1 May: Trend table outlook for FX, Commodities, Indices

By | May 1, 2019

Tuesday saw the Euro make some gains after some decent EU data, while US stocks staged a late rally to reach all-time highs. Elsewhere most FX pairs, as well as the metals, were fairly stable, while WTI was choppy day but ended fairly flat. All eyes are now on the FOMC result, due late in the US session and until then the action should be rather limited, especially given that it is the EU May Day holiday.

EurUsd:  is higher at the start of Wednesday trade, underpinned by some solid EU data and looks capable of going higher still although, being an EU holiday today all will depend on the outcome of the FOMC Meeting later in the session. Technically, the pair has continued its recovery from last Friday’s new trend low at 1.1110, last seen in May 2017, and ended Tuesday at 1.1215 after having earlier reached the minor resistance seen at 1.1225, which lies ahead of the 38.2% of 1.1447/1.1110 Fibo resistance, at 1.1238. Above there, the 22 April high of 1.1262 would come into play, beyond which, 1.1275/85 should be reasonably strong, being both 50% of 1.1447/1.1110 and 38.2% of 1.1569/1.1110. Above here would then target 1.1300 and 1.1318/25(61.8% of 1.1447/1.1110/17 April high). On the other hand, a more hawkish Fed would likely underpin the dollar, where near term support sits at 1.1180/85 and then again at 1.1145/50 ahead of the recent low at 1.1110. Below 1.1100 would target 1.1060/65, where the base of the descending wedge should see decent bids. A downside break would then open the way to 1.1020 (minor) and to 1.1000. For now, a cautious stance is required ahead of the Fed but overall, I still like to buy dollar dips.

DXY:  (97.52) continues to ease back from last Thursday’s 98.33 trend high (last seen in May 2017) and the dailies are now looking a little toppish. If so, on the downside, minor support will be seen at 97.25 and then there is not too much to hold it up until the /12 April low at 96.75 and the 100 DMA/ Rising trend support, seen at 96.67, although this seems some way off right now. On the other hand, a hawkish Fed could see a return to 98.00, ahead of a return to the 98.33 trend high. Further gains would see a run towards 98.80, where the top of the rising wedge lies, and then towards 100.10 (76.4% of 103.82/88.25).A cautious stance is required although I still prefer to buy dips.

AudUsd: Having traded down to 0.6988 last Thursday, the Aud$ continues to find a near-term base in consolidating near 0.7050, pretty much unmoved by yesterday’s soft Chinese data. The short term momentum indicators look pretty neutral and a sideways session look likely although the AIG Australian Performance of Mfg Index may create some minor waves.  Nearby sellers should arrive at 0.7070 (38.2% of 7206/0.6988) ahead of the chance of a run back towards 0.7100, and then 0.7120 (100 DMA), although if seen, would provide a decent selling opportunity, I suspect.  The medium term charts remain heavy though and on a sustained break of 0.7030, I think 0.7000 and the current low will give way for a run towards 0.6970, 0.6950 and eventually to 0.6900. I prefer to sell rallies in anticipation of the inevitable rate cut, but we may see better levels to do so.

NzdUsd: As with AudUsd, the Kiwi has bounced strongly after making a new trend low at 0.6580 last Thursday, and currently sits at 0.6670 as it continues its consolidation below 0.6680/85.  Near term resistance will again be seen at 0.6685 ahead of 0.6700. Above here would open 0.6715 (38.2%) and the 200 DMA at 0.6728, although not today I suspect. On the downside, support will be seen at 0.6655 (200 HMA) and at the recent 0.6630 pivot, ahead of 0.6600 and 0.6580. In the medium term, look for the chance of a decline towards 0.6560 (January flash crash low) and eventually to the long term rising trend support at 0.6500 – from March 2009.

US$Jpy: continues to look heavy although being Japanese Golden week the action may be limited until the FOMC decision is known. Tuesday saw the pair fall to 111.23 but it has recovered to currently sit on Fibo support at 111.38 (38.2% of 109.70/112.39). Below the session low would open 111.00, and under here would lead to 110.80/75 – 100 WMA/rising trend support, which should be strong. On the topside, minor resistance will again be seen at 111.80/85 and at 112.00 (200 WMA) and then at 112.40. Further targets would then be at 112.50/60 and eventually ay 113.05 (61.8% of 118.61/104.01) although this is a long way off. The 4 hour and daily charts look a little heavy, and a dovish Fed could see the downside come under more sustained pressure as yields head lower.

On the crosses, a neutral stance is mostly required, as per the look of the trend-table, where little stands out, although EurChf and EurGbp both look mildly bid in the short term although I prefer to stand aside.

Gold: is doing little right now but continues to respect the neckline of the SHS formation(1285), and while it does so I still prefer the downside as I suspect the US$ strength will return to place downside pressure on commodities. Tight stops should be in place above the 100 DMA, at 1292. Should the SHS formation work as planned, the downside target is seen at 1218 but that is a long way off right now.

Stocks:, ended with both the S+P and the NASDAQ at new all-time highs on Tuesday and further gains may be expected if the Fed continue their recent dovish tone later today, and then we are into blue sky territory. The DJI needs to take out 26960, and then 30000, before it hits new territory, but may yet play catch-up. As before, the dailies are showing a degree of bearish divergence but the weeklies remain positive and there is little reason to currently try and pick the top of the market.  We need to hold above rising trend support in order to maintain the upside momentum, but right now that seems to not too much of an issue and trading from the long side is the plan given the strong upside momentum in the weekly charts. I think SL should be placed below 2915/26200.

WTI: remains pretty much unchanged (63.45) after a volatile session (63.28/64.73) but remains just above the 4 month rising trend support, leaving the medium term uptrend intact. The daily indicators though are pointing lower, and a downside break  below the session low would open the way to 62.20 and then to 61.70 (both minor) ahead of the 200 DMA/Fibo support @ 23.6% of 42.23/66.57, currently at 60.85. On the topside, resistance will be seen at 64.70 (200 HMA) above which opens 65.00+. Right now, this now looks a good sell opportunity.

———————————————————————————————————————

*Trade of the day: May 1, 2019; 9:05 AM(AET)                       

*This is a personal opinion only, based on the look of the table below, and carries no guarantee of success.

All trades are good till 5.00pm NY time. All “in the money trades” should have the SL raised to break-even, or managed manually. All “out of the money trades” should keep original SL in place.

Sell EurUsd @1.1250. SL @ 1.1305, TP @ 1.1145

Buy EurUsd @ 1.1160. SL @ 1.1105, TP @ 1.1235

Sell AudUsd @ 0.7090. SL @ 0.7105, TP @ 0.6990

Sell WTI @ 64.75. SL @ 65.30, TP @ 63.00

Sell Silver @ 15.05. SL @ 15.20, TP @ 14.50

Sell Gold @ 1290. SL @ 1302, TP @ 1260