Yesterday, markets in general were rather quiet yesterday and again during the London session thus far. Of course, the recent performance in AUD (AUD/USD and AUD/JPY) was still on display last night. Given that AUD is a 'risk' related currency one might infer that equity prices are to remain firm and perhaps further weakness in DXC (Dollar Index) will be seen. However, as we all know, correlations over the last month or so have been quite fickle.

There is a 'sell' signal though on the 60-minute AUD/USD chart that might be worth noting. A break below .9160 might provide enough momentum to carry prices lower. Nonetheless, there have been several of these 'sell' signals in recent weeks with few of them providing any real value. This of course highlights the limits of trading based on models/signals. There is far more to trade analysis that simply the FX pair itself - one must consider the relative position of stocks, interest rates, commodities etc.. - at this point those markets are not confirming AUD/USD weakness - but that can change.

The S&P 500 remains in a bullish albeit confusing state. It has been a long time since I have seen a market go up as ugly as the S&P 500 - market internals are lousy (technical conditions in terms of breadth, volume and momentum are signaling at least a near-term setback for stocks, but prices keep laboring higher. Here too, a 'sell' signal was generated back on March 22nd and while prices have moved higher since then, the high last week at 1180.69 is still intact. Until that level is broken, there remains a chance that stocks will dip lower and thus take AUD/ with them.

While I could have simply wrote this post in one or two sentences and simply stated 'not much going on', I think it is important to understand the context of the current market - not terribly clear.

We have been long NOK/JPY for a few weeks now in the Weekly FX Alerts and are encouraged by the recent push higher. A break above 15.6060 would be ideal.

NOK/JPY 60-min chart

Click on image to enlarge!

For more from Dave, visit Aspen Trading for more updates.