Market Update: December 7
Scandex Technical Weekly: 12/06/2020
December 7, 2020
Market Update: December 8
December 9, 2020
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).
