Intraday Market Thoughts Archives

Here are two charts for the US dollar index and another chart at the bottom of this piece. Is this a turning point for the US dollar? You know the US dollar has a problem when it's posting its biggest weekly decline in 4 months on the same week that S&P500 is having its worst week in over a month. But let's look ahead: Will USD bulls finally see some light at the end of the 4-month tunnel? The two charts suggest USD stabilization/bounce could start as early as next week. But what's beyond that? Read on below.  The Premium long EURUSD was closed for 295 pips yesterday and the long GBPUSD entered 16 days ago hit its final target for 295 pips earlier today. The EURCAD is currently +430 pips from the first time it was issued in May 28, before a 2nd trade was issued on Jul 16th . And here is OPEN ACCESS to this WEEK's Premium Video. 

One USD-positive narrative anticipates that macro damage in and out of the US will re-ignite fresh wave of equity selling, prompting the usual USD-demand.  One USD-negative narrative is that the Fed—which has already reduced its asset purchases over the last 4 weeks-could easily crank up liquidity and put off any USD-risk aversion fire. We could also mention surging Eurozone portfolio flows, but we'll stay here all day/night arguing. SO let's cut it short and mention some technical signposts, leaving you with this once-in-a-lifetime chart.   

Silver's explosion to 7-year highs scores a big point in favour of the reflationary trade, which consists of ascending commodities, resilient equity indices and a falling US dollar. I have often said in the last 2-3 Premium videos that rallying silver was the remaining/necessary card in the Falling House of the US dollar. In order for the USD decline to transition from corrective phase to a secular bear market, silver must break out of its 20 ceiling as it is more of an industrial commodity than gold. What about Copper? More below. I've posted today's Premium video for subscribers, pointing out the potential twists on the EURUSD and XAUUSD course, while highlighting a few trades on indices.  

Silver's reflationary status is also shared by copper—known as the PhD in Economics for its close relation with the economic cycle -- but silver is considered as macro-driven as well as more speculative in nature. The reflation trade may get more wind in its sail if US crude closes above $42, which it currently seems to do. 

Equity traders shift to this evening's earnings from Tesla and Microsoft, with an eye on number of deliveries and the extent of earnings losses for the former; and cloud services sales for the latter.

 

There are many questions; here are 4 of them: i) Equity traders wonder about a possible double top in NASDAQ; i) oil traders question whether the pullback to 40 qualifies as a breakout above the Mar 9th gap; iii) and FX traders starting the buzz about whether the historic EU stimulus marks an inflection point in the USD slide (especially as Trump continues to talk about masks). Meanwhile, those in need for an excuse-pullback in stocks can point to a possible 1-2 week delay in the next US stimulus bill. All the while, the Golden State surpassed the Big Apple in the number of Covid-19 infections. More questions below.

Will NASDAQ head back towards the 10570s, while SOX drop back to 20220s before resuming their rally? And will the XLK technology ETFs break its Mar 27 trendline support? Key support seen at 105.60s, a break of which would lead to the 55-DMA of 101.70. Keep an eye on these key levels.

Gold and silver are both heading for their best 4 months in 10 years. Not only both metals are up for the 4th straight month, but both are showing the highest cumulative gains since 2010. Less than 24 hrs after we pointed out the technical breakdown in Gold/Silver ratio here, silver finally broke above the 21 level, taking gold with it to 1841.  The EU finally agreed on finalizing its historic stimulus package at EUR 750 billion, with EUR 390 billion in grants and EUR 360 bn in loans. (More on this below). EURUSD pulled back for a brief sell-the-fact before regaining 1.1490s. GBPUSD broke above the 200 DMA as well as a 7-month trendline resistance, while USDX deepened the breakdown below its 200-WMA. Also watch other crucial 200-DMAs deviations below. The Premium Insights' trade in AUDUSD was stopped out, while GBPUSD and EURUSD are currently in a total gain of 370 pips. We currently have no trades on indices, but our WhatsApp Broadcast Group members were issued yesterday“quick longs” on DAX30, DOW30 and NASDAQ, all of which produced +500 pips as shown below.

 

GBP, silver and NASDAQ are in control of FX, commodities and indices on due to a combination of improved sentiment from fresh fiscal stimulus programs and positive vaccine results. AstraZeneca broadened optimism after positive results from early vaccine tests. Euro remained supported after the 4 holdout EU nations agreed over EUR 380 billion to be made in grants. EU US Treasury Secretary Mnuchin and Senate Majority Leader McConnell are expected to produce a new fiscal package near $1 trillion. Silver hit a 4-year high as Gold/Silver ratio broke below its 10-month trendline support. USDX deepens its selloff, with 95.80 and 1190 acting as crucial support on USDX and Bloomberg USDX Index respectively (which nears 9-year trendline support). More key market levels are listed below.

Austria, Denmark, Netherlands and Sweden have agreed that the EU's EUR 750 bn stimulus program will comprise of EUR 390 billion in grants and the rest in loans. It all changed for EURUSD on June 23rd when it held the 1.1180s upon Germany's proposed stimulus. It was on June 23rd when Ashraf called mentioned EURUSD's technical flawlessness.

Key market levels

US Crude oil sustains the 38.30-41.50s range highlighted in here while DOW30 continue to fail the top of the June 10 gap before dropping towards the 26580s and remaining well above the 200-DMA at 26300.

Premium Insights' subscribers were issued a long on XAGUSD at 15.20/50 on May 7th, days before the Gold/Silver ratio broke below 100. The trade hit its final target at 18.30 on June 1st.  

Join me on July 28th for the TradeOn Summit to watch my session at 11:15 Eastern, 15:15 GMT, 16:15 London. Attendees will receive a confirmation link: includes url of the platform and login. See you there.