Intermarket Action Showing 1st Signs of Concern

  • Posted by on August 10th, 2017 at 4:31 pm

The $GBPJPY has a huge wedge on the weekly chart but it has been difficult to catch a move on this currency pair. Shorts at the top of the wedge just above 147.00 level had to contend with choppy price action. After a few weeks price finally broke down lower to the 144.00 support, and former resistance, level. The reason why I don’t think we’ve seen a huge correction is because we have been moving in such a way that allows momentum measured by the RSI to reset. With the measured move lower to the 144.00 support level. When the yen caught any kind of weakness, the $GBPJPY moved as high as 146.76, close to the former highs above 147.00 which are the former lows turned now resistance level. However, I think this one will just continue to grind lower. The price action has stair-stepped all the way down allowing momentum to progress naturally lower in the midst of this very measured move to the downside. Until this week.

GBPJPY WEEKLY CHART

If you look at U.S. equities, the major American stock indices have been making new all-time highs all summer. Equities just keep grinding higher despite the divergence in momentum between price and RSI. The divergence has been recently invalidated with momentum make a new high higher than the previous high. However, the other equity markets in Europe, Great Britain and Japan have all failed to make new highs in tandem with the U.S. markets. In fact, the $DAX has already broken below recent lows and the $NIK has failed to move higher. The weak dollar has clearly supported U.S. equities higher. In converse, the strong euro has been killing European equities as of late. The forex market has certainly been a factor behind the divergence in western stock markets.

DAX WEEKLY CHART

SPX DAILY CHART

And in steps North Korea. The geopolitical tension between North Korea and the United States has been building for months. But this week, the warring ideologies escalated to fighting words. The market closed today below the summer highs for the first time since trump took office this year. This looks to be a first, early signal that the market is starting to crack. Will it be 2007 all over again a decade later? Get ready.

  • The Commodity Dollars Signal
    Posted by on August 4th, 2017 at 12:36 pm

    The market seems to be turning higher for the commodity dollars (comm dolls), which is inline with the recent price action in commodities. Commodities, like […]

  • ON AIR with F.A.C.E
    Posted by on July 17th, 2017 at 12:53 pm

    I spend every Sunday with students looking at markets for the upcoming trading week. So I was happy to share this week’s insights with Dale Pinkert […]

  • Is The Cannabis Trade Burnt?
    Posted by on July 16th, 2017 at 3:32 pm

    Right as markets closed last week, the newswires had a flash crash. And just for an instant, a headline came through the wires that wasn’t […]

  • The Youth vs. The Market
    Posted by on June 10th, 2017 at 12:49 am

    Now that the markets have opened after the week that ended in a hung parliament, I, a mere trader, can now make exclaim, Theresa May […]

  • FM CAPITAL GROUP
    Posted by on June 7th, 2017 at 7:00 pm

    I have been on Twitter for 8 years. I birthed #forexTwitter along with some pioneering souls. We were here before the stock guys. They just […]

  • This is the Correction We’ve Been Waiting On
    Posted by on May 29th, 2017 at 5:11 pm

    After waiting weeks for the $GBPUSD to put in a correction of this recent bull rally, cable finally staged a real correction last week. Since the […]

  • What’s The Deal With Bonds
    Posted by on March 25th, 2017 at 11:31 am

    With the stock markets entering 2017 rallying into all-time highs, bonds have gotten very little attention. Or rather, they are just getting very negative attention. […]

  • Nothing More Left in the Aussie
    Posted by on March 23rd, 2017 at 7:51 pm

    The Australian dollar set off the new year rallying pretty much across the board. Even after some consolidation, the Australian dollar attempted to push the […]

  • Should you bet against Oprah?
    Posted by on March 1st, 2017 at 11:45 pm

    I was skeptical when $WTW, the Weight Watchers stock, surged early today after the company reported very optimistic projections for future growth. The cynic in […]