Finally something else besides ‘melt-up’. Index action in 2020 is basically straight up or straight down. Once the market picks a direction, it goes quickly in that direction without much of a counter reaction. In ES, pay attention to 2976 for a bounce. If it does bounce, then note 3065 for resistance. IF a larger reaction materializes (which would be a change) then 3137 should provide resistance.
Stephen Roach, former Morgan Stanley economist and currently employed by Yale, published A Crash in the Dollar Is Coming yesterday. He may be correct but these types of articles are usually published at near term price extremes (in this case a USD low). Technically, this is the perfect spot (December low) for a bounce. Also, DXY made a slight new low today but EURUSD did not make a new high. This non-confirmation is typical at turns. Back to 98.27 or so wouldn’t be a surprise. Finally, consider the extreme short term sentiment readings (DSI readings from Monday) in front of FOMC on Wednesday. The narrative heading into FOMC is that there is no limit to the Fed’s balance sheet. What else can they say that would ‘surprise’ markets in that direction? Risk for tomorrow seems like a classic ‘sell the news’ event.
TLT reached the noted support line on Friday and reversed higher. The importance of this line cannot be overstated. This is the same line that was resistance for major tops since 2012. Another leg higher from here is possible but I don’t have a strong opinion on whether or not that happens. Favor the upside as long as Friday’s low holds. 162 is initial resistance.
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DXY is breaking down but pay attention to 97.69 for possible support. This is the November 2018 high and center line of the channel from the March high. If price bounces from there then resistance is likely in the 98.50-99.00 zone.
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Be aware of 3136 in SPX as a possible pivot. The level is defined by the 78.6% retrace of the decline,March high, and the line that crosses highs in 2018 and 2019. This line was support in December. Price has responded to Fibonacci retracements (23.6%, 38.2%, and 61.8%) during the advance which increases confidence that ‘something’ happens at the next Fibonacci retracement.
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.
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.
WTI traded into the 2016 low today and reversed lower. My working assumption is that crude is building a bullish base. 18.20-19.20 is the zone to watch for the next low. This zone is defined by support and resistance since late March.