Gold traded into proposed resistance at 1908 today and immediately pulled back. I am of the view that price resumes lower from the current level towards the lower parallel near 1750. Failure to stay below today’s low would risk strength into the upper parallel of the bearish channel near 1940.
USDOLLAR daily RSI is 16.53. It’s only been that low twice (date since 2011); at the April 2011 low and the January 2018 low. Levels wise, the median line of the fork from the 2017 high is about 11950 (see close up below), which is in line with the lower parallel of the Schiff fork from the March high. It’s a logical place for a reversal.
This is a picture of the TV in my living room earlier today. I keep Bloomberg on throughout the day for background noise and the scrolling headlines on the right of the screen are the same headlines that are published on the app. The headline circled in red would not appear if the short USD trade weren’t extremely crowded, at least on a short term basis. Sentiment is ripe for a reversal.
The EURUSD drop from 6/10 to 6/19 retraced exactly 38.2% of the rally from 5/7. 4th waves often retrace 38.2% of 3rd waves. The implication is that EURUSD is headed higher in a 5th wave. A possible target is where wave 5 would equal wave 1 at 1.1460. The high volume level at 1.1261 is a good spot for support (the year open is 1.1260 by the way). Be aware of the current ownership profile however (see below). Speculators are the most long since the 2017 high.
Today was extremely quiet and as a result I don’t have much to update. Australian employment is tonight however so it’s worth another look at AUDUSD. If the flat interpretation is correct, then a lower high is in place at .6977 (and price shouldn’t move much above .6900). The ‘cleanest’ downside level is .6685-.6700. This has been a major level since July (almost a year), 2 equal legs down, and the 200 period midpoint on the 4 hour chart (magenta line).
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USDJPY plunged today. Price could bounce from the lower parallel of the short term fork near 108.00. Proposed resistance is the year open and center line at 108.75-109.00. Seasonal tendencies have turned down and the rally from the May low is in 3 waves. The implication is that the rally is complete as a correction and that price is headed for a break of the May low of 105.99.
GBPUSD has broken out and near term focus is on the median ine near 1.2800 with significant longer term upside potential. Support should now be 1.2420s or so, which is the top side of the line crosses recent highs.
Risk sensitive currencies such as the Australian dollar, New Zealand dollar and Canadian dollar gained ground in early Tuesday trading as hopes grew over global economic recovery from the fallout of the COVID-19 pandemic. Positive coronavirus vaccine news and indications that global economies are slowly reopening helped to buoy investor mood.