Pay attention to the USD indices over the next few days. The big level for USDOLLAR is about 12115. This is the trendline from the May low and September high. A break below would ‘announce’ that the USD trend is lower.
NQ broke the channel from the March low today but sharply reversed higher, putting in a high volume reversal in the process (see below chart). Watch the underside of the channel for resistance now near 15750 but the reversal casts doubt on that level as resistance. Proposed support is 15400. If this is a bigger top then both sides probably need to be frustrated…that’s how distribution works!
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.
AUDUSD has pulled back from just shy of the noted .7290. I want to see support at/near .7160/70 in order to maintain a constructive view. Failure to do so would leave me neutral at best.
This is the last update of 2021. A new calendar year is significant and those details will be addressed next week. The charts in this post highlight why I’m heading into 2022 with a USD bearish mindset. The chart above is a starting point insofar as making a USD bearish argument although the big picture ‘textbook’ trigger doesn’t occur until a break of the channel near 95. Until then, respect potential for strength into the 61.8% retrace of the decline from March 2020 at 97.73.
AUDUSD continues to make progress within what I believe is a new bullish sequence. As such, focus is on identifying support to buy. .7170 sticks out as the ideal level. This has been an important horizontal level since the September low. The price intersects short term channel support at the end of this week (and year). Maybe we get a big buying opportunity right at the beginning of 2022! .7290 or so is still proposed resistance for a pullback.
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.
The USD remains stubbornly up to flat. The psychological situation reminds me of early in the year when the USD was stubbornly lower for longer despite multiple reversal signals. Of course, price eventually resolved higher and now I want to go the other way! The underside of the former trendline support was reached 3 weeks ago and nothing has happened since. The situation should resolve in the next few days with Fed, ECB, BoE, and BoJ scheduled. We’re at resistance therefore I’m ‘thinking’ lower. The chart of daily closes below is a thing of beauty with respect to confluence resistance.
NZDUSD has lagged AUDUSD on this bounce, which is interesting because AUDUSD reached it’s key level (.6990) but the key level for NZDUSD is slightly lower at .6700. Recall that this is the 38.2% retrace of the rally from March 2020 and the line off of lows since March. The November 2020 low has been reached at .6756 but I love the confluence at .6700. Watch for a possible non-confirmation with AUDUSD and NZDUSD. This would occur if NZDUSD drops to a new low but AUDUSD makes a higher low. This non-confirmation tends to occur at turns. .6860 remains an important overhead barrier.