August SB Trade Desk Recap

On balance, August was relatively quiet.  For example, EURUSD (which represents about 70% of all FX transactions) traded in a 2% range for the month and dropped 0.53% after all was said and done.  USDJPY traded in a 1.89% range and ended August up 30 basis points (0.3%).  The biggest range among majors was USDCAD at 3.93% although it ended the month up just 1.22%.  Expect more volatility now that summer is over!  Trading results and some analysis examples from August are below.  If you think that the trade ideas and/or analysis can compliment your trading process, then click on the button below to join the community.

@JamieSaettele

August 2nd

THE ECONOMIST

The ‘magazine cover indicator’ strikes again.  For a short explanation on the logic applied, check out a post about the U.S. Dollar from 2016.

The most recent Economist cover highlights emerging market struggles.  Again, check out the post in the link above for an explanation on why magazine covers are useful contrarian covers but the bottom line here is that EM (I’ll dig into EM equities and FX more in the coming days) is ‘sold out’.

August 3rd

GBPUSD 4 HOUR

I’m conflicted regarding Cable.  On one hand, proposed USD support is lower (both USDOLLAR and DXY) and GBP futures are holding 2021 VWAP (see chart below).  On the other hand, the GBPUSD fork from the February high is a thing of beauty.  The high last week was right at the upper parallel and a bearish outside day was formed on 7/30.  Seasonality is bearish as well.  As such, I’m bearish against the 7/30 high.  Proposed resistance for entry is 1.3950.

BRITISH POUND FUTURES 4 HOUR

NZDUSD DAILY

.7100 might be in play again for NZDUSD.  The level has been a pivot since December.  It’s also near the 25 line within the channel from the February high.  Since the 75 line was support (twice), we should expect resistance near the 25 line (median line symmetry!).  .7100 is also the 200 day average.

August 4th

XAGUSD (SPOT SILVER) 4 HOUR

Silver tagged the underside of the trendline from the November low today and reversed sharply lower.  The action screams short.  Proposed resistance for entry is 25.75 or so.  Downside focus is the March low of 23.78 followed by daily reversal support (9/24/21 close) at 23.15.

August 10th

COPPER FUTURES 4 HOUR

Copper bounced off of the center line of the channel from the May high on Monday.  The center line validates the channel.  Further, the 25 line was recently resistance.  That line intersects the 7/6 high at 4.4025, which is now proposed resistance.  Bottom line, evidence suggests that copper is in a downtrend.

COPPER (ORANGE) AND AUDUSD (BLACK) DAILY

AUDUSD HOURLY

Copper and AUDUSD tend to move together (see above), which reinforces the bearish AUDUSD view.  With 5 waves down in AUDUSD from 8/4, today’s bounce is viewed as corrective.  .7370 is well-defined for resistance and a short entry.

August 11th

SPOT GOLD 4 HOUR

Gold has recovered most of its Sunday ‘flash crash’.  I’m thinking that 1765 is resistance (close to where we closed last week) and that price consolidates in a range in order to ‘reset’ before the next move.  1733 is possible support now.  Keep an eye on silver and gold.  Silver is lagging during this recovery, which isn’t a good sign for precious metal bulls.  Bigger turns in PMs are often marked by non-confirmations.  This occurred at the March 2020 low when silver made a lower low but gold did not (see blue boxes on the above and below charts).  Since the lows were made during thin conditions on Sunday night, I’m thinking that a non-confirmation occurs on hourly closes (1693 for gold and 23.05 for silver).

SPOT SILVER 4 HOUR

Aside from everything mentioned above regarding non-confirmations, pay attention to 24.05 for silver resistance.  Again, 23.05 is possible support.

August 12th

SPOT GOLD AND SILVER 4 HOUR

Silver made a new low and gold did not…non-confirmation!  Again, this is based on hourly data (as suspected yesterday).  Bottom line, the non-confirmation warrants a positive short term stance on precious metals.  1765/93 and 24.05 are resistance levels for gold and silver.

August 17th

NZDUSD DAILY

NZDUSD eyes remain on .6800 (or so).  Recall that .6800 is 2 legs down from the February high AND VWAP from the 2020 low.  The bottom of the channel is now about .6700 so let’s call .6700-.6800 a critical zone.  The high volume capitulation logic explained regarding AUDUSD applies to Kiwi (see futures chart below).  Proposed resistance is .6950/65 (former support and month open).

NEW ZEALAND DOLLAR FUTURES DAILY

August 18th

CRUDE OIL FUTURES DAILY

Crude failed just before 70.18 last week and it’s dropped every day since.  Median line acceleration was on display today (in copper too by the way…see yesterday’s post…).  The big test is 62.27, which is 2 equal legs down and the lower channel line.