Market Update 12/14 – BIG Levels into Central Bank Meetings

DXY WEEKLY

The USD remains stubbornly up to flat.  The psychological situation reminds me of early in the year when the USD was stubbornly lower for longer despite multiple reversal signals.  Of course, price eventually resolved higher and now I want to go the other way!  The underside of the former trendline support was reached 3 weeks ago and nothing has happened since.  The situation should resolve in the next few days with Fed, ECB, BoE, and BoJ scheduled.  We’re at resistance therefore I’m ‘thinking’ lower.  The chart of daily closes below is a thing of beauty with respect to confluence resistance.

12/8 – Everything from the 11/30 note remains valid.  It’s been 2 weeks since the top but feels much longer (to me at least).  I know this ‘feeling’ and it suggests that the relative brief passage of 2 weeks is inordinately important…think power laws.  Perhaps anticipation emphasizes the importance of this recent moment in time.  Bottom line, violent downside wouldn’t surprise.  Downside focus remains 93.30/50 with 95.20s as a possible bounce spot.  The longer term chart is below.

DXY DAILY

EURUSD DAILY

EURUSD printed an 1.1186 low 3 weeks ago.  The 61.8% retrace of the 2016-2018 rally is 1.1186.  The top side of the 2014-2018 line is also at the current level.  The zoomed in chart below highlights what I consider a trigger line for longs (magenta line).  The 3rd chart down shows the 5 wave rally from the 11/24 low.  The ensuing 3 weeks have have been a corrective nightmare.  I’m looking for this to resolve higher.

12/8 – My stance towards DXY is of course applied to EURUSD (reciprocated).  I’m a bull and still looking towards 1.1520/50.  A possible path is outlined in which price tags the 11/30 high before pulling back to reset before surging higher.  Note that extreme moves are a December hallmark.  Watch for 1.1315 support.

EURUSD 4 HOUR

EURUSD HOURLY

USDJPY DAILY

The big picture is important.  USDJPY made a high 3 weeks ago at 115.52.  The 61.8% retrace of the 2015-2016 decline is 115.52.  Also, the rally from the March 2020 panic COVID low channels perfectly.  If 114 doesn’t hold as resistance then the 61.8% retrace of the decline from the high at 114.38 is possible resistance.  The line that extends off of the March and July highs (magenta line) has provided support so a break below would suggest that the ‘move’ is lower.

12/9 – USDJPY ended up rolling over a few pips shy of 114.  The decline from the 12/8 high appears impulsive so I’m willing to short against that high.  Proposed resistance is 113.65.

USDCAD DAILY

USDCAD is pressing against the 25 line from the fork that originates at the 2016 high.  This line was resistance from September-November 2020.  If price is going to reverse lower then it may not be until after a spike above 1.2952.  USDCAD turns are often violent and occur after taking out key levels.