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Talking Points

  • USD/JPY stalls near year-to-date high
  • USD/CAD closing in on important downside pivot
  • Equity markets at risk of reversal?

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Foreign Exchange Price & Time at a Glance:

Price & Time Analysis: USD/JPY

Price & Time: The "Most Loved Rally in History"

Charts Created using Marketscope – Prepared by Kristian Kerr

  • USD/JPY came within a few pips of the yearly highs earier today before stalling
  • Our near-term trend bias remains higher in the exchange rate while above 103.35
  • A close over the YTD high near 105.40 is needed to signal that a new leg higher is underway
  • A minor cycle turn window is seen here
  • A move under 103.35 would turn us negative on the exchange rate

USD/JPY Strategy: Like the long side while above 104.20

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

USD/JPY

*103.25

104.70

105.05

105.25

*105.40

Price & Time Analysis: USD/CAD

Price & Time: The "Most Loved Rally in History"

Charts Created using Marketscope – Prepared by Kristian Kerr

  • USD/CAD failed last week by the 2x1 Gann angle line of the year’s high in the 1.0980 area
  • Our near-term trend bias will turn negative on a close below 1.0860
  • The 1.0960 area needs to be overcome to re-instill upside momentum
  • A very minor cycle turn window is seen today
  • A close under 1.0860 sets up a deeper decline towards 1.0750

USD/CAD Strategy: Square.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

USD/CAD

1.0805

*1.0860

1.0900

1.0960

*1.0980

Focus Chart of the Day: Dow 30

Price & Time: The "Most Loved Rally in History"

News of a potential ceasefire in the Ukraine has seen US equity markets punch through to new all-time highs this morning. I view this as a negative. Not the ceasefire obviously, but the push to new highs as we enter into this all important cyclical turn window. As I have mentioned in recent notes, the next few days are deemed as absolutely critical for the US indices from a timing perspective as several long-term relationships are all converging here. The way I look at the world via cycles a push to new highs during this period is a huge potential negative as it sets up for some sort of reversal – hence the reason I call these periods “turn windows”. What is particularly interesting about this window is the huge conviction bulls have heading into the second half of the year. The AAII bear % is near its lowest levels ever. Sell side notes I have gotten my hands on over the past few days have all been talking about the “bullish period” after labor day as apparently over the past 5 years (is that even statistically meaningful?) the SPX has averaged almost 3.75% in the two weeks following the holiday. My point in all this is to highlight the fact there is no concern whatsoever of a sell off into the worst seasonal period of the year. It has been very popular over the past year to call this market “the most hated rally in history”. From where I am standing it doesn’t seem very hated at all, in fact, it seems pretty loved. This all seems very dangerous to me and in the perverse way markets work it probably means the one year nobody is looking for weakness during the negative seasonal period is the year it will finally show up. In my opinion, any price action signs of reversal in the indices should be taken quite seriously over the next few days.

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This publication attempts to further explore the concept that mass movements of human psychology, as represented by the financial markets, are subject to the mathematical laws of nature and through the use of various geometric, arithmetic, statistical and cyclical techniques a better understanding of markets and their corresponding movements can be achieved.

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