Market Update 12/20 – Watch GBPUSD Closely Down Here

NASDAQ FUTURES (NQ) DAILY

NQ is testing the lower line from the channel that originates at the March low.  This is a well-defined channel.  Every important pivot since March (highs and lows) has occurred on the channel.  So, it’s make or break!  That simple.

12/16 – The equity ‘market’ has felt odd recently.  A look beneath the surface confirms this suspicion.  The 30 day Nasdaq advance-decline line is plotted below the composite index.  The AD line closed at -637 today.  The magenta dots indicate readings of -600 or lower.  Previous readings this occurred at the Dec 2018 low and for several weeks in March-April 2020 (the first reading was 3/18/20).  Prior to the last few years, readings this low occurred in October-November 2008 and during the 2000-2001 decline!  Those periods are shown in the charts below.  So, the A-D line is ‘oversold’ yet the QQQ closed a bit more than 5% off of the all time high today.  All of the prior ‘extreme’ AD readings occurred after for more meaningful declines.  The only takeaway I have is that if the index continues to decline but the A-D line improves then look out below because the next low won’t be until the next extreme A-D reading.

SPOT GOLD 4 HOUR

Continue to focus on buying the dip in gold.  Proposed support is refined to the 50%-61.8% retrace of the rally from last week’s FOMC low.  Those levels are 1777-1784.

12/16 – Gold followed through on its reversal from Wednesday which increases confidence in near term upside.  1834 remains the near term objective.  1770/80 is now proposed support (as opposed to 1770).

GBPUSD DAILY

Cable remains above the high, although barely.  I continue to ‘think’ higher in GBPUSD given the well-defined price level that price is hovering above.  Again, this is VWAP from the March 2020 low and channel support.  There is also the high from March 2020 and the 38.2% retrace of the rally from March 2020.  Finally, there is RSI divergence on the 4 hour chart.  Magenta dots in the chart below show divergent readings over the past year.

12/15 – Cable low in place?  There isn’t much to add to comments from 11/30 other than noting that VWAP from the March 2020 low has also provided support for the last few weeks.  Upside focus is 1.3412, which is the median line of the structure from the year long channel and September low.  Proposed support is the high volume level from today at 1.3238 and 61.8% of today’s range at 1.3211.  BoE is tomorrow.

GBPUSD 4 HOUR

AUDJPY 4 HOUR

The AUDJPY rally failed in the expected zone for resistance last week.  As such, focus is higher as long as price is below that level.  Proposed resistance is 81.58.

12/7 – AUDJPY followed through on Monday’s reversal.  Similar to AUDUSD, the rally from the low appears impulsive which suggests that additional upside is in store following a pullback.  Proposed support is near 80 (12/1 and 12/2 lows along with VWAP from the low).  Proposed resistance remains 82.00/30.  I prefer trading AUDUSD but wanted to share AUDJPY given it’s usefulness as a barometer of risk.