We got the bounce as suspected and Nasdaq futures are approaching proposed resistance near 11415. I’m on alert for a turn lower from that level.
11/1 – QQQ made an inside month in October. The red and blue dots on this chart indicate my ‘inside BB’ setup. This occurs when price makes an inside month and the prior month’s high/low is higher/lower than the upper/lower Bollinger Band. The signals for QQQ have been timely to say the least! Considering the importance of the tech sector to the overall market, I’m not taking this signal lightly. Near term, noted support held on Friday and a 4 hour volume reversal triggered on Friday (see below). Respect bounce potential with resistance near 11420s. The next tradable support is 10350s. These levels are anchored VWAPS.
Copper dropped into proposed support and bounced. The bounce has so far retraced half of the decline from the high. A bit more strength into the 61.8% retrace at 3.1455 is a possibility before an attempt at a lower high. Weakness below the center line of the multi-month channel would shift focus to the lower parallel near 2.92.
10/26 – Copper high last week was right at the line that crosses off of the July and September highs. Parallels to this line form a channel and provide levels to pay attention to on a near term basis. 3.0465 is a possible bounce level. A break there opens up the more important test at 2.9205. Tactically, I’d look for a failed bounce from the former level to target the latter.
The pullback in DXY is nearing proposed support from the top side of former resistance lines near 93.00. This needs to hold to maintain a constructive view. The drop today may be ‘it’ though since VWAPs from the September and October lows held today (see futures chart below).
10/28 – DXY finally closed above the trendline from the March high. The top side of the line is now proposed support near 93.20. Broad focus is still towards 96-97 although 94.75 is a possible reaction level. Keep it simple…DXY held long term support (see below) and just broke above a 7 month trendline. That’s bullish.
USDNOK since the March high is a case study in Elliott wave analysis. The drop was a textbook 5 waves. Since the September low, price has rallied sharply and traded sideways in what I’m viewing as a B wave. B waves are often complex so additional sideways is possible (maybe a triangle forms?) before a strong advance in wave C. The 200 period average on the 4 hour chart has been a useful trend filter and support/resistance for most of 2020. That is currently 9.32 and I’m watching there for support.
The EURUSD bounce has reached 1.0740, just under the proposed 1.1750/75 zone for resistance. So, maybe we get upside attempts tonight as election results roll in. Ultimately, focus remains lower towards 1.1495 (or so) as has been the case for several months!
11/2 – I’m reproducing EURUSD election analog from last week’s report. In 2016, Euro, Yen, and gold spiked drastically before reversing and trending lower for the next 5-6 weeks. A 1.1900 EURUSD spike would certainly be drastic. It’s tough to believe something like happens again. It’s just too scripted and likely a case of recency bias for even entertaining the idea. I’m still thinking EURUSD resistance in the 1.1750/75 zone.
USDCNH has pulled back to the cited support zone. Again, the bottom of the zone is 6.6690 (61.8% retrace). I want to see this level hold. The impulsive rally from the 10/21 low suggests that at least one more impulsive rally is in store.
10/29 – The USDCNH, DXY non-confirmation nailed the turn again. Upside is favored for the USD over the next few weeks but there are reasons to suspect that the USD pulls back slightly (so maybe a bounce in equities too). USDCNH pattern is one of those reasons. The rally from the low is in 5 waves so expectations are for a 3 wave pullback. That pullback is underway. The proposed support zone is 6.6690-6.6880.
AUDUSD ripped higher today and is currently trading right at trendline resistance and VWAP from the September high. There have been several instances over the last few months where AUDUSD has traded above this VWAP before resuming lower. Something similar here into the election? Also, the election analog (updates below) remains on track (rally into the election and then dump). Bottom line, this rally presents the next bearish opportunity in AUDUSD.
AUDUSD price pattern is similar to 2016 as well. In 2016, AUDUSD barely took out its August high on election day and then reversed lower. This year, the high was on 9/1. I’m of the mind that AUDUSD trades lower from current levels but did want to share the comparison.