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

By | May 10, 2019

It has been another choppy session on Thursday, while waiting on the outcome of the talks, currently going on, between the US and China. The US$ looks technically a little weaker, while stocks did their usual thing in opening lower before recovering through the session.

I have covered just the major currencies today, as the expected volatility after the end of the trade talks is likely to wipe out any techncial levels. We will reassess after the headlines have been released. There are no trade ideas today and we will wait until Monday toreasses the levels.

EurUsd:  The Euro saw a brief spike up to 1.1250 early in the US session but it has since given up most of those gains to sit just above the recent 1.1200 pivot. Technically, the momentum indicators stuck in neutral and further choppy consolidation looks possible in the days ahead although the 4 hour charts may be building up some mild positive momentum. Overall though, I still prefer the downside in the medium term but it may be too early to look to buy dollars here. On the topside, minor resistance will again be seen nearby at 1.1225/30 ahead of the session high of 1.1250 and then last Thursday’s peak at 1.1265. Beyond that level would then target 1.1300 and 1.1318/25(61.8% of 1.1447/1.1110/17 April high). Back below 1.1200, minor support arrives at 1.1275 ahead of 1.1150/60 and then again at last Friday’s low of 1.1135, which lies ahead of the 26 April 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. I mildly prefer to look for levels to be long US$/ short Euro although it looks as though we could see some exaggerated volatility in the event of a trade headline, so a nimble stance is currently required.

DXY:  (97.45) is slightly lower on Friday, although the daily momentum indicators maybe turning slightly negative, while the weeklies are in neutral so a nimble stance is required heading into the weekend. The technical studies though are pretty much unchanged, and on the downside support will again arrive at 97.25/15 (Thursday spike low; 97.24), but below which there is not too much to hold it up until the 12 April low at 96.75 and then the 100 DMA/ rising trend support, seen at 96.67. On the other hand, a topside squeeze could see a return to 97.80 and possibly to 98.00, ahead of a return to the 98.33 trend high. I don’t think we see too much volatility today in the absence of any economic news, but 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 on Wednesday  although I still prefer to buy dips in the dollar.

US$Jpy: headed lower on Thursday , in making a new 4 month low at 109.47 ahead of a bounce to end the day at 109.75. Although the 4 hour momentum indicators are oversold, the dailies are pointing sharply lower and the theme of selling rallies seems to be the plan although all will depend on the US/China tariffs argument.  Below 109.45 would allow for the 38.2% Fibo support of the flash crash low at 109.18 (38.2% of 104.01/112.40), ahead of 109.00 and 108.75 (50% pivot of 98.94/118.60) and 108.50 (31 Jan low).On the topside, the initial level to watch would be at 110.00 ahead of 110.25 (minor) ahead of the strong resistance seen at the previous support level,  at 110.60 100 DMA) and at 110.70 (100 WMA/ /61.8% of 109.75/112.40). Further, minor resistance would then be seen at 111.05, which would fill the chart gap, ahead of 111.40 and then at 111.70, 111.80/85 and at 112.00 (200 WMA) and then, possibly, 112.40, albeit it that this is a long way off now. The short term momentum indicators are a little more positive, with the 1 hour charts showing some bullish divergence, so we could see a squeeze higher but the dailies look heavy, so trading from the short side seems to be the initial plan and selling rallies seems to be the plan for Friday, but wait for trade headlines before getting involved.

AudUsd: The Aud has traded a tight 0.6965/0.6997 range on Thursday and now sits in neutral while awaiting a headline from the trade talks. The daily momentum indicators still look heavy and the downside seems set for further tests although the short term momentum indicators do currently look mildly more positive.

On the downside, the near term support is currently intact at 0.6965 below which would open the way to 0.6950 and eventually to 0.6900 and lower. Resistance now lies nearby, at 0.7000 and at 0.7020/25 ahead of the post RBA high at 0.7047. Further out, beyond there, levels to watch are at 0.7055 (38.2% of 7206/0.6965), 0.7070, 0.7100, and then 0.7112 (61.8%) and 0.7110 (100 DMA). My longer term downside objective is 0.6650/0.6700 so, as before, I prefer to sell rallies in anticipation of the inevitable rate cut. A positive trade outcome today could put that theory on hold, so stay nimble!