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.
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).
AUDJPY is nearing the line off of the 2008 and 2016 lows. This line was support in October 2018 and resistance in early 2019 so watch for resistance there again. The line is about 85.80. Daily RSI is 83.6 (see the next 2 charts), which has only been reached once before, in December 2005. Price topped then and fell over 6 big figures in the next 2 weeks.
AUDUSD responded to the 25 line of the Schiff fork from the March low. Recall that price topped at the 75 line (75 and 25 lines are magenta)…a perfect example of median line symmetry! Focus remain towards the lower parallel near .7413. Proposed resistance is .7640.
USDOLLAR (quarter each of EUR, GBP, JPY, and AUD) has broken above the trendline that originates at the 11/12 high. The top side of that line is now proposed support near 11684. Upside focus is the 12/21 high at 11837. The level is reinforced by the median line from the fork that originates at the January 2017 high. A longer term chart is shown below for context.
BTCUSD made a 2 bar weekly volume reversal last week. TradeStation historical is limited but this is the 2nd 2 bar weekly volume reversal since 2019. The 2019 signal identified an important top. Bitcoin news mentions have also gone parabolic (see below). This isn’t a surprise but it’s comforting to see the data. In other words, the speculative excess isn’t anecdotal.
NZDJPY filled the previously uncovered close from May 2019 early this Month and is threatening to break down from a 4 week topping pattern now. The 200 week average has been resistance for years and is proving itself again at the current juncture. Near term focus is on former resistance at 72.00 with a much deeper drop (69.00ish) from the current level possible given the specter of 5 waves up from the March low.
Copper continues to trade on both sides of the 61.8% retrace of the decline from 2011. I continue to follow near term levels from the channel off of the March low. The center line is about 3.50. That needs to break in order to suggest that copper is lower, probably until the lower parallel.
Given the tag of a long term Fibonacci level in copper, I’m keeping a close eye on the near term picture. 3.45 is a level to know over the next day. This is the center line of the channel from the March low. A break below would indicate a near term behavior change and shift focus to the lower parallel. That is currently about 3.25. The line increases about .0050 a day.