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

By | May 14, 2019

There is a lot of red on the heat map today, indicating a general risk-off mood, with more of the same seemingly likely in the session ahead. While the US$ looks mixed, the Jpy and Chf are in demand, with the Aud and the Kiwi looking the most vulnerable currencies. Stocks also look though they are in for further declines, while the big winner has been Gold, which seems to be gearing up for further gains.

EurUsd:  For the third session in a row, the Euro saw a brief spike higher, reaching 1.1265, where the 55 DMA capped it, although it did not last long up there and is now back in familiar territory, currently at 1.1225. The momentum indicators are telling us little, and further choppy consolidation looks possible in the days ahead. There are probably better things to trade right now, but overall, I still prefer the downside in the medium term although a cautious stance is warranted. On the topside, resistance will again be seen nearby at 1.1250/55 and again at  the May 1/Monday spike high at 1.1265. Beyond that level would then target 1.1300 and 1.1318/25(100 DMA/61.8% of 1.1447/1.1110/17 April high). On the other hand, 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.

DXY:  (97.39) is pretty much unchanged on Tuesday, although the daily momentum indicators are still looking slightly negative, and further choppy trade, possibly with a mildly negative bias, may be the outlook for the next day or two. The weeklies are in neutral so a nimble stance is required and right now, the technical levels are pretty much unchanged. On the downside support will again arrive at 97.25/15 (Friday spike low; 97.13), 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 97.50/60, 97.80 and possibly 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 selectively buy dips in the dollar despite the fact that the charts are currently not giving any hint of a move higher. I would leave US$Jpy alone, as that looks increasingly heavy and maybe the Jpy crosses are still a decent bet, (short cross/long Jpy).

US$Jpy: headed lower on Monday as safe haven demand increased dramatically, reaching 109.00 ahead of a dead-cat bounce heading into Tuesday. The short term momentum indicators are now oversold, with the hourlies hinting at some bullish divergence so the dollar may get a near term reprieve, but the dailies are pointing sharply lower and the theme of selling rallies still seems to be the plan. If we do see a topside squeeze, the initial level to watch would be at 109.45/50, 109.80 (23.6% of 112.40/109.00 / 100 HMA) and 110.00, beyond which would allow for a run towards 110.45 (200HMA) although that is now some way off. On the downside, the initial support will be seen at 109.00 and then at 108.75 (50% pivot of 98.94/118.60) and 108.50 (31 Jan low) and 108.17 (50% of 104.01/112.40%) .  The pair will be headline driven so a cautious stance is required, but from the look of the dailies, selling rallies is preferred.

US$Chf:  traded lower on Monday and looks heavy on Tuesday although it is now oversold in the short term so a mild bounce is possible. If so, a recovery would now find sellers at 1.0090/1.0100 and again at 10125 and at 1.0145 (100 HMA), ahead of 1.0200, which currently looks out of reach. The pair did make a bearish outside week though, so the downside is still currently preferred, and below 1.045/500 would then allow for a run towards 1.0065(50% of 0.9894/1.0236) and potentially to 1.0025 (61.8% of 0.9894/1.0236), 1.0000 and possibly to 0.9975 (76.4% of 0.9894/1.0236).

AudUsd: The Aud is at levels last seen in January 2016 (flash crash aside), and with the momentum indicators still look heavy the downside may be in for further tests. If so, on the downside, a break of 0.6940 would open the way to 0.6915 (minor) and to 0.6900 and lower; under 0.6900 there is actually very little support to be seen until 0.6827, the 17 January 2016 low. Resistance now lies nearby, at 0.6965 and then at 0.6985/90 ahead of 0.7000. Above here would open up 0.7020/25 ahead of the post RBA high at 0.7047 although this looks a long way off now. I think we are heading lower thought and 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.

NzdUsd: The Kiwi remains heavy after last week’s RBNZ decision to cut rates, but it continues to consolidate above the spike low of 0.6525 and more of the same seems possible today. The daily momentum indicators are still pointing lower though and the downside seems set to come under further pressure at some stage. If so, the initial support is seen right here at current levels – 0.6560 (January flash crash low), and then at 0.6525, the post RBNZ, spike low. Below there would look to the long term rising trend support at 0.6500 – from March 2009, a break of which would look at the October 2018 spike low at 0.6465. On the topside, resistance will be seen at 0.6580, 0.6600 and then at Friday’s high at 0.6613 (200 HMA) and at 0.6625/35 (minor gap fill).

On the crosses, the Jpy still looks increasingly firm on all fronts although it has already strengthened a fair way, so being cautious here and selling rallies in AudJpy, NzdJpy and EurJpy is favoured. Elsewhere EurChf looks as though it is heading lower, and the recent lows at around 1.1160 could come back into play at some stage. Note that AudCad also looks heavy, with 0.9315 being an initial target, while UsdCnh is building a head of steam to test 7.000 at some stage.

Gold: has rallied sharply on safe haven demand, negating the head/Shoulder theory and stopping out our short position. The dailies are looking more positive and a run towards 1310 (10 Apr high) and then to 1324 (25 March high) now looks possible. Downside support is now at 1295 (100 DMA) and then at 1290, which seems unlikely to be seen again today. Buying dips seems the plan now..

Silver: Silver has been choppy, but is currently unchanged on the day,  at 14.78. A neutral stance seems wise, but and looking to sell into rallies towards 14.90/15.00, with stops placed tight above 15.00/05 (50% pivot of 13.89/16.21), may be the plan,  above which could then see a run toward the 100 DMA at 15.32. On the downside, support will be seen at the session low/2 May low at 14.60. Further downside support would be seen at 14.45 (76.4% of 13.89/16.21), 14.20 (minor) and at 14.00 but with an eventual, long term target being at 13.85. While a good deal of caution is required here if short, I prefer to trade this way from a structural standpoint, as I think 14.00 – and lower – is eventually on the cards, in line with a stronger US$, but probably not while Gold looks bid.

Stocks: tanked by 2.5% and look very heavy on Tuesday, with the dailies and the weeklies heading lower, so I prefer to look for levels to sell into with a SL placed around 1% above current levels. Downside targets are at 2775/2760 (200 DMA/100 DMA) in the S+P and at 24875 (8 Feb low) in the DJI

WTI: was choppy on Friday (60.68-63.34), leaving the short term momentum indicators in neutral, but with the dailies pointing lower, so a return to 60.00 would not surprise. Note that WTI did register a bearish outside day on Monday, adding to the downside bias. Overall though, it could be that the current consolidation carries on, so we should probably be looking for a continuation of the wide range trade between 60.00/63.00. Support will arrive at the 200 DMA @60.50 and again at 60.00, while sellers will be seen at 62.00 and again at the Monday high at 63.34, above which could see a return to 64.00/70. As with the previous outlook,  I prefer to sell rallies but stay nimble!

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

*Trade of the day: May 14, 2019; 9:01 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 @ 1.1285, TP @ 1.1165

Buy EurUsd @ 1.1175. SL @ 1.1135, TP @ 1.1250

Sell AudUsd @ 0.6965. SL @ 0.7010, TP @ 0.6885

Sell WTI @ 62.30. SL @ 63.50, TP @ 60.00

Sell S+P @ 2835. SL @ 2865, TP @ 2775

Sell DJI @ 25400. SL @ 25650, TP @ 24900