Market Update: November 10

SILVER DAILY

Silver has been trending lower since August 6th and put in a large bearish outside day on Monday.  Focus is towards the lower channel line near 20.65, which is currently just above the 200 day average.  Resistance should be about 24.56 (see 4 hour chart below).  A downside bias is reinforced by the fact that VWAP from the high was resistance on SLV on Monday (see 2 charts down).

SILVER 4 HOUR

SLV DAILY

U.S. DOLLAR INDEX FUTURES DAILY

DX made a bullish volume reversal on 2 x the 20 day average of volume on Monday.  Volume reversals with the magnitude of volume are shown on the chart.  Not bad!  The only false signal was in October 2016.  The volume reversal suggests that the USD decline from the September high is a B wave (EURUSD rally a B wave as discussed in recent posts).

11/8 – DXY continues to trade at/just above a major long term level.  Nothing has changed.  This is support until broken (daily closing basis at least).  The UUP (see below) warns that last week’s drop is a trap.  The red bars on the UUP chart show when price closed at a 52 week low with volume at least as high as it was last week (1.8 x the 13 week average).  Every instance except one (highlighted in yellow) was a capitulation low.  Stay tuned.

USDJPY 30 MINUTE

The near term USDJPY wave pattern continues to unfold.  Action since Monday’s high compose small waves A and B.  A drop into 104.60/70 in wave C would complete the corrective decline and give way to the next leg up in USDJPY.  This proposed support zone ‘fits’ with VWAP resistance in Yen futures (see below).

11/9 – USDJPY took out nearly all of last week’s post election decline in several hours.  The rally is impulsive (5 waves) so strategy calls for buying a dip.  Proposed support is either 104.70s or near 104.15.  Upside focus could be significant given the one sided positioning (COT), which was discussed in a note last week.  Also, a volume reversal triggered on a daily basis with today’s volume greater than 2 x the 20 day average.  That has only happened 3 times in this direction (see below).

JAPANESE YEN FUTURES HOURLY

USDTRY 4 HOUR

How about that timing?!  After tagging the long term parallel, USDTRY dropped over 5% on Monday…it’s largest decline in over 2 years.  3+ month channel support has held.  I favor going with weakness on a break of the channel.  Possible bounce levels are 7.7790 and 7.3950.

11/8 – Based on long term slope analysis (parallels), USDTRY reached resistance last week.  I like the short side now…that simple.  Also, a bullish volume reversal triggered on a weekly basis for TUR (see below).  Previous signals have coincided with USDTRY tops.  Also, EidoSearch results are overwhelmingly bullish TRY (results are below).