USD/CAD fell to trendline support on Wednesday, as the Canadian dollar was boosted by rising crude oil prices and hopes of a global economic recovery. Equities, crude oil and the risk sensitive Australian dollar also benefited from rising investor confidence.
Resistance came in slightly higher than thought for GBPUSD but the idea remains the same. Proposed support for long entry is 1.2160/90s. The bottom of the zone is the 61.8% retrace of this week’s rally and 4/6 low. The top of the zone is VWAP from this week’s low (see hourly futures chart 2 charts down). Additional bullish evidence includes a daily volume reversal yesterday (see daily futures chart below). The last daily volume reversal was in January 2017, which was an important low. Also, don’t forget seasonal tendencies are now bullish. Elliott structure suggests that the rally from this week’s low is either a C wave or 3rd wave, so upside potential is significant.
The chart of spot gold is cleaner show I’m showing it instead of futures. Price broke out of the triangle described yesterday. That’s bullish! The top side of the former triangle line should be support now near 1720/22 (former highs at 1722).
Wow. I did NOT imagine that the S&P would be back at these levels. As I type in after hours trading, ES is taking out the 2/28 close. Volume on 2/28 was the highest since August 2011 (U.S. debt downgrade). High volume days are important because they represent a ‘vested interest’ at that specific area.
Resistance was hit today in gold. Futures printed a high of 1742.40 and spot traded 1718.70 at its best level. I obviously don’t know for certain if that was the end of the rally but it is a good sign (for a bear) that price reacted where it should have. I am bearish but not yet short. A break below the line that connects lows since 4/21 (not shown here but can be drawn on an intraday chart) would serve as the signal to short.
Gold reversed from massive resistance last week (long term parallel is shown on the weekly chart below). I am bearish…at least near term. If the decline from last week’s high unfolds in 5 waves, then I’d be confidently bearish against the high and look to short a rally. For now, just know that levels to watch are 1672.50 for support (keep in mind that this is futures and not spot) and 1724.20 for resistance.