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Talking Points

  • Important week for USD/JPY
  • USD/CAD fails at Gann resistance
  • Major turn window coming up for Silver

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Foreign Exchange Price & Time at a Glance:

Price & Time Analysis: USD/JPY

Price & Time: Making the Contrarian Case For Silver

Charts Created using Marketscope – Prepared by Kristian Kerr

  • USD/JPY remains capped by Gann ressitance near 102.80
  • Our near term trend bias is lower in the exchange rate while below 102.80
  • Interim support is seen near 102.00, but a daily close under 101.35 is really required to confirm the start of a more important decline
  • An important turn window is seen this week in the yen related to the 2011 low
  • A move over 102.80 will turn our near-term trend bias to positive, but a push through 103.15 is really needed to get us more excited about the upside

USD/JPY Strategy: Like the short side while under 102.80.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

USD/JPY

*101.35

102.10

102.35

*102.80

103.15

Price & Time Analysis: USD/CAD

Price & Time: Making the Contrarian Case For Silver

Charts Created using Marketscope – Prepared by Kristian Kerr

  • USD/CAD touched its highest level in a month last week before encountering resistance at the 3rd square root relationship of the year’s high near 1.0960
  • Our near-term trend bias is positive in the exchange rate while over 1.0855
  • A daily close over 1.0960 is needed to trigger a more important advance
  • The next cycle turn window of importance is eyed around the end of the month
  • A daily close under 1.0855 would turn us negative on Funds

USD/CAD Strategy: Flat. May look to buy on a break of 1.0960.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

USD/CAD

1.0835

*1.0855

1.0910

1.0915

*1.0960

Focus Chart of the Day: SILVER

Price & Time: Making the Contrarian Case For Silver

Silver continues to languish near multi-year lows and remains one of the least loved commodity markets out there. We think this could change soon. Our contrarian view is based on cycles, positioning and sentiment - all of which seem to suggest that the metal is nearing an important inflection point within the next few weeks. The second half of this month looks particularly important for the metal as a long-term cyclical interval related to the 1980 inflation adjusted all-time high (34.4 years) should have material influence on the metal. At the same time that XAG/USD is entering into this potentially important cyclical period large speculator short positioning as measured by the CFTC has risen to its highest level in a decade. This has been accompanied by a swift decline in the Daily Sentiment Index or DSI to below 10% bulls just last week. In layman’s terms the market looks to be leaning heavily in one direction and is vulnerable to an important reversal when/if this concentrated position unwinds. Our cyclical analysis suggests this will probably happen sooner than later. From a cyclical standpoint we would prefer to see a new multi-year low before any reversal (ideally from somewhere near 17. 25), but if a strong enough pattern emerges before that we would certainly take that as a sign that the reversal is already unfolding. New cyclical lows in Silver into July would undermine the turn potential and signal our positive view was wrong.

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