Today was a classic ‘sell the news’ day with the news being Russia attacking Ukraine. A more accurate term is ‘fade the news’. SPY carved a high volume reversal. We saw one of these at the 1/24 low. Prior to that, you’ve got to go back to 2018.
You may have heard that Russia is in the news. USDRUB reversed sharply lower today after tagging daily reversal resistance (daily high close from March 2020). This level was also resistance in November 2020 (U.S. election). The reversal lower today ‘fits’ with a coming squeeze in equities and a pullback in gold. I’m wondering if the USD also breaks down. The chart below shows USDRUB and DXY since the beginning of the year. Let’s see…
If the gold breakout is going to face problems then it probably happens near 1920. This is just above the June high, short term channel resistance, and the 61.8% retrace of the decline from the 2020 high. It’s also the 2011 high (see below). In the meantime, 1877 and 1854 are proposed supports.
Gold has pulled back to support defined by the center line from the channel that originates at the September low. A dip under today’s low to test 1842 isn’t out of the question. The top side of former trendline resistance needs to hold as support in order to maintain a bullish stance and look towards 1920.
Gold has broken out and the next level to focus on is 1920. This is near the June high and possible channel resistance from the channel that originates at the September low. It’s also the 2011 high. If price pulls back then support should be 1842/47. The top of this zone is the center line of the noted channel. The bottom of the zone is the top side of former trendline resistance.
USDOLLAR held the trendline that originates at the September low today. A break of this line is what I’m waiting for to signal ‘all clear’ on the downside for the USD.
I’ve been focusing on near term gold levels recently, which have played out well. 1815 was support today for example. However, don’t forget the big picture! Gold has been ‘coiling’ for over a year and is just under the trendline that originates at the January 2021 high. A break above this line would suggest at least a test of the 2020 high. Finally, notice the perfect channel re-test (channel from 2015 low).
UUP (USD ETF) completed a weekly volume reversal last week! Most signals since inception of the ETF have been identified important turns in the ETF and therefore the USD in general.
SPX has retraced 61.8% of the decline from the high. This is also ‘original’ trendline resistance. This is a perfect spot for at least an interim high. I’m looking lower towards 4494 or so (2022 VWAP) and possibly 4404.
Gold cut through the proposed support zone with ease has already reached the lower parallel of the Schiff fork from the August low. This is ‘last chance’ support for gold in my opinion. If price doesn’t hold here then there is no reason from my vantage point to consider the long side. 1830 is now resistance on a bounce.