Charting Key Breakdown Levels In The EURUSD, The S&P, The VIX And The Spanish 10 Year

Tyler Durden's picture

Looks like John Noyce's prediction, who among the Goldmanites, has long been bearish on the EUR, is about to be proven right. Below we present his latest technical observations not only on the key FX pair, but on the VIX, The S&P, and, perhaps most importantly, the Spanish 10 Year. In brief: if today's weakness is not contained, there could be a very signficant downside risk breakdown in numerous market indicators.

EURUSD – The underlying signals of a significant top in place look clear, but a few levels to watch.

-    1.4166 – Uptrend from the January ’10 low
-    1.3968 – Interim low from 23rd May
-    1.3810 – 200-dma
-    1.3571 – Uptrend from the June ’10 low

 
Since sending the bigger picture piece on EURUSD last Sunday/Monday a number of clients have asked about potential MT-LT (multi-week/-month) targets. The first real weekly chart support comes in 1.3558-1.3528 where the 55-wma and uptrend from the June ’10 lows are converged. Ultimately however if this is as big a topping structure as it appears to be, a move back towards 1.20 is something to consider.

VIX - For the first time since the drop in equities began from the 2nd May high the VIX is attempting to make a meaningful push through the highs of the range. This likely has important implications for risk appetite correlated FX pairs which are still in a “stretched state” in trend terms. USDMYR is the clearest example, it having spent a similar extreme period below its 200-dma to EURSEK prior to its recent sharp upside correction (further details below).

S&P – First good support below here 1,257-1,241. This is where the 200-dma, interim low from March and the primary uptrend from the March ’09 lows are converged. Although there are further meaningful supports down to the 55-wma at 1,217, a break of this support region on the daily chart would be the first warning of a more meaningful downtrend beginning, as opposed to the drop from the May highs being a correction within the broader uptrend. Again important for FX from a broad risk appetite perspective.

Spanish 10-year yields – Is the market about to break from the triangle that never seems to end? Since the November ’10 high at 5.58% Spanish 10-year yields have been forming a tight triangle consolidation, making repeated attempts to break both higher and lower. While it’s been incredibly frustrating, technically the greatest risk has continued to look to be for an eventual upside break, i.e. toward higher Spanish 10-year yields and also very likely (taking into account the setup on the spread chart) wider Spain/Germany spreads. The pivot to watch at this point is 5.53%, a break above there would give a triangle extension target in the region of 6%. As previously highlighted there’s still a relatively strong inverse correlation between the Spain/Germany 10-year spread and EUR/Crosses such as EURCHF. Overall, a break higher in Spanish 10-year yields would therefore quite likely have significant negative implications for the EUR.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Clueless Economist's picture

When will they listen to John Maynard and I????

We need stimulus.  We need to print more money so we can fund all of those shovel ready jobs that need to be filled.  This will save or create many millions of jobs by my caculations.  Never underestimate the Keynes multipler...the mor $ printed the better things will be. 

redpill's picture

OT: Not to be forgotten, everyone's favorite black swan...

Flashes of Cherenkov radiation and recriticality at Fukushima going entirely unreported

http://hawaiinewsdaily.com/2011/06/apparent-explosion-and-fire-at-fukushima-4/

Franken_Stein's picture

 

Probably transitory.

In any case: bullish !

 

dwdollar's picture

Magical levitation all afternoon as the DOW reaches -200.

Franken_Stein's picture

 

I have a serious question:

 

Can the movement in the EUR/CHF and USD/CHF FX pair be regarded as the inverse of what the movement of the gold price in € or $ would be, if it was only driven by supply and demand and not distorted by COMEX short positions ?

 

Both qualitatively and quantitatively ?

 

I mean gold is a scarce resource and the Swiss Franc is too.

 

The SNB, after unsuccessfully trying to print like crazy and buying Euros by the boatload which now rot on their balance sheet, has now given up on that and can only watch the Franc rise with despair as their Euros become ever more worthless.

 

Or is this comparison too far fetched ?

 

Ghordius's picture

I have the same impression
Add oil to the picture, and the three seem to dance a tango...

francis_sawyer's picture

If you have to ask, you can't afford it...

Orly's picture

Sure it can and it has acted the way you describe.  The reason has to do with "risk-on" vs. "risk-off."

The Swiss franc is now considered the world's most reliable currency and the action it is taking reflect an inverse correlation between risk and less-risk.  It used to be the job of the US Dollar to be the safe-haven currency but that is no longer the case.

As the global perception of the US as "saviour to all economies" plants its feet firmer in cement, as illustrated by the pieces Tyler had at the week-end indicating that the US taxpayer has surreptitiously supported European banks to the tune of some $600 billion, the further the US dollar will decline.  It has lost its safe-haven status because no one is sure what the Fed will do to shore up Greece, Portugal, Spain...you get the picture.

No one will be willing to give credence to a currency that is just giving it away.  In the meantime, the Swiss franc fills the role of risk-off currency of choice, while gold fills the role of risk-on (speculation...) trades.  What happens to the USD from here is anyone's guess.

:D

Village Smithy's picture

As for today,I believe the magical ES levitation is just about to start.

EscapeKey's picture

The DJIA bounces as if by magic every time it nears the -200 mark.

hedgeless_horseman's picture

Gentlemen, the hard deck on today's mission is 1263.

Greeny's picture

Yeah, cause I bought few stocks there :))

Keep selling.

Franken_Stein's picture

 

Regarding the Spanish 10 year, this is not a triangle, this is going to be just an island gap  that is going to be closed downwards pretty soon.

You know, transitory.

 

rubearish10's picture

Don't you just get the feeling "someone" is going make a Canuck like "stick save" between now and the close and if not, most certainly before tomorrow's US open after some kinda roiling this evening. Come on now,,,,,,,we've been here before. On with the Greek party, geeze!

Eddyspain's picture

Well, spanish 10 year bond now at 5.548% now...plus serious rioting in Barcelona (regional parlament besieged by protesters, mps have to go in and out by helicopter or poclice vans) plus rumous of an general election in the fall etc etc

Greeny's picture

"S&P – First good support below here 1,257-1,241."

Draw trend line from April 2010 to April 2011

And lower trend line (parallel) from JUL 2010 to

2011 and that my lower target for S$P 1170 and Not

freaking 1000, Where is the Silver Chart?

Cause it can drop to about 23/oz by your charting

theory as well.. Be fair.. You don't have to promote

collapse and create panic. We have enough of it in reality

already.

Arius's picture

right on...shoot the messenger...

sasebo's picture

I've got a question.

WHAT THE HELL WOULD WE BE DOING IF TD & ZH WEREN"T STAYING ON TOP OF ALL OF THIS?

 

Greeny's picture

on top of what, dude? Yes, Market is down today

and you are happy, check back 2010 summer..

plenty room to move down.. Today your conspiracy

theory works, let's check back tomorrow.

Enjoy bearning Americans 401k's..

sasebo's picture

The world is full of stupid assholes. What else is new?

Greeny's picture

that's exactly my point.

knowless's picture

maybe a combination of bear and burning?

Chump's picture

I get no pleasure from the pain of others, but we are so unbelievably fucked that a 401K account is inconsequential compared to the doom about to be visited upon us.

But maybe you're right.  Maybe all that matters is whether or not we're green tomorrow.

monopoly's picture

That is something I do not want to even think about. Been here almost 2 years and this site sure helps me sleep well at night.

And, we got Robot as a bonus. :)

richard in norway's picture

could someone please explain the vix for me

 

what is it and how is it measured

Greeny's picture

Basically Volatility rising as Markets go down..

Check VIX there is options you can play on it..

But the problem is: with rising VIX option premiums

goes up accordingly so when Market rebound you can

lose that premium.. No free lunch here. I was trying to

protect some investments today via options and it's simply

impossible, prices for the options too high..

Arius's picture

you can simply sell...

DB Cooper's picture

Not sure what you're asking - but if it is about VXX don't play with it or any levered ETF.  They are mathematical scams built by the big investment firms to steal investors money.  They are built to approach 0 and pretty fast too.  VXX has gone from a split adjusted 480 to 24 in a little over 2 years.  It is a one day trade only.

Caviar Emptor's picture

It's time for the CNBS anchorettes to ask every day : "But is this the bottom?" 

Of course the more appropriate question would be "Is this a great bottom or what?" 

Tracerfan's picture

Sorry, but this is all news-driven price movements, not chart-driven.

 

 

Caviar Emptor's picture

Once again financials and materials leading the way down...the Pandora selloff is getting serious

Greeny's picture

--deleted reason: duplicate---

sasebo's picture

May I add -

TD & ZH are working their asses off for us.

slewie the pi-rat's picture

i'll take Charts for $400, please, alex.

and the answer is:  Bearish.  slewie?

uhhnhh...is it bullish or bearish if the S&P 500 chart reminds you of the Mountain Climber Game on The Price Is Right?

alien-IQ's picture

it's 3PM. Critical levels everywhere. Smoke em if you got em kids...this could get weird:-)

hungarianboy's picture

Look at that huuuge tick volume in EUR/USD 15 minute. Might bounce very soon.

monopoly's picture

Not once have the idiots on the idiot channel mentioned that gold is "green".

alien-IQ's picture

they were not just frivolously granted the moniker of "the idiot channel"...they earned it.

Laudrup's picture

Bet the Bernank is staring at these charts all day, sweating his ass off

chancee's picture

Such total bullshit price action on SPY... being completely propped up every time it tries to break through support.  The lie of SPY.

Greeny's picture

What is your problem? Are you short?

Wait for QE3 then, Ben will take care of you :)))

Chump's picture

Stay long.  QE3 is coming, I promise.