April 18 am, FX/S&P/BTC Commentary

Euro-1.1255. The left hand chart is the weekly Eur on top, EurJpy and then $Yen on bottom. Since late 2016, EurJpy and the Euro look very similar so whatever way the Euro goes, I expect EurJpy to follow. The Euro needs to disconnect with an impulsive move and settle into a new trading range below 1.1200 and Eurjpy needs to do the same below 124 to reassert the downtrend. On the upside, the levels to watch are 1.1500 and 130. For now, range trading dominates but I expect an eventual break lower. The Euro could easily go towards 1.1500 and not do any damage to the longer term bearish view. I am bullish $Yen in the bigger picture but a break above 114 is needed but if EurJpy indeed breaks lower with the Euro, that could keep the upside in $Yen contained. For today, the Euro is below both today's and yesterday's mid so the bias is down but the range is 106% of the 10-day average so I cant't expect much range expansion. Resistance lies at 1.1270. Sell an early morning bounce ahead of there with a stop at 1.1285 looking for a test of the lows and probably lower with 1.1230 as a target. London is short, so look for a counter-trend rally around their square up time. Can also wait to see how the 950 to 1050am period trades versus the 920 to 950am period to set the tone into the close. Its a long weekend, so could see some squaring up into today's close.  

S&P-2900. Nothing new to say here as the market continues to climb a wall of worry. Consolidating just below the all time highs and above support at 2880 then 2840, is bullish price action. Bears are getting short and bulls who aren't long are just waiting for the dip. The risk here is not a hard break lower but a very strong rally to new highs. My line in the sand is still 2800/2780 although I think little odds we see near that range before new highs. The right hand chart is the daily EurJpy and S&P on bottom. They do pivot together and drift somewhat in the same direction between the pivots but the big divergence everyone pointing out is the strong rally in the S&P since the December lows and the sideways trading in EurJpy since then. There are no natural sellers of yen--only buyers. When there is liquidation of US stocks from overseas, they naturally have to sell dollars and buy Yen and since there are no sellers, buyers need to pay up. I think the S&P can continue to go higher without EurJpy following. If EurJpy tanks in here, I don't think it means much for the S&P as it will be on the back of a weak Euro and not a strong Yen.

BTC-5250. BTC is doing what is usually does--move big in one direction and then settle into a prolonged trading range. To expect 20% or 10% moves on a regular basis is not realistic. Take advantage of the 3-4% daily swings or trade this $600 range. BTC is holding nicely at these levels and that's a bullish sign. There are single prints from 4800 down to 4200. As long as holding above there, look for the next big move to be to the upside with a target of 6000 to 6200. Can lighten up longs ahead of there and can even try the short side on the first attempt. I do expect a break higher eventually but rather wait for 6250 to print to confirm which is similar to the 4250 level.  

Have a great long weekend!