USDOLLAR found resistance at the cited level (recovery high was 12536) and broke down today. Individual USD crosses nailed their supports as well (see levels noted below from last week). My wave count interpretation is that weakness from the 5/18 high is either a 3rd or C wave so downside potential is significant in the coming weeks and months.
Risk sensitive currencies such as the Australian dollar, New Zealand dollar and Canadian dollar gained ground in early Tuesday trading as hopes grew over global economic recovery from the fallout of the COVID-19 pandemic. Positive coronavirus vaccine news and indications that global economies are slowly reopening helped to buoy investor mood.
Nasdaq futures and QQQ (weekly QQQ is below) covered their closes from 2/21 on Wednesday and closed beneath those levels today. Mistrust of strength has been misguided but the gap fill and down day today at least presents a bearish risk point (Wednesday’s high).
USD/CAD fell to trendline support on Wednesday, as the Canadian dollar was boosted by rising crude oil prices and hopes of a global economic recovery. Equities, crude oil and the risk sensitive Australian dollar also benefited from rising investor confidence.
It ‘feels’ like the USD is on the verge of breaking down. That said, USDOLLAR is back into important support (line off of 2011 and 2014 lows and a major horizontal level…see weekly chart below). Support is support until broken so respect bounce potential with resistance near 12520.
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Resistance came in slightly higher than thought for GBPUSD but the idea remains the same. Proposed support for long entry is 1.2160/90s. The bottom of the zone is the 61.8% retrace of this week’s rally and 4/6 low. The top of the zone is VWAP from this week’s low (see hourly futures chart 2 charts down). Additional bullish evidence includes a daily volume reversal yesterday (see daily futures chart below). The last daily volume reversal was in January 2017, which was an important low. Also, don’t forget seasonal tendencies are now bullish. Elliott structure suggests that the rally from this week’s low is either a C wave or 3rd wave, so upside potential is significant.
Gold consolidated in early trading on Tuesday after reaching its highest levels since October 2012 on Monday. The yellow metal was pressured and stocks jumped amid rising risk appetite, spurred by news of a potential COVID-19 vaccine.
Gold is pulling back to the top side of former triangle resistance. If gold is bullish, then suppport should be 1716/22. I’m looking to buy in that zone for resumption of upside. If the noted zone fails to hold, then gold would turn extremely bearish because the recent breakout would be considered a completed terminal thrust from a triangle.