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It pays to take a moment to revisit this artice, especially given the sharp moves down in stockx this month
Have you ever heard of the term “month-end rebalancing?”
US OPEN
ES/NQ gain ahead of US PCE, sentiment hit amid trade angst but off worst levels
Good morning USA traders, hope your day is off to a great start! Here are the top 4 things you need to know for today’s market.
4 Things You Need to Know
European bourses are in the red, but with sentiment off lows; ES/NQ gain ahead of US PCE.
USD remains underpinned by trade angst; Antipodeans lag given the risk-tone.
Bonds bid after Trump’s latest on tariffs & tech pressure, though benchmarks are off highs.
Commodities lower on month end and ahead of weekend uncertainty.
XAUUSD 4 HOUR CHART – Outside week
At a minimum, the 8 week pattern of higher lows/higher highs was broken by an outside week. This leaves the focus on last week’s low at 2877 to see iit finishes the day below it for an outside week key reversal.
So far, 2852 support has held, which is close enough to the pivotal 2850 to make this level the one to watch on the downside (I always pay attention when the “50” level is involved). Below that is 2834 and then a void to aub-2800.
On the upaise. A close above 2777 and a move above 2888 would be needed to ease the risk
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The dollar holding firm at month end with USDJPY back above 150 and AUD and NZD underperforming. .
Watch month end rebalancing flows to see whether a risk of dollar buying (hard to say how much has already taken place) given weaker stocks. I read bank report earlier in the week indicating it expects EURUSD selling given the underperformance of US stocks relative to European stocks
This is not an exact science so keep an eye on what looks like real money flows, especially ahead of the 4 PM month end London fixing
Elsewhere;
Golfdextending its retreat.
Cryptos down sharply
US bond yields falling further but off earlier lows.
US stocks finding some support but the day is young.
Looking ahead
US PCE (watch the core reading) is the key data release… See a detailed preview
Watch for Trump comments, especially after the carnage triggered by his tariff comments yesterday.
An Outside Month Key Reversal is a technical analysis pattern that signals a potential trend reversal in financial markets, often seen in stocks, commodities, or forex.
What is it?
It happens when the price action of the current month:
1. Trades both higher and lower than the previous month’s range (making an outside bar).
2.Closes above the previous month’s high (for a bullish reversal) or closes below the previous month’s low (for a bearish reversal).
Bullish Outside Month Key Reversal
• Current month low is lower than the previous month’s low.
• Current month high is higher than the previous month’s high.
• Close is above the previous month’s high.
• This signals a possible uptrend reversal.
Bearish Outside Month Key Reversal
• Current month high is higher than the previous month’s high.
• Current month low is lower than the previous month’s low.
• Close is below the previous month’s low.
• This signals a possible downtrend reversal.
Key Points:
• The larger the volume, the stronger the signal.
• It works better after a prolonged trend.
• Monthly charts provide stronger signals than daily or weekly charts.
(From the internet)
NAS100 DAILY CHART – Outside month still on the table
As I have been noting, the failure to regain 21376 keeps an outside month risk on the table. For this to occur, 20471 would need to be broken with a risk to 19887 -21300 below it.
So, 20471 will be the focus on Friday as it needs to hold and 20836 regained to ease the risk.
US500 DAILY CHART –Outside month
I may have sounded like a broken record noting the risk of an outside month.
The break of 5901 (low 5893) produced an outside month (new low for the year), which makes the Friday close the focus. A finish to the month below 5901 would produce an outside month key reversal with a void on charts until 5756.
This suggests 5900+ is needed to slow the risk. .
XAUUSD DAILY CHART – Weekly Pattern Broken
Now that the 8 week up pattern has been broken with a move below 2877, the focus is on Friday’s close to see it finishes below this level for an outside week key reversal.
In any case, while the high is in for now, note there are layers of supports (red AT lines) below the market.
To slow the risk, it needs to trade above 2877-88, about 2920 to negate it.
Time to revisit this article as XAUUSD price action is a classic Monday Effect
Another Trading Secret Revealed: The Monday Effect
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