Chart Advisor: Make It a Triple!


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By J.C. Parets & All Star Charts

Wednesday, 15th June, 2022

1/ It’s Not Just the U.S.

2/ The Kiwi Points Lower

3/ Time to Shuck Corn

4/ Where Are the Bitcoin Buyers?

1/ It’s Not Just the U.S.

Interest rates have been surging worldwide in recent weeks. Today, the Federal Open Market Committee (FOMC) delivered on a much-anticipated rate hike of 75 basis points (bps) and signaled additional increases over coming months.

The U.S. is not alone in this trend, as benchmark interest rates of government bonds are rising around the world, surpassing previous cycle highs.

Source: All Star Charts, with data provided by Optuma

Following today’s FOMC meeting, yields across domestic and international government bonds declined for the first time since late May.

Rates will likely remain on the rise as inflation continues to run hot. This is especially the case in the U.S., U.K., and eurozone.

These international comparisons provide us with valuable insight as to how long this trend could last. For now, with so many of these benchmarks completing major bases and following through higher, there is no sign of it ending any time soon.

2/ The Kiwi Points Lower

The NZD/USD currency cross has led the Australian dollar (AUD) at major turning points for nearly a decade. Higher lows for the New Zealand dollar (NZD) in early 2016 guided both foreign exchange (FX) pairs out of a trough. Two years later in 2018, the lower highs in the NZD/USD foreshadowed a multi-year downtrend in both currency pairs.

Now that the Kiwi (NZD) is breaking down, it raises the question of whether the Aussie (AUD) will follow.

Source: All Star Charts, with data provided by Optuma

Many of last month’s short-lived breakdowns against the U.S. dollar are starting to look increasingly like premature moves. The AUD is already back at its former pivot lows, threatening to break lower yet again.

For now, price action remains uncertain at these key levels of former support. But with commodity currencies vulnerable as the USD gains strength, there could be further weakness in the AUD.

3/ Time to Shuck Corn

With the old crop contracts nearing expiration, we’re entering the season when grain markets tend to roll over into the fall. Looking across the grain complex, most contracts could be poised to fall as they form near-term tops.

The continuation chart of corn futures provides a good example, as it carves out a multi-month distribution pattern above an area of former resistance-turned-support.

Source: All Star Charts, with data provided by Optuma

If we start to see these tops resolve lower in the coming weeks, it will weigh heavily on commodity indexes. Silver prices may not be as closely tied to the economic cycle as crude oil or copper, but silver contracts comprise 41% of the CRB Index and deserve our attention.

4/ Where Are the Bitcoin Buyers?

Bitcoin (BTC) collapsed earlier this week after violating the key $29,000 support level and completing a major distribution pattern. It has fallen by roughly one-quarter in less than four days as the bears continue to exert selling pressure.

Prices are currently challenging the next line of defense at the December 2017 high of $20,000. This is where Bitcoin and other cryptocurrencies peaked during the previous bull market cycle.

Source: All Star Charts, with data provided by Optuma

With significant price memory over the past few years, there is a good chance former resistance will turn into support. So far, that’s what we’re witnessing as Bitcoin hit the $20,000 level this morning and rebounded higher.

Nonetheless, we’re still looking at a nine-day losing streak for the world’s largest cryptocurrency.

Bulls want to see the $20,000 level hold, as it is a logical area for buyers to step in and establish a floor in Bitcoin. If that fails to materialize, and price violates the former 2017 highs, we could expect another leg lower. Under this scenario, we’ll be watching $13,000 as the next zone of support.

Originally posted 15th June, 2022

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