News and Analysis

Market Update 1/6 – USDCNH Breakout

SPX HOURLY

The SPX decline is unfolding in an impulsive manner.  The count shown suggests another leg lower before a larger corrective rally takes place.  The arrows are a ‘best guess’.  4635 or so is proposed support.  This is the trendline from the October low.  The VWAP line is 2022 VWAP.  Track that for resistance regardless of the proposed pattern.

1/5 – 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.

SPOT GOLD DAILY

Gold support is still 1777/84!  The zone is daily reversal support and the 61.8% retrace of the rally from the 12/15 (reversal day) low.

12/20 – 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.

USDCNH DAILY

This one is throwing me for a loop.  USDCNH broke out today.  I’ve got USD reversal signals galore and this development suggests the exact opposite…or does it?  It’s possible that EURUSD does rally (and USDJPY declines) while ‘risk FX’ suffers.  It’s also possible that CNH trades in isolation.  Regardless, watch for 6.3830 support.  The long term chart with a long term Schiff fork is below.

USDCNH WEEKLY

USDCAD 4 HOUR

USDCAD has traded from VWAP off of the October low to VWAP off of the December high.  I’m clueless from the current level and am hoping for clarity post NFP.  Stay tuned.

1/3 – The last day of 2021 and first day of 2022 result in more or less a wash for USDCAD.  However, it’s important that the recent low occurred near the median line from a bearish fork.  The implication is that the upper parallel is resistance if reached.  That line intersects the well-defined 1.2820/30 zone towards the end of the week.

GBPUSD 4 HOUR

Heads up for GBPUSD resistance near the upper channel line at about 1.3620.  A reaction up there would warrant a short attempt.  Eventual ly, the lower parallel will be of interest for support…probably near 1.3400.

1/3 – Cable came in a bit today and I’m ‘hoping’ for price to pull back a but more so that we get a shot at buying near 1.3370.  The level is reinforced by the lower parallel from a short term bullish fork.

AUDJPY DAILY

AUDJPY reversed sharply from the confluence of the bearish upper parallel and short term upper wedge line.  The lower wedge line is about 82.30.  In the meantime, watch for resistance near 83.50/70.  AUDJPY is plotted with CNHUSD below (recall the USDCNH breakout).  These 2 crosses tend to trend together over time.  So, if the USDCNH breakout is legit (CNH lower) then AUDJPY is probably a bear.

1/3 – If I’m wrong about AUDUSD, then AUDJPY could be a great short.  Price reversed sharply lower today from near the 61.8% retrace of the decline from the October high.  Strength from 12/3 is a possible bearish wedge as well.  Very near term, the drop from today appears impulsive (not shown) and may extend a bit lower before a rally attempt.  83.40 is proposed resistance.

AUDJPY (BLACK) AND CHNUSD (RED) DAILY