News and Analysis

Market Update 7/28 – Levels for USD Support

DXY 4 HOUR

DXY traded up to 93.19 one week ago and reversed.  In other words, price is following ‘the script’.  A short term bearish fork is in play and price is at the median line now.  This is important because median line acceleration (in this case lower) is a possibility.  Focus is towards 91.50/75.  Again, this could happen quickly.

7/14 – DXY is in a similar position USDOLLAR.  An Elliott case can be made that strength from the 7/6 low is an ending diagonal.  Under this scenario, DXY trades up to 93 or so before reversing lower.  HOWEVER, note that the bottom of the zone noted a few weeks ago has been met (92.79…the high so far is 92.85).  Under 92 would suggest that a deeper drop is underway with 91.50 as a first stop.

GBPUSD 4 HOUR

Cable is testing the early July high.  This is possible resistance but I lean towards a run at 1.4000 before attempting to fade strength.  This view is partly based on the DXY view.

7/27 – GBPUSD has traded into the VWAP levels noted yesterday (see futures chart below for those VWAP lines).  However, there is no indication of resistance (hourly or 4 hour reversal candles for example).  As such, I’m wondering if 1.4000 needs to be tested before this takes a breather.  The 61.8% retrace is 1.3991 and 1.4000 has been critical since March.  Continue to watch for 1.3730 support.

AUDUSD DAILY

7415 has been discussed in these pages for months.  That level is now reinforced by the 20 day average and a short term trendline.  Also, the rally from the low would consist of 2 equal legs at .7427.  If a strong downtrend is underway, then .7415/30 (or so) should provide resistance.  The chart below shows price with a rolling 20 day midpoint.  Notice how the 20 day midpoint acts as support or resistance during strong trends.

7/21 – AUDUSD hit VWAP from the March 2020 low today and registered a key reversal.  As noted yesterday, I remain bearish Aussie on a bigger picture basis but a key reversal off of an important VWAP level warrants a constructive view in the present.  Look towards .7400/15 with support at .7320.

AUDUSD DAILY

GBPJPY DAILY

GBPJPY has rallied 5 of 6 days since the ‘constructive’ view was put forth but pay attention to 153.40/50.  This is a clear horizontal level of importance and the 50 day average.  IF (big IF) a head and shoulders top is developing since early April THEN price should turn down from the noted level.  Wait and see.

7/20 – Yen crosses reversed higher today.  Expanding on the implications from the Nikkei bear trap, GBPJPY tagged the 3/24 low today before reversing higher.  Price also held trendline support.  I’m constructive towards 150.74-151.31 (former lows).