ES reversed back below 2939.75 so I’m treating today’s high as a risk point for shorts. Proposed resistance is 2923/32, which were intraday supports on Tuesday. A proposed downside swing target is 2670ish. This is the median line of the bearish fork from the October 2018 high (was support on 3/10 before the 3/12 breakdown). VWAP from the low is currently 2672.50. This figure will rise slightly each day.
Bitcoin extended its gains in early Thursday trading, reaching almost 9,500 before retracing sharply. The world’s largest cryptocurrency by market capitalization has benefited from its appeal as a hedge against inflation amid unprecedented stimulus by central banks.
Wow. I did NOT imagine that the S&P would be back at these levels. As I type in after hours trading, ES is taking out the 2/28 close. Volume on 2/28 was the highest since August 2011 (U.S. debt downgrade). High volume days are important because they represent a ‘vested interest’ at that specific area.
To review, USDOLLAR dropped in 5 waves from the March high. The 4/14 low was right on the 61.8% retrace of the rally from the March low. At that point, I was looking for a 3 wave rally back to 12692. Instead, USDOLLAR has traded in a tight range. Price is nearing the 4/14 low. It’s not impossible that the rally into the 4/21 high at 12593 is the entire correction but the correction would be awfully small in both time and price retracement. So, it’s possible that a flat is unfolding. Under this scenario, a C wave rally (probably sharp) will begin from nearby levels (may or may not take out the 4/14 first).
AUD/USD rallied to its highest level since March 11 in early trading on Tuesday, as Australia stands out as one of the countries having best managing the Coronavirus pandemic. The country responded quickly, closing its borders and imposing restrictions on movement. With new cases falling sharply over recent weeks, Australia began to ease social distancing restrictions. Sydney’s famed Bondi beach was reopened on Tuesday to local swimmers after a month-long closure.
‘The market’ continues to levitate. Each turn lower from a well-defined level (the most recent turn lower was from where the rally from the March low consisted of 2 equal legs) is met with another leg up. Volume has died, as is tends to do when markets rally. From here, I am paying attention to 2 levels for potential resistance. The first is 2923/35 in ES. This is the 61.8% retrace and 2020 VWAP. In cash (chart is below), the 61.8% retrace is 2935. The 2nd level to note is the 200 day average and July 2019 high on cash, which is 3007/28.
The EURUSD decline from the 3/27 high is in 3 waves. Since this decline succeeds a 5 wave rally from the March low, it’s possible that the rally from last week’s low is either a C wave or a 3rd wave. Last week’s low is also on the lower channel line from the 2019 high. This line has provided support numerous times since September (zoomed out view of the channel is below). Near term entry is unclear but keep an eye on the line off of the 3/27 and 4/14 highs for a breakout.
A surge in Bitcoin on Thursday to over $7,750 marked the latest leg of an uptrend that began in mid-March. Traders viewed Friday’s expiry for CME April Bitcoin futures as the catalyst for Thursday’s thrust higher. The CME Bitcoin futures contract expires every fourth Friday of a given month.
Jamie looks at the 5 wave rally into the April high in GBP/USD.