The Periodical: 18th March 2022

Peaks in oil and gold suprise the macro crowd, strength in USDJPY and a textbook trade in AUDNZD

Mar 18

Chart of the Week: DAX

The German DAX from around 2015. Price has bounced off the 9 year FLD for years and also shows a tremendous 40 week component, running at 33.4 weeks over the sample period. A strong recent bullish move from a likely 40 week low is compelling.

Round Up

After the last few weeks of volatile price action, this week has been relatively tame on those terms. Stockmarkets have started to show signs of making the 40 week nominal low expected toward the end of March, with the FTSE having come down to target and now bouncing handsomely. The US markets are still a touch shaky and the possibility of a further low is not out of the question yet. Both the S&P 500 and DJIA have made strong upward moves but price needs to cross the 80 day FLD to confirm. Amplitude modulation across the indices is a fascinating aspect to equity markets at the moment. The German DAX, shown above, displays a very bullish looking bar at the monthly scale as it bounces off the 9 year FLD. Expect that FLD to be tested again later in the year.

Gold and silver retraces have neutered the precious metal bulls on the social media channels once again. Calls for plus $2000 gold have been plentiful, itself a contrarian signal over and above our expectation of the 40 week nominal peak. We now await a trough of 20 week magnitude coming in the next few weeks.

In a similar manner to gold, the energy market has collapsed somewhat to levels matching prices prior to the geopolitical events. WTI crude oil peaked from what is likely a 40 week nominal crest and hit our target in a couple of days, such is the nature of event driven pseudotrends - often retraced rapidly. Price is now attempting to bounce from either a 20 or 40 day nominal low. FLDs in WTI crude are arranged in a sideways pattern, indicative of generally sideways movement for a few months, at the amplitude of the recent FLD height.

In forex, there are several noteworthy developments. The dollar index is peaking from a 80 day nominal crest, likely also at least a 40 week nominal peak we have been anticipating. AUDNZD continues to be the darling of Hurstonian analysis, moving elegantly down to to our target and the 20 week FLD support. Price is likely moving from either the final 20 day nominal low of the current 80 day component or the 80 day component low itself. A large low in mid May is expected in this instrument for bulls. EURGBP exploded out of a 80 day nominal low in early March after coming down to a target of 0.82 in late February. This will be an interesting analysis going forward as the underlying trend is heavily down, rendering all moves up in the last year or so as bulltraps. USDJPY suprised to the upside, missing our downside target with a tremendous bullish increase in amplitude at the 40 day component. Price is now rolling over in the 80 day component, due to trough late March. USDCAD has been choppy, moving sporadically into a large cycle low (20 week nominal at least) due later this month or early April.

USDCAD is approaching a major low in the coming weeks.

Cryptocurrency has, possibly for the first time in recent years, taken a back seat the last few weeks. Prices in Bitcoin, Ethereum and Litecoin have all been serenely tracing out what is phased as the final 80 day component prior to a 40 week nominal low, due within the next few weeks. Expect plenty of renewed vigour in these markets shortly, with bulls in the ascendancy once again.