NZDUSD failed to turn lower from the line that extends off of the February and 3/18 highs. The structure from the February high is now a Schiff fork. The upper parallel intersects with the well-defined .7100 level and 200 period average on the 4 hour chart. If NZDUSD is lower, then .7100 is the price to short.
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.
GBPJPY topped just before 153.85 (high was 153.41). The cross made a J-Spike in the process. The drop is impulsive in nature and the proposed resistance zone is 152.30/70. The downside level of interest is the 3/24 low at 148.53.
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).
GBPUSD spiked up to 1.3840s today before pulling back. Interestingly, 1.3840 was the level I was looking for resistance last week because that was last week’s open. Better defined resistance is 1.3880 but the rally from the low is in 3 waves and the drop from today’s high is impulsive. I like shorts into 1.3812. Given the failed break above long term trendline resistance last month, downside may be significant. Another reason to favor downside against today’s high is the fact that the rally failed near VWAP from February FOMC.
USDTRY swings remains TEXTBOOK. The massive gap higher after the weekend is wave C of the noted A-B-C advance from the February low. In fact, the high is at the 78.6% retrace of the decline from the November high. Recall that when the leading diagonal was first identified after the February low, I noted that corrections after leading diagonals tend to retrace 78.6% of the diagonal. Voila! I am bearish again and resistance is 7.9990-8.0595. Don’t forget that USDTRY remains below long term resistance
BTCUSD has dropped in 5 waves from the high made over the weekend. The implication is that this rally ends with a lower high before at least one more leg lower. The 2 levels to keep in mind for resistance are the former 4th wave high at 57,341 and the 61.8% retrace at 58,511.
EURUSD may be working on a 3 wave rally from the 3/9 low. Proposed support for wave B is just under 1.1900…1.1887/99 is daily reversal support, the 61.8% retrace of the rally from the low, and 2 equal legs down from the 3/11 high. If this interpretation is correct, then price will rally into 1.2050/90 (month open is 1.2070 as well).
The 4th wave idea described yesterday looked promising for a few hours…then EURUSD blasted through 1.1950. Current pattern is unclear from my vantage point but the next upside level of interest looks like 1.2050/75. This is the 25 line of the bearish fork from the January high and the underside of the center line from the channel that originates at the March 2020 low. 1.1950 is now proposed support.