Last week: There was only one minor trend line breakout of note last week and I attribute this relative void to market uncertainty in the lead up to FOMC and, then, more of the same as this rate news was digested. This was compounded by cautious trading on the S&P500 as it now trades just below the whole-number and psychological 4,000 level; which would likely be making traders a bit nervous especially given the lengthy 12-month rally the index has already enjoyed. It was, therefore, not surprising to see so many indecision-style Spinning Top and Doji candles printed last week! The four major US stock indices, the S&P500, DJIA, NASDAQ and Russell-2000 all closed with bearish weekly candles. The US$ Index and Gold both closed a bit higher for the week but also fell victim to indecision-style weekly candles as did the VIX but its candle was bearish.

 

NB: I am away with family on a 2-week holiday until Tuesday 30th March. This is holiday that had been postponed due to Covid restrictions. Weekday updates will be brief and few during this period but I will endeavour to publish a full weekend update; on both weekends.

 

Technical Analysis: It is important to keep in mind that this analysis is Technical and chart-based but that any major Fundamental news items, as recently seen with Covid-19, have the potential to quickly undermine identified chart patterns. This is why it is critical that traders appropriately manage their trade exposure and risk per trade during these volatile market conditions.

 

Trend line breakouts: There was only one minor trend line breakout last week. Updates posted throughout last week can be found through the links here, here and here:

 

• Gold: a TL b/o for $20.

 

This Week: (click on images to enlarge):

 

• • DXY: US$ Index: The US$ index closed with a bullish-coloured Spinning Top weekly candle and continues to hold up and out from the recently broken 12-month bearish-reversal descending wedge. Note how weekly momentum is declining and contracting though:

 

DXY weekly: an indecision-style weekly candle:

 

DXY 4hr: watch for any momentum-based wedge breakout: up or down!

 

 

• • 10-yr T-Note Interest rate: The chart of the 10-yr Treasury Interest rate shows the recent bullish breakout from the triangle congestion pattern is moving along. The 15 level and weekly 200 EMA have been taken out so watch for any continuation move up to the weekly 61.8% Fibonacci, near 21.50. 

 

• 10-yr T-Note Interest rate:  the bullish breakout continues:

 

• • % Stocks above their 200 Day Moving Average Index: The Percentage of stocks above their 200 Day Moving Average remains above the 85% region. The first chart below gives a perspective of this current level and shows the previous peaks near 92.50% and how there often tends to be some mean-reversion once such lofty levels are reached. The second, expanded, chart shows the continued struggle under the 92.50% level.

 

% of US Stocks above the 200 Day Moving Average: watch for any further reaction at the 92.50% region:

 

% of US Stocks above the 200 Day Moving Average (expanded): holding below 92.50% ? 

 

 

• • Central Bank update: there is one Central Bank rate update this week: SNB (CHF).

 

• • S&P500: Keep the bigger picture in perspective with the recent moves as this chart suggests there is a lot more room to move with the overall bullish run. However, this does not discount the odd pullback along the way as trends do not travel in straight lines forever; they tend to zig and zag their way along either bullish or bearish paths. Note how the recent Covid dip does not even figure on this chart!

 

S&P500 yearly: keep this latest move in perspective:

 

 

• • Market Phases: It is important to recall the three main types of market phases: Accumulation, Participation (Up and Down) and Distribution. Traders should monitor the chart of the S&P500 chart for any Distribution type activity that might eventually lead to Participation Down; especially as the S&P500 trades up near the all-time High. The chart below shows how the S&P500 evolved in the years leading up to, and during, the Global Financial Crisis (GFC). Note how the Distribution phase evolved over a period of many months and there was a double test of the all-time High region. Keep this in mind with the current market action on the S&P500.

 

S&P500 market phases: Global Financial Crisis 2007-2009:

 

S&P500: keep watch for any Distribution type of activity:

 

 

• • Copper: Copper is often viewed as one metric of economic health and closed with a bearish-reversal-style Hanging Man weekly candle.

 

Copper weekly: a bearish-reversal style weekly candle:

 

 

• • Emerging Markets: The Emerging market ETF, EEM, closed with a bullish-coloured Spinning Top weekly candle and is holding near the 12-month support trend line.

EEM weekly: watch the 12-month TL:

 

 

• • DJIA: The DJIA closed with a bearish-reversal Shooting Star-style weekly candle after testing a new all-time High at 33,000 during the week.

 

DJIA weekly: watch 33,000 for any new make or break.

 

 

• • NASDAQ composite: The NASDAQ Composite Index closed with a bearish-colored Spinning Top weekly candle reflecting indecision as the index struggles just under the recently broken 12-month support TL. However, traders need to watch for any potential Bull Flag formation, but, any serious sell off would bring the weekly chart’s 61.8% Fibonacci, circa 9,500, into focus.

 

NASDAQ weekly: watch for any potential Bull Flag:

 

 

• • DAX weekly: The DAX closed with a bullish-coloured Spinning Top weekly candle and at a new all-time High;

 

DAX weekly: watch the 12-month support TL:

 

 

• • Commodities: The Commodity ETF, DBC, continues with a bullish breakout from the bullish-reversal Descending Wedge that I had been monitoring for some months but closed with a bearish weekly candle. However, the ADX remains above the threshold 20 level AND price action continues to hold above the $15 resistance-turned-support level.

 

DBC weekly: closed with a bearish weekly candle; 

 

 

• • Russell-2000: The Russell-2000 is often viewed as the ‘Canary in the Coal Mine’ for US stocks and the index closed with a bearish-coloured Inside weekly candle reflecting indecision. The Index is holding above the 61.8% Fibonacci extension of the Covid-induced Swing Low so watch for any push to the 100% level, circa 2,475.

 

RUT weekly: watch for any push to the 100% level, circa 2,475.

 

 

• • Bonds / TLT: The Bond ETF, TLT, closed with another bearish weekly candle and just below the 135 S/R level. My Elliott Wave indicator is still suggesting a potential uptrend though.

 

TLT weekly: closed below the 61.8% Fibonacci and 135 support:

 

 

• • USD/CAD and USD/CNY: keep an eye on these two weekly chart Descending Wedge patterns for any new trend line breakout.

 

USD/CAD weekly: lower again as the CAD$ strengthens:

 

USD/CNY weekly: a TL b/o BUT keep watch of 6.50 for any hold above this break:

 

 

• • VIX: the Fear index closed with a bearish-coloured Spinning Top weekly candle but still above the 20 S/R level.

 

VIX weekly: watch for any new break below 20 S/R:

 

 

Calendar: Courtesy of Forex Factory:

 

 

Earnings: Courtesy of Earnings Whispers:

 

 

Market Analysis:

 

S&P500: The S&P500 closed with a bearish-coloured Spinning Top weekly candle after testing a new all-time High during the week. Price action managed to hold above a 12-month support trend line but is becoming increasingly squeezed between this support and resistance above from the whole-number and psychological 4,000 level so watch this for any new make or break.

Trading volume has held above the 200 MA but I have revised the bear trend line so watch this for any new breakout.

 

S&P500 ETF: SPY weekly: watch for any new trend line breakout:

 

The Index closed the week just above 3,900 making this the horizontal support level to monitor and there are revised 4hr chart trend lines to assess with any new momentum breakout.

NB: The second weekly chart shows how the 61.8% Fibonacci extension of the Covid-induced Swing Low is up near 4,150. This would be one target for any bullish continuation move.

Bullish targets: any bullish 4hr chart trend line breakout would bring 3,950 and 4,000 into focus.

Bearish targets: any bearish 4hr chart break below 3,900 and the 12-month support trend line would bring 3,850 into focus  After that, watch 3,800 and whole-numbers on the way down to the weekly chart’s 61.8% Fibonacci retracement level, near 2,800. Traders need to watch for any potential weekly chart Bull Flag activity around this 12-month support trend line.

• Watch 3,900 and 4hr chart trend lines for any new breakout:

 

 

 

ASX-200: XJO: The ASX-200 closed with a bearish-coloured Spinning Top weekly candle reflecting indecision as price action continues to struggle under 6,800 resistance. The index closed the week just above 6,700 making this support level to monitor for any new make or break.

As mentioned over recent weeks: The pre-GFC High of 6,851.50, pre-2020 High of 6,893.7 and 2020 High of 7,197.2 loom large and ahead of current price action and are proving to be strong resistance levels for the index.

Trading volume was a bit higher last week and above the 200 MA but I have revised the bear trend line so watch for any new break back above this trend line.

 

XJO weekly: watch for any new b/o above the bear TL:

 

Keep in mind that the recent Golden Cross still remains valid. The Golden Cross is a bullish signal where the 50 SMA crosses above the 200 SMA. Such crosses are often, but not always, followed by a decent bullish run so these crosses are worth noting:

 

XJO daily: the recent Golden Cross remains valid for the time being:

 

Recent 4hr chart price action has been very messy but there are revised 4hr chart trend lines to monitor for any new breakout.

Note how ADX momentum still remains low on the daily chart and is declining on the weekly chart.

Bullish targets: Any bullish 4hr chart triangle breakout would bring 6,800 and the pre-GFC high of 6,851.50 into focus. After that, watch the pre-2020 High of 6,893.70, the whole-number 7,000 and, then, the 2020 High of 7,197.20.

Bearish targets: Any bearish 4hr chart triangle breakout would bring 6,600 into focus.

• Watch 6,700 and for any new 4hr chart triangle breakout;

 

 

Gold:  Gold closed with a bullish-coloured Spinning Top weekly candle reflecting some indecision as price remains pegged by $1,750.

As mentioned over recent months: This price action and hold below $1,900 acts as further evidence in support of the longer-term Inverse H&S thesis that I have been discussing as an option here for many months.

The weekly chart still has the look of a broad Inverse H&S pattern; or some may see this as a broad Cupping style pattern. Both are rather similar though as they are bullish patterns and suggest follow-through to the order of magnitude of the depth of the Cup / height of Head. In this case, that move is of around either $800. Keep watch of $1,900 now that price action is trading below this neckline region!

$1,900 remains the region in focus for any bullish Cup or Inverse H&S breakout:

• Any hold above $1,900 would support the Cup pattern thesis.
• Any move back below $1,900 would support the Inverse H&S pattern thesis.

Traders need to watch this $1,900 level over the coming sessions especially as the US$ index is still below the recently broken 10-year support trend line:

• any US$ hold below the multi-year support trend line could help send Gold higher.
• any US$ move back above this support trend line could keep Gold range-bound. This would help to further develop the Inverse H&S pattern.

 

Price action closed the week just below $1,750 so this will be the horizontal resistance level to watch for any new make or break and there are revised 4hr chart trend lines to monitor for any new breakout.

As per last week: the daily chart reveals the importance of the $1,670 level so this continues to be a ‘line in the sand’ support level to monitor. Any new weekly close below the $1,670 level would bring $1,500 into greater focus. The two weekly charts show that $1,500 is:

• near the 61.8% Fibonacci of the Aug 2018 – Aug 2020 swing High move.
• forms the lower boundary of the Inverse H&S pattern I have had on my charts for many months.

Note that weekly ADX momentum is now above the 20 threshold level BUT the bearish DMI, although above 20, is trending downward but watch for any uptick here.

Bullish targets: any bullish 4hr chart triangle breakout, above $1,750, would bring $1,770 back into focus followed by $1,800, the daily 200 EMA, $1,850 and $1,900.

Bearish targets: any bearish 4hr chart chart triangle breakout would bring $1,700 and the recent Low, near $1,670, into focus.

• Watch for any 4hr chart triangle breakout:

 

 

EUR/USD: The EUR/USD closed with a bearish-coloured Spinning Top weekly candle after spending much of the week trying to hold above 1.19 so this will be the horizontal support level to monitor for any new make or break.

There are revised 4hr chart trend lines to watch for any new breakout.

NB: Note that the longer-term target for any continued bullish movement following the previous break of the 13-yr trend line is the monthly chart’s 61.8% Fibonacci, near 1.40. This trend line breakout was flagged back in a post on August 2nd 2020. Price at the breakout was around 1.17 and has reached up as far as 1.23, a move of around 600 pips, so this has been a breakout worth monitoring.

Bullish targets: Any bullish 4hr chart triangle trend line breakout would bring 1.20 and 1.21 into focus as the latter is still near the 4hr chart’s 61.8% Fibonacci. After that, watch the monthly 200 EMA and 1.22 level and, then, whole-numbers on the way up to a previous weekly chart High, circa 1.26 and, for any continued push up to 1.40.

Bearish targets: Any bearish 4hr chart triangle trend line breakout would bring 1.18 into focus.

• Watch 1.19 for any new 4hr chart momentum-based trend line breakout;

 

 

AUD/USD: The Aussie closed with a bearish-coloured Doji weekly candle and still just below 0.78 making this the resistance level to watch for any new make or break.

Price action is also holding just below a recently broken 12-month support trend line so this support-turned-resistance will need continued monitoring and, as with the break of any support trend line; keep watch for a potential Bull Flag.

There are revised 4hr chart trend lines to monitor for any new momentum-based breakout.

NB: The longer-term target for any bullish continuation from the weekly/monthly chart’s Descending Wedge breakout is the weekly 61.8% Fibonacci, near 0.90. This monthly wedge trend line breakout was also flagged back in the post on August 2nd 2020. Price at the breakout was around 0.71 and has reached up as far as 0.80, a move of around 900 pips, so has been another breakout worth monitoring.

Bullish targets: Any bullish 4hr chart triangle trend line breakout would bring the 12-month TL into focus. After that, watch 0.79 and whole-number levels on the way up to the weekly chart’s Descending Wedge breakout target of 0.90.

Bearish targets: Any bearish 4hr chart triangle trend line breakout would bring 0.77 and 0.76 into focus. After that, watch whole-number levels on the way down to 0.65 as this is near the 61.8% Fibonacci of the March 2020 – Feb 2021 swing High move.

• Watch 0.78 and for any 4hr chart triangle trend line breakout:

 

 

 

AUD/JPY:  The AUD/JPY closed with a bearish-reversal Shooting Star-style candle just under 85 S/R so this will remains the resistance level to watch for any new make or break.

As noted over recent weeks: The weekly chart reveals that the 85 level has been a significant reaction zone for the AUD/JPY and has been resistance for the last three years; this level was peppered many times throughout 2018 but could not be broken. The next major level above 85 is 90 so watch this target level if 85 is broken.

As also noted over recent weeks: AUD/JPY traders also need to keep an eye on the sentiment with stocks though, especially the S&P500 index, as the two are generally highly aligned; as the chart below reveals. Any pause with stocks might render similar for the AUD/JPY:

 

AUD/JPY versus S&P500 (gold line): a high degree of positive correlation:

 

There are revised 4hr chart trend lines to monitor for any new breakout. I have included a daily chart here this week as well. Note how the 72 level is down near a previous reaction zone and not too far from 61.8% Fibonacci of the March 2020 – March 2021 swing High move; this might be a target to aim for if risk appetitive turns very sour.

Bullish targets: Any bullish 4hr chart triangle breakout would bring 85 S/R back into focus followed by whole numbers on the way to 90 S/R.

Bearish targets: Any bearish 4hr chart triangle breakout would bring 84 into focus followed by the 21-week support trend line and 83 S/R. After that, watch the monthly 200 EMA and whole-numbers on the way down to 76 as this is still near the recently broken 7-yr bear trend line. After that, watch 72 as this is near the 61.8% Fibonacci of the March 2020 – March 2021 swing High move.

• Watch 85 and for any new 4hr chart momentum-based trend line breakout;

 

 

 

NZD/USD: The Kiwi closed with a bearish-coloured Doji weekly candle and, again, just below 0.72 keeping this the level to watch for any new make or break.

Price action also remains just below the recently broken 12-month support trend line so this support-turned-resistance will need continued monitoring and, as with the break of any support trend line; keep watch for a potential Bull Flag.

Bullish targets: Any bullish 4hr chart triangle trend line breakout would bring the recently broken 12-month support trend line into focus followed by 0.73. After that, watch 0.74 and 0.75 as the latter is the next major horizontal S/R zone (see weekly chart). Then watch 0.76 as this is near a monthly chart 61.8% Fibonacci target of an earlier monthly chart triangle breakout.

Bearish targets: Any bearish 4hr chart triangle trend line breakout would bring 0.71 into focus. After that, watch whole-number levels on the way down to 0.63 as this is near the 61.8% Fibonacci of the March 2020 – Feb 2021 swing High move.

• Watch for any 4hr chart triangle trend line breakout:

 

 

GBP/USD: The Cable closed with a bearish-coloured Spinning Top, and almost Inside, weekly candle with both reflecting indecision as price continues to struggle under the major 1.40 level keeping this as the resistance to watch for any new make or break.

There are revised 4hr chart trend lines to watch for any new breakout.

NB: The longer-term target for any bullish continuation above the previously broken 14-yr trend line, noted here in my article on December 20^th, is the monthly chart’s 61.8% Fibonacci, near 1.75. Price action at the initial breakout was around 1.35 and has reached to 1.42, a move of 700 pips, so this trend line breakout was a great clue about things to come and the target for this move has not even been reached yet!

Bullish targets: Any bullish 4hr chart triangle trend line breakout would bring 1.40 into focus followed by 1.41 and 1.42. After that watch whole-number levels on the way up to 1.50 as this is a previous S/R region on the weekly chart. Any bullish continuation after that would bring whole-number levels on the way up to 1.75 into focus.

Bearish targets: Any bearish 4hr chart triangle trend line breakout would bring a 12-month support trend line into focus followed by 1.38 and 1.37. After that, watch whole-number levels on the way down to 1.25 as this is near the 61.8% Fibonacci of the March 2020 – Feb 2021 swing High move.

• Watch the 4hr chart trend lines for any new breakout:

 

 

 

USD/JPY:  The USD/JPY closed with a bearish coloured Spinning Top weekly candle after spending another week consolidating near 109 keeping this as the level to watch for any new make or break.

NB: The bullish weekly descending wedge breakout continues here and this was first noted in my article of January 31^st. Price action at the initial breakout was around 104.5 and has reached to 109, a move of around 450 pips, so this trend line breakout was a great clue about things to come!

There are revised 4hr chart wedge trend lines to monitor for any new breakout and note the low level of momentum.

Bullish targets: Any bullish 4hr chart wedge breakout would bring 110 and whole-numbers on the way up to 115 into focus.

Bearish targets: Any bearish 4hr wedge breakout would bring 108.5, and 108 back into focus. After that, watch whole-number levels on the way down to 105 as this is near the 61.8% Fibonacci of the Jan-March 2021 swing High move.

• Watch 109 and for any new 4hr chart wedge trend line breakout.

 

 

GBP/JPY:  The GBP/JPY closed with a bearish coloured Spinning Top, and almost Inside, weekly candle with both reflecting indecision as price stalled under the key 152 S/R.

Price action closed the week down near 151 so this will be the level to watch for any new make or break and there are revised 4hr chart trend lines to monitor for any new momentum breakout.

NB: The longer-term target for any bullish continuation above the previously broken 40-yr trend line, noted in my post of January 3^rd, is the weekly chart’s 61.8% Fibonacci, near 170. Price action at the time of this breakout was near 141 and has reached up to 152, a move of around 1,100 pips, and so is another trend line breakout that has proven to be worthwhile monitoring.

Bullish targets: Any bullish 4hr chart trend line breakout would bring 152 followed by whole-number levels on the way up to the weekly chart’s 61.8% Fibonacci, near 170, into focus.

Bearish targets: Any bearish 4hr chart trend line breakout, below 151, would bring 150 and the 13-week support trend line into focus. After that, watch whole-number levels on the way down to 135 as this is near the 61.8% Fibonacci of the March 2020 – March 2021 swing High move.

• Watch 151 and the 4hr chart trend lines for any new breakout: