News and Analysis

Market Update 5/24 – More USD Trades and Watch Copper

COPPER FUTURES DAILY

Copper has rebounded after testing a support shelf from last fall.  4.46 or so is well-defined for resistance.  The level is defined by the 200 day average, the underside of former trendline support, and the March low.

5/5 – After breaking trendline support and Monday, copper rebounded (with ‘risk’ in general) to the underside of the trendline.  Support became resistance…which is bearish until noted otherwise.  The bearish development may say something about rates as well in that the copper/gold ratio tends to lead interest rates (see below).  In other words, we should be close to a turn in rates.

USDJPY 4 HOUR

USDJPY is closing in on the 50 day average at 126.20 and trading around former lows (4/26 and 5/19).  Price has come off 5 big figures (we took a chunk of it) and a rally attempt from this level makes sense.  Proposed resistance is 128.60.  125.10 remains the biggest test on the downside (near term at least).

5/16 – Yen futures made a one week volume reversal last week.  There have only been 2 bullish high volume one week reversals since 2007 and both were near term lows.  In the current context, this makes sense as USDJPY is ‘due’ for a correction (Yen futures higher).  The weekly signal reinforces our USDJPY short trade.

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GBPUSD HOURLY

1.2430s remains ideal support for GBPUSD.  In fact, this level is also the 61.8% of the leg up from 5/18.  An aggressive Elliott count treats the rally from the low as a series of 1st and 2nd waves which means that the next leg up is the elusive ‘3rd of a 3rd’ move (strong rally).  Bottom line, I favor longs into 1.2430s.

5/23 – GBPUSD has followed through on the reversal from long term support (recall the lower parallel from the long term pitchfork).  1.2638 is a possible hiccup level but a more important level to focus on is probably 1.2770 or so (4/26 high and currently just under the 50 day average).  1.2430s is ideal support from VWAP off of the low, the 20 day average, and the 5/20 low.

NZDUSD 4 HOUR

NZDUSD has broken above the steep trendline that connects highs in April.  The top side of this line intersects proposed trendline support near the 5/2 low at .6365.  Let’s call this a ‘triumvirate’ of support.  The RBNZ press conference is tonight and I favor longs into the noted level.  Near term upside focus is .6650 (2022 VWAP, 50 day average, and 4/26 high).

5/19 – Kiwi didn’t quite reach the noted .6150.-6204 zone but the rally appears impulsive so I’m thinking that a tradable low is in place.  Like AUDUSD, NZDUSD has reached the 20 day average and line that extends off of the April highs.  A pullback here should encounter proposed support near .6290 and set the stage for a strong 3rd (or C) wave higher.