USDJPY didn’t quite make 130 but notice the channel from the 2021 low. 1/2 and full channel extensions are plotted with the channel. The March high was at the 1/2 channel extension. Today’s high was at the full channel extension. Near term focus is on the 1/2 channel extension near 125.30, which was formerly resistance. Near term, watch for resistance near 128.50 (see below). Finally, a volume reversal (on futures) triggered today. This is only the 3rd such reversal since 2014. Those charts are below.
USDCNH broke above a year long trendline today and price also completed a 4 month head and shoulders pattern today. Watch the top side of the blue trendline for support near 6.3930. I realize that this goes against the idea of the USD topping. Maybe the USD has more to go that previously thought?
NQ reversed higher from the proposed support zone today. Sentiment is stretched down here too as evidenced by the AA II bull bear spread (see below). Sentiment is stretched just about everywhere actually…bonds…the USD…and equities. So, perhaps the reversal down here in stocks is joined by a reversal higher in bonds and lower in the USD over the next few days…just a thought. Anyway, I’m looking higher in NQ. It’s possible that everything since 2/24 is a massive base but near term focus is on 2022 VWAP near 14500 for now.
It’s clear that the USD won’t roll over until/unless rates stop going up. TLT is the long bond ETF, which moves inversely to rates. So, a turn higher in TLT means a turn lower in rates. This could happen soon because TLT is closing in on a massive level defined by 2 legs down from the August 2020 high (using this high rather than the COVID spike high…the August high is the daily and weekly closing high) at 119.94. It’s also the 25 line within the channel from the 2007 low. This line nailed the 2013 and 2018 lows. Finally, the decline channels. If we do get a reversal then there should be a USDJPY play.
DXY printed 100.52 today and then carved a key reversal. In fact, UUP (USD ETF) made a high volume reversal (see below). The combination of the wave count, measured level (recall the 100.59 measurement), upper channel line, and volume reversal make a strong case that the USD topped today.
DXY has reached the bottom of the zone cited last week for possible resistance. The line off of the November 2021 and March highs is right up here along with the well-defined horizontal that goes back to 2015. Within the sequence from the January low, wave 5 would equal wave 1 slightly higher at 100.59. Also, DXY is now up 9 days in a row (see below). The last time that happened was at the March 2020 high!
USDCAD has reached the level noted for resistance. This level is huge. It’s defined by VWAP from the March high, 200 period average on the 4 hour chart, underside of the trendline from the 2021 low, and year open! My ‘guess’ is that price rolls over but I need a response, such as a price and/or volume reversal, in order to short. Stay tuned.
The ‘final leg higher’ option is unfolding in DXY. A key zone to pay attention to is 100.39/59. This is a well-defined horiztonal and where wave 5 would equal wave 1 within the sequence from the January low. Also, note that EURUSD has yet to trade beneath its March low. It may very well do so but a non-confirmation is in place until that happens.
I’m torn on Kiwi given the prospect for a deeper AUDUSD pullback. In any case, continue to be aware of the long term neckline (blue line), which has been resistance and support so far in 2022. The line is about .6890. If we get a decent reaction at that level, then it will be worth taking a shot on the long side with a tight stop.