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

By | August 1, 2019

Having cut by 25bp, the Fed have sent the US$ higher and stocks lower, and with the amount of red on the heat map today it would seems that we may be in for more of the same in the coming sessions, with the Euro, Aud and Nzd all looking heavy, and the stock markets looking as though there could be some follow-through selling when the US session begins again later on today.

 EurUsd:  The Euro has fallen sharply to a 2 year low of 1.1060, which we suggested yesterday would be the short term support,  following the FOMC decision, and it looks to me as though we are on the way to 1.1000. The H/S formation is building its downside momentum and the 1.1000 measured target may now be in sight. The neckline remains at 1.1200, although shorts should now reduce SL to 1.1115, above which could see a short squeeze back towards 1.1142 (23.6% of 1.1411/1.1060) and 1.1193 (38.2%), ahead of the 1.1200 neckline. On the downside, we are likely to chop around above 1.1060 for now, below which, minor support will be seen at 1.1040 ahead of the 1.1000 H/S target. If/when we get below 1.1000, there is good trend support at 1.0965 – at which point I would square up any short Euro positions and take a nimble stance, but until then look to stay short and sell rallies.

DXY:  (98.60) The DXY has headed sharply higher following the FOMC Meeting and having reached a peak of 98.68 it has taken out some decent resistance and seems to be on its way towards 99.00 and the  measured, reverse H/S target at around 99.25 (EurUsd: 1.1000).  On the downside, support now lies 98.35 and at 98.00. below there could see an acceleration to the downside but for the time being I prefer to buy dips in the dollar, looking for a test of 99.00+.

US$Jpy:  was largely left out of the action following the FOMC meeting and chopped around, in another rangebound session, below 109.00, and which seems set to continue today. The technical situation has not really changed and the initial resistance remains at the 10 July high of 108.99, which was also the Wednesday high and now sees a minor double top at 109.00, which will add to the resistance levels as sellers queue up at that level. Beyond 109.00 would open the way towards 109.17 (61.8% of 110.67/106.77), and eventually to 109.74 (76.4%), 109.92 (30 May high), ahead of 110.00, although progress may be slow, especially if we see further weakness in the US stock markets, which will see further movement out of risk trades and a move towards safe haven assets. On the downside, minor support will be seen at 108.40/50, which has acted as a base over the last few days, ahead of 108.25 (minor) and 107.95/108.00). Under here further would arrive at 107.60/65 and at 107.40/45 ahead of the 18 July low of 107.20. I am neutral on US$Jpy and remain sidelined.

AudUsd:  The Aud had another tough day on Wednesday following the FOMC Meeting, and we now have a double bottom with the 18 June low, at 0.6831. The short term momentum indicators are oversold and we may chop around here for a while but the medium term charts are increasingly negative and I suspect 0.6830 will eventually give way, with the next major target being at the flash-crash low (Jan 3) at 0.6715.  If we do break 0.6830, there is very little support ahead of the 0.6715 base and it could be quite volatile on the downside. On the topside, resistance will be seen at 0.6855/60 (minor) and then at 0.6875 and at 0.6890/0.6900. For now, staying short is the plan, adding to the position into rallies, with a SL placed above 0.6900.Today will see  a busy calendar for the Australian dollar so some caution will be required but a break of 0.6830 could be on the cards sooner than later.

NzdUsd: As with the Aud$, the Kiwi has moved lower after the FOMC Meeting, and currently sits at 0.6560 (76.4% of 0.6487/0.6789) having traded down to a low of 0.6541. The momentum indicators look heavy and below 0.6540, there really is not too much to stop the Kiwi heading back to 0.6510 (minor) and to 0.6487 (14 June low). On the topside, resistance will be seen at 0.6570 (minor) and at 0.6585, above which could return to 0.6600 although this looks doubtful. As with the Aud, selling rallies with a SL placed above 0.6610 seems to be the plan.

Stocks: The S+P fell sharply following the FOM Meeting and currently sits at 2970, down from the high of 3020. Fibo support arrives at the session low of 2958 (23.6% of 2727/3028) and with the momentum indicators looking negative we could see a move towards 2940 and then towards 2914 (38.2%) and even to 2900. On the topside, resistance will be seen at 2980/85 and again at 2995/3000. Currently selling rallies with a SL placed above 3000 seems to be the plan.

In other markets, the Euro, Aud and Kiwi look in trouble against the Jpy and a selloff in stocks would most likely add to Jpy strength. The ASX also looks heavy today and there is a busy calendar ahead so it could be a rocky ride.

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*Trade of the day: August 1, 2019; 8:12 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.

Today’s order are wide because of the FOMC meeting but overall I still prefer to look for levels to buy US$.

Sell EurUsd @1.1100. SL @ 1.1135, TP @ 1.1000

Sell AudUsd @ 0.6875. SL @ 0.6775, TP @ 0.6910

Sell NzdUsd @ 0.6585. SL @ 0.6615, TP @ 0.6490

Sell S+P @ 2985. SL @ 0.3005, TP @ 2920

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