News and Analysis

Market Update 1/10 – Equity Reversal – Levels to Know Now

NASDAQ FUTURES (NQ) 4 HOUR

NQ broke the channel from the March low today but sharply reversed higher, putting in a high volume reversal in the process (see below chart).  Watch the underside of the channel for resistance now near 15750 but the reversal casts doubt on that level as resistance.  Proposed support is 15400.  If this is a bigger top then both sides probably need to be frustrated…that’s how distribution works!

1/5 – 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.

NASDAQ FUTURES (NQ) DAILY

SPX 4 HOUR

SPX spiked below the trendline from the October low but reversed higher to close above the line.  Today’s low is right at a short term bearish fork.  This is instructive in that a drop below would suggest downside acceleration (median line acceleration).  Watch for support near 4630.  Proposed resistance is 4728/44.

1/6 – 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.

GBPUSD DAILY

GBPUSD put in a doji and the high was just under the upper channel line that originates from the 2021 high.  Today’s high did tag the August low and 11/9 high so a top of sorts could be in place.  My trigger for a short is a break below the center line of the short term bullish fork (see below).

1/6 – 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.

GBPUSD 4 HOUR

USDCAD 4 HOUR

USDCAD is clearing up a bit.  Price remains confined to the range defined by VWAP from the October low and December high but 1.2760/90 is well-defined for resistance now.  Also, a head and shoulders top could be in the works from the 12/3 high.

1/6 – 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.

AUDJPY DAILY

AUDJPY is testing the line drawn off of the December lows.  A break below would confirm a wedge from the December low and suggest a return to that level.  This is a make or break level.

1/6 – 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.

CADJPY 4 HOUR

CADJPY continues to respect the upper parallel from the fork that originates at the May high.  Downside focus is the 25 line, which has provided support on numerous occasions since November.  That is about 89.30.  Proposed resistance is 91.20s although be aware that a break under the short term median line (support today) would suggest downside acceleration towards the noted objective.

1/5 – 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).