Scandinavian Capital Markets, Author at Scandinavian Capital Markets

April 13, 2021

Market Update 4/12 – Key Spot in Copper

Copper is once again testing the critical trendline from the March 2020 low. This line is reinforced by the 50 day average, which has been precise support since November. I’m waiting for a break lower in order to turn bearish copper.

April 9, 2021

Market Update 4/8 – Focus on USDJPY

The poke above the 2018-2020 line was short lived as USDJPY has reversed all of last week’s gains. The failed break above this line makes for a bearish setup. Near term, watch for a bounce near 108.80 and for resistance near 109.85-110.00. I favor shorts into the proposed resistance zone.

April 7, 2021

Market Update 4/6 – GBPJPY Top?

GBPJPY topped just before 153.85 (high was 153.41). The cross made a J-Spike in the process. The drop is impulsive in nature and the proposed resistance zone is 152.30/70. The downside level of interest is the 3/24 low at 148.53.

April 2, 2021

Market Update 4/1 – The Copper/Gold Ratio and Inflation Trends

The copper/gold ratio is churning at 8 year trendline resistance. A pullback/consolidation of gains over the last year (the ratio bottomed in April 2020) ‘makes sense’ from this level. This is an important ratio to watch for clues on interest rates (Gundlach often references this ratio) and trends in inflationary/deflationary assets (notice the deflationary crash into the 2009 low and recent inflationary rally for example). I prefer to look at the 30 year bond rate rather than the 10 year note because the long end is more indicative of inflation. The copper/gold ratio and U.S. 30 year bond yield are shown in the chart below. So…pullback in the ratio from resistance…and pullback in rates (also from resistance…see 2 charts down)…which may mean a deeper pullback in the ‘inflation trade’. In FX, this would mean higher USD (already underway), lower commodity currencies (getting started), and lower Yen crosses (waiting on the turn).

April 1, 2021

Market Update 3/31 – Gold Turning?

Action in PMs is interesting following today’s turns higher in gold and silver. Silver turned up from beneath the early March low but gold never broke the early March low. This non-confirmation is typical at turns. I’m watching gold with a closer eye right now due to the trendline from the January high (the 2021 trendline). A break above would indicate a behavior change and shift focus to the center line of the channel from the August 2020 high near 1780.

March 31, 2021

Market Update 3/30 – Big Spot for USDJPY

USDJPY continues to rip higher but price has reached an interesting level. The level in question is the line that extends off of the 2018 and 2020 highs. Seasonal tendencies also top this week. This trendline/seasonal combination makes for a great opportunity to fade the move but we need price to suggest that some sort of a top is in place. An intraday volume reversal for example would suffice.

March 30, 2021

Market Update 3/29 – Short GBPUSD Setup

GBPUSD spiked up to 1.3840s today before pulling back. Interestingly, 1.3840 was the level I was looking for resistance last week because that was last week’s open. Better defined resistance is 1.3880 but the rally from the low is in 3 waves and the drop from today’s high is impulsive. I like shorts into 1.3812. Given the failed break above long term trendline resistance last month, downside may be significant. Another reason to favor downside against today’s high is the fact that the rally failed near VWAP from February FOMC.

March 25, 2021

Market Update 3/24 – Great AUDJPY Short Setup

I love this AUDJPY short setup. Price has broken below the trendline from the November low. The underside of that line is now proposed resistance at 83.65/90. The 2/26 low is a bounce level at 81.98. Downside is the lower parallel from the bearish fork, which is significant (probably a 78 handle).

March 24, 2021

Market Update 3/23 – Important Development for USD

The break above the median line in USDOLLAR is significant! The top side of this line should provide support now near 11810. The September low at 11867 is possible resistance for a pullback/pause but general focus is on the parallel that was resistance in Q4 2020 (then reassess). That line is about 12030. The long term view is shown below for context.

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