the 9/17 low and highs in early October.  I’ll keep an eye on volume metrics and alert you in the event of a reversal signal.

NZDUSD 4 HOUR

NZDUSD 4 Hour

NZDUSD tagged the 61.8% retrace of the decline from 9/18 today.  This is a good spot for the next high but I’m also respecting potential for a stretch into .6724, which would make 2 equal legs up from the 10/20 low and is also the year open.   As is the case with EURUSD, a small 5 wave drop would present a bearish opportunity against the high.

10/20 – Kiwi action since late July looks like a textbook topping pattern.  If the cross is going to break down sooner rather than later, then .6620 should provide resistance.  A break under the line off of the 6/30 and 9/24 lows would suggest that a mark down is underway towards .6350/80 (bearish lower parallel and mid-June support).