Market Update - June 16

Optimism was seen early in Asia-Pacific trade, as risk-associated assets strengthened of the back of the Federal Reserve’s corporate bond purchasing announcement.

The announcement of further stimulus from the Bank of Japan and the possibility of more fiscal help floated by US President Donald Trump sent S&P 500 futures soaring alongside the commodity-linked Australian Dollar, as the haven-associated US Dollar and Japanese Yen plunged.

However, risk aversion seems to have returned late in the session, with risk assets retracing earlier ground gained. Hence I am looking for possible sell opportunities.

EURUSD is nearly back to the noted 1.1340. I’m on alert for a turn lower between 1.1340/72. The top of the zone is daily reversal resistance.

Commodity currencies are forming flat patterns from Friday’s Asian session. AUDUSD has already exceeded the end of wave A so I’m on the lookout for a turn lower. I’m thinking that this happens from either the 200 hour average at .6930, the 61.8% retrace at .6961, or the 75 line within the channel from the 4/3 low at .6988.

NZDUSD has also exceeded the end of wave A and is testing the 200 hour average.  Price could turn down now but a better level for resistance is probably the 61.8% retrace of the decline from last week’s high at .6511.

USDCAD is also forming a flat! Price has yet to take out the wave A low, which is one reason to suspect that the flats in commodity currencies are not complete. Ideal support is 1.3450/90. This is the 61.8% retrace, 200 hour average, and 6/9 high.  Broader upside focus remains 1.3833. USDCAD sports the cleanest short term levels of the commodity currencies in my opinion.

AUDJPY found support near the bottom of the channel from the March low. The decline from last week’s high though is in 5 waves (with a truncated 5th wave) so I’m anticipating a corrective rebound. Resistance is either 74.90-75.18 or 75.88. The bottom of the zone is the 61.8% retrace, former support, and the 200 hour average. The top of the zone is the 78.6% retrace and underside of the center line.

Good Trading,


Dominik Stone

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