BMy “Euro on the go!” headline last week preceded the euro’s trip to nowhere—except deeper into the three-month narrow-range to prepare for its faster-and-farther fireworks fugue to a crazy breakout price! The reverse of the current situation will be too much price in too little time. Let’s review some euro charts to see if a 50-day expiration long overhead call spread and a long 1.225 single put (weekly 20-simple moving average) make sense (see the charts below).
Regarding this week’s forecast, I noted that the British pound, the euro and crude looked bullish, and they behaved so. The projected range in crude offered a good reversal trade level into Wed. Also, my list of breakout symbols (Canadian dollar, crude oil, the pound and the S&P 500) produced pricing outside the prior week’s ranges. As a monthly chart follow-up, VIX futures are forming an inverted hammer, while Ten-year T-Notes formed a reversal long signal last month.
Planes and cars and steel is one thing, but now it’s serious because we are talking soybeans. China decided to hit at the heart of U.S. China trade by taxing the beloved American soybean. The move was viewed by the market as the first real sign that the potential trade war is serious because China loves and need U.S. soybeans. Historically, China introduced the United States to the soybean and we have been happy to sell them back to them.
Weather continues to be a headline story, mostly due to the fact that there is not much else to report on at this point. There are chances for rain in Argentina later in the week, but we are in the camp that thinks it may be too little too late.
Some trending markets, such as gold, the euro and bitcoin may continue their behavior into next week. I’m bullish-sideways for next week on all symbols I track, except the yen, soybeans and bitcoin, due to understudies. The Yen, Beans, and Bitcoin chart bearish to me. The breakout candidates for this coming week are the Euro (monthly pivots are equal to last month, plus trending weekly pivots), gold (bullish), soybeans (bearish hammer) and bitcoin (bearish).
Export sales yesterday morning came in at 1,752,996 metric tons, this was well above the expected range from 1,000,000-1,500,000 metric tons. The bulls will want to see this become a longer-term trend to keep this market grinding higher. The corn market was also helped by spillover from the strength in soybeans and wheat.
In corn, export sales yesterday morning came in at 1,974,400 metric tons, well above the top end of expectations which ranged from 1,000,000-1,500,000 metric tons; last weeks read was 1,769,595 metric tons.
Friday offered a surprising report for corn seeing that funds had covered 89K shorts in just one week. While that still leaves funds short 131K it was quite a bit more active than expected. A knee-jerk reaction to that news is to lose some support as other speculators ease up on buying ahead of the funds. It's a simple idea that buying ahead of the funds when they are record short can offer a large potential for fund help to your buy order.