This one is throwing me for a loop. USDCNH broke out today. I’ve got USD reversal signals galore and this development suggests the exact opposite…or does it? It’s possible that EURUSD does rally (and USDJPY declines) while ‘risk FX’ suffers. It’s also possible that CNH trades in isolation. Regardless, watch for 6.3830 support. The long term chart with a long term Schiff fork is below.
The equity ‘market’ has felt odd recently. A look beneath the surface confirms this suspicion. The 30 day Nasdaq advance-decline line is plotted below the composite index. The AD line closed at -637 today. The magenta dots indicate readings of -600 or lower. Previous readings this occurred at the Dec 2018 low and for several weeks in March-April 2020 (the first reading was 3/18/20). Prior to the last few years, readings this low occurred in October-November 2008 and during the 2000-2001 decline! Those periods are shown in the charts below. So, the A-D line is ‘oversold’ yet the QQQ closed a bit more than 5% off of the all time high today. All of the prior ‘extreme’ AD readings occurred after for more meaningful declines. The only takeaway I have is that if the index continues to decline but the A-D line improves then look out below because the next low won’t be until the next extreme A-D reading.
Is the nightmare correction over for EURUSD? The ‘look’ is definitely there. For Elliott nerds, everything from the 11/30 high constitutes a complex correction labeled W-X-Y. This means that the drop is in 3 waves but the corrective legs of the structure are also corrective in nature. Upside focus is the 161.8% retrace at 1.1540, which is also the 10/29 low. Proposed support is the high volume level from today at 1.1273 and 61.8% of today’s range at 1.1252. ECB is tomorrow.
We got a prediction headline. The following is courtesy of the WSJ. Whether Omicron Wreaks Havoc or Not, the U.S. Dollar Is a Buy
Prediction headlines indicate extreme confidence in the direction of the trend. This is the same psychology that led to Powell capitulating on inflation. I’m extremely bearish the USD. Whether or not we get a spike higher following NFP is a complete guess but pay attention to this short term channel in USDOLLAR. A break below would serve as the ‘all clear’ that the USD is about to dump.
***This is the last post until next week. The Thanksgiving holiday is coming at the right time for me…I’ve been ‘out of tune’ with markets for the last 2 months and need a breather. Happy Thanksgiving!***
Remember the gold ‘breakout’ above the critical 1834. It was short lived and the yellow metal has been slammed lower the last few days. Focus is squarely on the slope confluence (blue lines) near 1769. That level needs to provide support in order to hold a constructive view.
BTCUSD has followed through on its 11/10 reversal. I love this setup. Price has broken the median line, which is now proposed resistance along with the 11/12 low at 62295. Initial downside focus is channel support (blue line) in the 52000s. A longer term view is below.
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.