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

By | August 7, 2019

Stocks have bounced following the Chinese intervention in the Yuan yesterday, and the short term momentum indicators do suggest further near term gains. The longer term charts though appear increasingly negative so I do not think we are out of the woods yet and prefer to look for levels to sell, with a view of lower stocks in the days/weeks ahead. The US$ looks mixed although the longer term US$Jpy/US$Chf charts also point lower, suggesting that safe haven demand will return at some stage, while the AudUsd long term charts also look heavy. The RBNZ Meeting today may also keep the Kiwi under pressure. EurUsd seems to be building for some upside action although the momentum is weak, so I remain cautious.

On the crosses, the Jpy and Chf seem set to remain in demand, while the Aud looks heavy.  UsdCnh seems to be a buy on dips.

Elsewhere WTI looks increasingly heavy, while Gold appears bid on all timeframes.

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*Trade of the day: August 7, 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.

Buy EurUsd @ 1.1150. SL @ 1.1115, TP @ 1.1250

Sell AudUsd @ 0.6785. SL @ 0.6815, TP @ 0.6700

Buy AudUsd @ 0.6715. SL @ 0.6690, TP @ 0.6820

Sell NzdUsd @ 0.6580. SL @ 0.6610, TP @ 0.6485

Sell S+P @ 2900. SL @ 2925, TP @ 2725

Other strategies seem to be:

Continuing Yen strength on all fronts – another near term bounce in US$Jpy and in X/Jpy is possible but selling rallies is preferred

The Aud looks weak against both the Nzd and the Cad. Parity may be looming for AudNzd

NzdUsd will trade on the back of the future guidance from the RBNZ today. A dovish outlook seems likely and trading from the short side is favoured.

EurGbp has once again made new highs and seems to have the medium term momentum to head higher still.

EurAud looks positive on all timeframes although the 4 hour charts are overbought and may need some corrective activity. Buying dips is preferred

Look to sell rallies in the S+P and the ASX

Gold to remain highly volatile but the charts have a positive bias, so buying dips is preferred

UsdCnh has corrected lower on Tuesday but the longer term charts are pointing up, and as long as the pair remains above 7.0000, I suspect that the dollar will eventually head higher

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EurUsd:   The Euro is unchanged on Wednesday at 1.1200, although it was a choppy session, but leaves the technical outlook pretty much intact. Interestingly, the neckline of the HS formation, at 1.1215, was taken out, but having triggered some stops to reach a high of 1.1248 the Euro then turned sharply lower, to 1.1166, ahead of a bounce back to 1.1200 into the US close. The 1.1215/1.1250 area should now see decent sellers, so the upside may be slow unless we see a big selloff in the dollar. But having broken above – and then failing to hold above – the neckline and 55/100DMAs (1.1230), these should act as decent resistance today. Above 1.1250 would open the way to 1.1264 (61.8% of 1.1411/1.1025), ahead of 1.1300 (200DMA) and 1.1320 (61.8%). On the downside, the initial, minor support will arrive at 1.1165 (38.2% of 1.1025/1.1248/Session low) ahead of 1.1135/40 (/200HMA/50%) and 1.1112 (61.8%). Below 1.1100 would allow for an eventual return to the trend low of 1.1025 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. Right now, it looks set to be a choppy session and 1.1150/1.1250 may well cover it, but I still prefer to sell Euro rallies as I think that 1.1000 and lower will be seen at some stage down the track.

US$Jpy:  bounced strongly from 105.50 to a high of 107.07 on Tuesday in Asia and then settled back into a choppy range for the balance of the session. The short term momentum indicators now look mildly positive but the longer term momentum indicators are heavy, so selling rallies is preferred. Minor resistance will now be seen at 106.70/80 and again at 107.00/10, beyond which could then head back to 107.40 (50% pivot of 109.30/105.51) and to 107.85 (61.8%) albeit unlikely. On the downside, support will be seen at 106.20/25 and at 106.00 ahead of the Tuesday low of 105.51, but beneath which there is little support ahead of the January flash-crash low (104.01). Volatile conditions are likely but I don’t think the downside is done with yet and from the look of the charts in the stock indices/Gold/WTI, further safe haven demand is going to be required in the days ahead so selling US$ rallies is preferred.

AudUsd:  The Aud chopped around between 0.6750/0.6800 on Tuesday and is currently struggling to hold on to the base of the range at the start of Wednesday trade. A decisive break of 0.6750 would find little to hold it up ahead of 0.6715, the interbank flash-crash low of 3rd January, where exporters should continue to provide a degree of support if we see it in the coming session. If not, then below 0.6700, there is minor support at 0.6660, but under there would open the way to 0.6500 and, further out, the next major Fibo level is not seen until 0.6250 (76.4% of 0.4773 (April 2001)/1.1082 (July 2011)). That is a long way off yet and in the meantime, the 4 hour indicators attempting to recover their oversold condition so bounces are possible, where resistance is will again be seen at 0.6775/80, at 0.6800 (session high), 0.6818 (Friday high), and then at  0.6825 (23.6% of 0.7081/0.6747). Further resistance would be seen at 0.6875 (38.2% of 0.7081/0.6747/200 HMA) but that won’t be bothered for a while. As before, selling rallies is preferred.

NzdUsd: spiked to 0.6589 following Tuesday’s NZ jobs data but it is now back at 0.6520 while waiting for the RBNZ decision, where a rate cut is widely anticipated. Direction will be driven by the dovish bias of the statement but if further cuts are likely then the Kiwi should head below 0.6500 and on towards 0.6485, Below there would open the way to 0.6464 (26 Oct ’18 low) and even to 0.6424 8 Oct ‘18 low). A less dovish RBNZ would cause a spike in the Nzd, taking it back to 0.6550 and on towards 0.6585 and possibly to 0.6600/15, which if seen would be another sell opportunity I think. I prefer to be short as I think the RBNZ will not want a higher Kiwi .

 

 

 

 

 

 

 

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