GBPUSD held VWAP from the March 2020 low on Friday. As noted last week, lower parallel support is slightly lower near 1.3320 (see below) though. If the rally from last week’s low extends into a small 5 wave advance then I’ll want to but a small dip.
The cleanest setup from my vantage point at the moment is in gold. Price has broken out (remember 1834 was possible resistance…it didn’t do anything so it’s support) and 1834 is proposed support. Former resistance is reinforced by the top side of the line off of the 2020 and May highs along with the center line of the short term bullish channel (which was formerly resistance). Upside focus is the May high at 1916.
So much for all of that fancy Elliott mumbo jumbo. Remember the ‘5 waves down at multiple degree…blah blah blah’. USDOLLAR (quarter each of EUR, GBP, JPY, AUD) ripped to its highest level since September 2020 today. Sometimes various methods work and sometimes they don’t. The methods that I employ haven’t worked well for a few months now. This will change. It always does. Anyway, USDOLLAR is still in the vicinity of longer term resistance. The zone extends to 12181, which is the December 2019 low and parallel resistance.
Since USDCAD is USDCAD, it had to test Friday’s high before reversing lower. In any case, there is no change to the view that a 5th wave lower is underway. I don’t have all of the measurements on the chart because I like to keep it clean but realize that wave 3 is exactly 161.8% of wave 1. If today was the 4th wave high, then wave 5 would equal wave 1 at 1.2184. This is in line with the 5/13 high at 1.2203. Bottom line, I’m looking towards 1.2200ish. There is a high volume level at 1.2459 that is proposed resistance now. Finally, an 8 hour volume reversal triggered today (see futures chart below, which extends back one year).
Gold is closing in on the noted level from the line that extends off of the 2020 and May highs and resistance since July near 1834. I’m ‘thinking’ pullback initially from the well-defined level but will be tracking for support beginning near 1800 since I’m of the mind that the broader trend is higher.
I have not been ‘in tune’ with USD moves for the better part of the last month. During periods of uncertainty, I find it helpful to go back to the basics. USDSEK is often a ‘tell’ for general USD trends and pivots. Here are several objective technical observations;
USDSEK is holding the 200 day midpoint (similar to the 200 day average)…this is bullish.
The decline from the 8/20 high is in 2 equal legs…this is characteristics of a corrective decline within a larger advance…bullish
Daily RSI registered ‘overbought’ readings at price highs over the last year and RSI readings at price lows have been above 30…this is also bullish.
In summary, the weight of evidence is USDSEK bullish and therefore generally USD bullish (notably against European FX). At least that’s where my mind is at the moment.
Crude traded up to 84 (a bit above) and has gone straight down since. 82.20 is now proposed resistance if crude bounces. Downside focus is the July high at 76.98 and possibly the top side of the LONG TERM former resistance line (now support) near 73. The weekly chart below shows the this long term chart in its entirety.
Clarity is lacking ahead of FOMC as it pertains to general USD direction. The ‘break’ lower in the USD last week proved false but one can make the case that action since September high is 5 waves down and 3 waves up. The rally has retraced 61.8% of the decline too so it’s possible that price resumes lower now. Confidence in direction is extremely low right now. Hopefully, this clears up post-FOMC.
Action since the October high in EURJPY is probably a 4th wave. As such, expectations are for a 5th wave rally to a new high. A possible target is 134.29, which is the 61.8% retrace of the 2014-2016 decline and where the rally from the May 2020 low would consist of 2 equal legs. Watch for support near 132.00.