News and Analysis

Market Update 1/5 – Cypto Breakdown

NASDAQ FUTURES (NQ) DAILY

The latest NQ rally failed before the high.  This is interesting in that SPX traded at an all-time high yesterday and the Dow did today!  Such non-confirmations are typical at important turns.  The bottom of a 10 month channel is just below the market.  A break would indicate an important behavior change and open up the bottom of the longer term channel.  That’s currently about 14600.  Also, a drop under 15492 would confirm a double top with an objective near the October low of 14368.

12/22 – NQ held the channel perfectly and the next possible pivot is the center line near 16354.  Trade around the center line was sloppy recently but the line was precise support back in August so there is precedence for this line to produce a reaction.

S&P 500 DAILY

I’ll update the near term SPX pattern when price action dictates (after a clear 5 down for example which would then present an opportunity to short a bounce).  For now, I just want to remind you of the line that crosses highs since April 2010 (remember the May 2010 flash crash!?).  The comments from mid-December remain pertinent.

12/16 – The SPX channel from the 2009 low is a thing of beauty.  The market has pressed against the channel for prolonged periods of time, notably in 2014-2015 but eventually each tag of the upper channel line resolves with a drop to the center line.  Depending on time, that’s 15%-20% lower.

BTCUSD DAILY

A head and shoulders top is evidence in BTCUSD.  Price is at the neckline.  In the event of follow through, the objective would be 24500.

ETHUSD 4 HOUR

ETHUSD has broken the line described yesterday (magenta line).  This line is resistance if reached near 3640.  Price is testing the 200 day average now (not shown) but the more important level is probably VWAP from the May 2021 high at 3050 (see below).  Bigger picture, my view is that price drops to 985 or so in a 4th wave.

1/4 – ETHUSD is in a potentially dangerous spot.  Price is pressing against 3900, a level has been support (give or take) since October.  This is also the 20 day average.  The most important technical aspect of this chart is the line that extends off of the May and September highs (magenta line).  This line has been support since the 12/4 crash.  If it gives way, then look out below.  My long term wave count suggests downside towards 1000 or so (see below).

ETHUSD DAILY

UUP MONTHLY

I forgot to show this earlier in the week.  This is USD ETF, which is basically the inverse of the euro.  A monthly volume sell signal triggered at the end of December.  Add this to the list of ‘reasons’ to be a EURUSD bull.

USDJPY WEEKLY

I still don’t have a signal to short USDJPY.  If price does make a new high then be aware of the massive trendline near 117.50.

1/4 – Well, the re-test is out of the question but this USDJPY move could be a false breakout.  The chart above shows square root levels.  Square the year opening price and add/subtract that number in increments.  For USDJPY, the square root of 11510 is 107 so the first square root up is 116.17.  The idea is to look for a turn at the first square root level during the first week of the year in a market that is already extended.  Several examples are below.  An Elliott case is also made for a top as the rally from January 2021 consists of 2 equal legs (log scale).  This chart is below.  An objective trigger isn’t present yet.

CADJPY DAILY

CADJPY is interesting on the short side at these levels.  Price has turned down from the upper parallel of a well-defined fork.  The median line was precise support which increases confidence in resistance up here.  Bigger picture, the rally from March 2020 is a clear 5 waves and price is pressing into a massive level (see below).

CADJPY WEEKLY

EURCAD DAILY

A well-defined channel has developed in EURCAD from the November low and price carved a bullish outside day today.  I also like the failed break under the February 2020 low and the weekly reversal (J-Spike in fact…shown with magenta bars below) in November.  I like the long side against today’s low.

EURCAD WEEKLY