I get off kilter with the market when I get too specific. Case in point is yesterday’s comparative with the 1929 Dow. History rhymes, it doesn’t repeat. They say that the most 4 dangerous words in investing/trading is ‘this times it’s different’. In truth, it is different every time! So rather than be too specific, let’s just acknowledge that the Dow topped on the same parallel as it did in 2008 and tanked. It then rebounded from a parallel and level that made sense for a low (orange horizontal line is the closing price from the day that Trump was elected). The center line (blue line) is about 23600. THAT is where I am focus on over the next day(s) or week(s). Basically ring a bell when it gets there. The chart below shows the entire channel (from the 1932 low and 1929 high). Wouldn’t you agree that the center line in blue is important?
DOW 2 WEEK BARS
SPX hasn’t had much of a pullback since bottoming (biggest one was last night in Globex) and price took out 2592 today. Here too, let’s keep it simple! SPX has traded in textbook manner around the pitchfork lines. Price was supported on the median line for a few days in March and then gapped lower (median line gap risk is a principle). The low was right on the lower parallel. The most logical place to go, based on median line principles, is back to the median line. That’s about 2729 and is considered the next decision point. Pay attention.
3/24 – After today’s rally, SPX has retraced 23.6% of the decline from the Feb high. Bigger levels for resistance are the 38.2% at 2592 and ultimately the 50% level, median line, and June low at 2729. I think that’s where the market is headed before another leg lower begins. The hourly futures chart below outlines near term support from VWAP off of the low, currently at 2300. SPX may want to take out 2499 first before pulling back. Regardless, focus is on identifying a higher low with the aid of VWAP off of the low.
USDOLLAR has traded to the noted 12640. Even if a major high is in place, price could bounce here. If it does, then the structure of the advance (corrective or impulsive) will decide whether or not we hold a general bullish or bearish opinion on USDOLLAR.
3/25 – USDOLLAR focus remains on 12640 or so before I’d think about USD longs. Sentiment is reversing from extreme levels and USD seasonality is now bearish so the case can be made that a much more important top is in place. I don’t have any long term reversal signals to support that thought but might by the end of the week.
EURO FUTURES 4 HOUR
Follow the VWAP levels on futures. EURUSD is back to 2020 VWAP. Notice how that’s been a decent bull/bear dividing point this year. If price surges through or trades around here for a day or so and turns up then we’ll have a point of reference to be bullish against. If price pulls back, then watch for support from VWAP off of the March high, which was resistance on the way down (watch for former resistance to provide support). That is going to be about 1.0940 in spot (front month trading at 40 pips premium). VWAP off of the low is about 1.0840 spot but pay attention to 1.0940 initially.
3/25 – Was thinking 1.0500/30 before the big low but EURUSD is holding up after dumping below the line off of the August and November 2018 lows. This line was support in Sep 2019 and in February. So, that drop and recovery qualifies as a failed break and/or bear trap. Also, there is divergence with RSI at the low on the weekly (EURUSD was divergent with RSI for much of 2018 and 2019…there are some great signals in years past however). Bottom line, I’m open to the idea of a massive low being in place and will alert when/if near term action warrants an entry.
GBPUSD 4 HOUR
Just missed the entry in GBPUSD. Watch for support now at 1.1960/90. This is the Sep low and line off of recent highs (neckline). Near term upside focus is 1.2515-1.2625 (congestion earlier in the month and 61.8% of drop from March high).
3/25 – I like GBPUSD higher. Today’s low was on VWAP from the low (see below). Proposed support is now 1.1759 (low hour close from today). Near term upside levels are 1.2093 and 1.2304 (38.2% and 50% retraces from March high and parallels).
USDJPY has broken down and a bearish fork is in play. The median line was support today so focus for resistance is the 25 line (previously support) near 110.15 and/or the upper parallel near 111.05. Downside focus is the lower parallel, currently in the low 107.00s.
3/25 – USDJPY high so far is 111.72…good enough. The trigger for a short is a break below the short term trendline, which is about 110.75. Immediate focus would be 108.50s.
NEW ZEALAND DOLLAR FUTURES
I’m showing the NZDUSD futures chart to show VWAP. There is no difference between futures and spot right now so the levels are equal. The median line continues to provide resistance. VWAP from the March high, previously resistance, is now in line for support at .5876. Look to buy just above there. Upside focus is the upper parallel, currently near .6200. Last week may have been a HUGE low by the way (long term chart below).
3/19 – NZDUSD is trading right on the lower parallel (after a spike below today) of the Schiff fork that originates at the 1985 low. The upper parallel was resistance in 2007, 2008, 2013, and 2014. Price blew through the top of the parallel in 2011 before reversing. With such a great showing at the upper parallel, it would make sense if the lower parallel provided support for the next big turn. I’m keeping abreast of the short term picture and will let you know if I see an opportunity for entry.
EURAUD traded 1.8573 today…right into the cited level. I’m leaving a short order under the 200 hour average at 1.8400, which has been decent resistance and support since February. Downside is the long term center line (channel from 2012 low…see 3/24 post for long term chart) near 1.7200.
3/24 – EURAUD made a ‘panic high’ last Thursday at the upper parallel of the channel from the 2012 low. Focus is towards the median line near 1.7200. The median line was resistance for years, so it’ll probably provide support now. Proposed resistance for entry is daily reversal resistance (Thursday’s close) at 1.8579. I obviously don’t know if that gets reached. If price starts to break down now then the plan will be to sell into the 200 hour average at a later date.