Price broke down from its broad 2016 triangle in Q4 2016 and challenged the bottom of the nine-month range and our downside target at 0.7150/00 in December. The response to nine-month lows at 0.7150/00 was positive however, setting up an impulsive bullish reversal towards one-year range highs above 0.77 in February and again in March. The highs of 0.7741/50 fell marginally short of testing previous highs ahead of the recent downturn. This succession of failures above 0.7700 reminds us that LT range highs around 0.7750/0.7835 remain a significant obstacle. On the flipside price has produced a series of higher lows since early 2016, the traits on a MT uptrend. The recent hold of the lower weekly Bollinger band at 0.7360/70 has been followed by some reasonably impulsive upside and implies that another challenge of 0.7750/0.7835 is increasingly likely. A weekly close below the lower weekly Bollinger band at 0.7360/70 is required to negate the current positive bias.
MT and LT momentum aligned with a negative bias in May. This was short-lived however and MT momentum has again shifted to a positive bias in June implying that the downtrend bias is no longer in play.
The full text of this article is available to MacroBusiness subscribers
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
