The US$ is generally mixed on Monday but the following themes seem to be in play:
EurUsd reached its H/S target on Friday at 1.1320/25 and with the medium term momentum indicators looking mildly supportive we could see a run towards 1.1345 (100 DMA/61.8% of 1.1447/1.1182) and 1.1385 (76.4%). On the downside, back below 1.1250/45, and the 1.1230 spike low on Wednesday – decent support will again be seen at 1.1200/10. Only a break of 1.1175 would renew the downside pressure, for a run towards targets likely to be at 1.1125 (20 June 2017 low), and eventually at 1.1100 and 1.1065. Right now, buying dips may be the plan but note that the daily Ichimoku chart, below, shows the Euro running into the daiy cloud and Kijun at 1.1315 so the upside may be limited today.
AudUsd briefly broke above resistance at 0.7170 but then ran out of steam at 0.7192, ahead of the 200 DMA, lying at 0.7195, and is now back at 0.7170 (20HMA). Beyond 0.7195, a break of 0.7206 (21 Feb high) is required to make further progress, and further positive news from China this week could be the catalyst. If so, look for a run towards 0.7225 (76.4% of 0.7295/0.7002) and eventually to 07265 (5 Feb high) and even to 0.7295(31 Jan high). Downside support will now arrive at 0.7150 and at 0.7125 (200 HMA) ahead of 0.7100/0.7090, below which would open the way to the rising trend support at 0.7075. As with the Euro, buying dips currently seems to be the plan
NzdUsd made a new 3 month low at 0.6713 before squeezing sharply higher, to 0.6781, on Friday, before closing at 0.6760. The momentum indicators look mixed at the start of the week and a cautious stance is required but as long as risk sentiment is positive the Kiwi should see the benefit. For the time being buying dips towards the 200 DMA at 0.6735 with a tight SL below Friday’s los seems to be the plan. Above 0.6780, the target would be 0.6798 (38.2% of 0.6938/0.6713) and then 0.6826 (50%)
US$Jpy had a solid session on Friday, following stocks and yields higher, and as long as risk sentiment remains upbeat positive the pair should continue to see the benefit. The pair closed the week at the 200 WMA , at 112.05 and a break of this is needed to push on towards 112.50/60 and then to 113.05 (61.8% of 118.61/104.01). If risk sentiment were to deteriorate, then we are likely to see a return back towards 111.50 (200 HMA) and to 111.00. Below this would open 110.80/75 – 100 WMA/ (50% pivot of 109.70/111.82) and possibly 110.50 (61.8%).
On the crosses, EurJpy and AudJpy both had strong sessions, with AudJpy making a 4 month high, coming to rest on the 200 DMA, last seen in mid December. This will provide decent resistance, but a break would open the way to 81.00 and possibly to 81.90 (61.8% of 90.30/68.50 (flash-crash low)).
EurJpy did as we suspected on Friday, breaking above the 125.80 resistance before heading toward 126.80 (high 126.76). This level is strong and will not be easily overcome, being the 200 WMA. However, a break would see 127.50 as a target ahead of 127.90/128.00. Both crosses look positive on the charts and buying dips seems to be the idea.
The most interesting charts though are in Gold and Silver, where the possibility of a head/shoulder top remains in place with good potential downside momentum for both. If the neckline for each of these were to break, Gold would have a downside potential towards $1200oz and for Silver to around 13.85oz.
Stocks rose by around 1% following the release of the strong profit reports from JP Morgan and Wells Fargo. The short term charts are turning higher for both the S+P and the DJI, while the weeklies also remain positive. The all-time-high targets are now in sight, in the S+P at 2940, while the initial DJI target is at 26750, above which could target its all-time high at 26950. Citi/Goldman report on Monday.
Some caution is required though. The dailies are showing a degree of bearish divergence and we need to hold above rising trend support in order to maintain the upside momentum, these now being at 2885 and at 26165.
WTI is lower, currently at 63.70, but the dailies/weeklies remain positive, so for the time being I prefer to remain long but with a fairly tight SL in place. The resistance is seen at 64.40/80, but above 65.00 would then allow for a run towards the next major target, seen at 66.80 (50% pivot of 107.65/26.03) and then at 68.00. As we said previously, the S/H/S target is at 70.00. The short term momentum indicators are suggesting caution on the topside, and if the negative risk sentiment does grow, then the upside for WTI is limited. I still prefer to be long but keep stops tight. Buy dips, with SL below 63.00.
Note that the Russian Finance Minister said over the weekend that Russia and OPEC could decide to increase oil production to fight for market share with the United States – which would not do the oil price any good. OPEC meet on June 25/26 to decide whether to extend the current agreement of reducing oil output by 1.2 million bpd for six months, from January 2019 – watch this space!
*Trade of the day: April 13, 2019; 8:19 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 @1.1325. SL @ 1.1355, TP @ 1.1225
Buy EurUsd @ 1.1250. SL @ 1.1215, TP @ 1.1325
Sell AudUsd @ 0.7205. SL @ 0.7235, TP @ 0.7150
Buy AudUsd @ 0.7150. SL @ 0.7120, TP @ 0.7220
Sell NzdUsd @ 0.6805. SL @ 0.6835, TP @ 0.6740
Buy NzdUsd @ 0.6745. SL @ 0.67100, TP @ 0.6825
Buy WTI @ 63.00. SL @ 62.50, TP @ 65.00