Market Update: December 7
U.S. MONEY SUPPLY AND INFLATION
Unless ‘this time is different’, the U.S. is going to see inflation ramp up in the coming years. This is long term bearish USD (not a trade).
CALL VOLUMES AND FED BALANCE SHEET
The Fed has made mom, pop, aunt, uncle, son, daughter, and Rufus the dog all speculative call buyers. If this isn’t a sign of speculative excess and therefore a market top warning, then I don’t know what is.
GBPUSD 4 HOUR
GBPUSD is following through on Friday’s reversal. As noted yesterday, this bounce presents a short opportunity. Ideal resistance is about 1.3440 (12/1 and 12/2 highs and underside of the median line). Initial downside focus is the line off of the September and November lows near 1.3030.
12/6 – GBPUSD also made a daily volume reversal (see colored bars) on Friday. Importantly, this occurred from the massive 1.3500 level. Near term, price is sitting on a median line that has previously provided support. A break here shifts focus to about 1.3320. A bounce from there would present the opportunity to short. Bigger picture (see 2 charts down), eventual support may be just under 1.2700.
NZDUSD 4 HOUR
Kiwi bounced from just above .7000 again today, reinforcing the big figure as an important level. As stated previously, a drop under .7000 is required to short. If that happens, then .6750-.6800 will be initial downside focus. It’s worth noting that AUDUSD made a slight new high today while NZDUSD did not. NZDUSD had been leading the rally in recent weeks and may be leading the way lower now.
12/3 – NZDUSD is little changed for the last 2 days. Daily RSI is now above 80. Previous instances are shown with magenta dots on the chart. Tactically, a drop under .7000 is still needed in order to establish a short against the high.
GBPCAD DAILY
GBPCAD tested the lower barrier of a 6 month symmetrical triangle today and bounced. A break lower would suggest a test of the 2016, 2017, and 2019 lows at 1.5750-1.5850. In the interim, watch for resistance near 1.7200 (12/2 low and year open).
