Scand.Ex is pleased to present the next video with trading analysis by Jamie Saettele – Short Term Floor in Place for EURUSD?
The US dollar rallied sharply on Monday, lifted by safe haven flows as fears grew over rising tensions between the US and China. Both US President Trump and Secretary of State Mike Mike Pompeo have laid the blame for the pandemic on China.
ES found support today from VWAP off of the Feb high. This level was resistance in March and support in April. I am treating last week’s high as the bearish risk point but given the support hit today a bigger bounce is favored. Resistance should be 2890-2930.
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.
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.
‘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.
EUR/USD rallied on Friday, extending its gains before reversing in early trading. Yesterday’s up move can be largely attributed to the weak dollar, which lost ground against major currencies after the shocking US jobless claims figures were released.