Education
January 5, 2022
Well, the re-test is out of the question but this USDJPY move could be a false breakout. The chart above shows square root levels. Square the year opening price and add/subtract that number in increments. For USDJPY, the square root of 11510 is 107 so the first square root up is 116.17. The idea is to look for a turn at the first square root level during the first week of the year in a market that is already extended. Several examples are below. An Elliott case is also made for a top as the rally from January 2021 consists of 2 equal legs (log scale). This chart is below. An objective trigger isn’t present yet.
December 30, 2021
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.
December 28, 2021
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.
December 15, 2021
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.
December 10, 2021
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.
December 8, 2021
All eyes should be on the month+ USDOLLAR channel line. As noted last week, a break below would serve as the trigger that the USD has finally turned.
December 3, 2021
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.
December 1, 2021
The DXY high is right on the trendline that was pointed out last week (see chart below for the full picture)…we may have just seen a major top. Trading wise, I’m looking towards 93.30/50 with 95.20s as a possible bounce level. The lower zone is channel support. That will be the big test. If DXY is a bear then 96.20s should provide resistance.
November 30, 2021
USDJPY reversed sharply last week and high was 115.52! Near term downside focus is 112.20s and 114.50s sticks out as possible resistance. This is the 61.8% retrace of the decline from the high along with the 25 line of a short term fork. The 75 line provided support (so far) so resistance at the 25 line would make sense.