The Signals Were Correct

The trade desk highlighted that there were signals coming against the long-Usd trend earlier in the week, but they were negated by the latest drop lower in global equity trade on Monday. Tuesday reversed that, with global equity futures trade finding support, and moving higher. That played out in the form of oversold major currencies finding buyers, and reversing overnight negativity.

We are starting to get the same 4-hour chart signals that cropped up on Monday, but this time they have volume, and a clear fundamental calendar that may allow them to follow through for a 150-200 pip move.

The key to further appreciation on the major currencies, and some near-term Usd weakness following through, will be whether the S/P futures market can hold above 1075. If so, and a move towards 1100 can take place, the major pairs may even form a near term trend reversal.

The pairs signaling on the 4-hour, although they are still against the trend, are Long Gbp/Usd, Gbp/Jpy, Usd/Jpy, Aud/Jpy, and Short Usd/Cad. Signal detail will follow soon after 17:00 ET.

The dollar index (DXY) failed to break the 87.00 area, and is looking to reverse off price points last seen in January 2009.
These form a yearly chart triple top that connects trade from 2005, which will be tough to break. As the global growth story unwinds, the move to Usd based Treasury notes is in place, but overbought, fueled by a desire to be long safety, at the cost of yield. Speculative interest may n=move out of the Usd in the near-term as May profit is banked.

Any positive potential in equity markets being able to hold support will be confirmed with the Japanese Nikkei moving higher through 9650 and the German Dax holding 5750 support. Both regional market moves would allow the S/P futures traders to dmove price action up and through 1075 and hold there. That would pressure the short side of the Usd.

Short-sided speculative interest in West Texas Intermediate has managed to hold price action below $70, which is now a swing point high of note. The ease in which sentiment changed from bullish outlooks on global growth to a very negative view has empowered those on the short side of oil, and aided the ease in which the Usd was been bought.

The need to hedge the long-Usd environment allowed gold trade to move higher and stake a claim to be a stand-alone asset class that seems to have few peers when global expansion is in doubt. The GLD/USD correlation is holding strong as both Usd and Bullion reserves are seen as a near-term safe haven.

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