Potential Trade Signal on AUD-USD

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK (TheLFB-Forex) -- Economic releases have dominated sentiment towards equity risk valuations, and as highlighted last week, the completion of first-quarter earnings reports now leaves attention focused on near-term economic releases.

Equity valuations and economic fundamentals remain weak, with questions now being asked whether the Federal Reserve will instigate another round of quantitative easing programs.

It would seem that for QE3 to be launched, the U.S. equity markets would need to be 20% below current valuations. The catch-22 scenario of ramped-up equity values not being able to stimulate economic growth is now in front of the Federal Reserve, and there is no easy solution to the conundrum that the U.S. central bank and Treasury have created. (Good luck with finding an easy answer to that one!)

Outlook:

The potential for new trade signals to form today is weak, and open equity and ETF positions should be closely monitored. Today is not the day to be looking for equity-based trades to easily follow through. The recent selling spree, which hit on increasing volume levels, needs to be absorbed before committing heavily to either direction.

Trade desk signals highlighted the potential in a weekly chart close below 1330 on the S&P 500 (1315), below 7150 on the German Dax (7150), and below 9500 on the Japanese Nikkei (9550), as being pivotal for equity outlooks going into June. Holding support on a weekly chart offers a near-term base to work higher from. The U.S. markets have broken support, but as yet the Asian and European markets are holding. Detail will follow as that technical story unfolds.

ETF

SPY(SPY) (131.90), the ETF that tracks S&P 500 momentum looks set to continue its sideways mid-term trading pattern, in-line with global equity trade that has increasing daily volatility. There is very little support if 131.00 breaks on SPY, which will draw in targets of 129.50 and 127.50, but only if momentum builds in global equity selling.

Tests of 1340 resistance on S&P 500 and 134.00 on SPY, which have been highlighted as major resistance areas, now look a long way off. The next price action break of note will carry a lot of pent-up momentum, and will likely come as a consequence of breaking news headlines. The NFP numbers from the U.S. on Friday will now be instrumental in setting equity fair value for June.

Alternate 24-Hour Trade:

Investors who do not want to wait for their regional cash market to open, or do not have 24-hour access to the market they have open positions in, are able to access the 24-hour currency market. There is potential to analyze and trade currencies in a high-volume market that is supported by the global inter-bank system.