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

By | August 15, 2019

The is a lot of red on the map on Thursday following the inversion of the US 2/10Y yield curve and, following the steep selloff in the stockmarkets as a consequence of the growing possibility of a recession, it looks as though there may be further downside ahead. Safe-haven demand will see increased demand for the Jpy and the Chf, while Gold and Silver appear to have further upside ahead of them as well. The US$ looks mixed, although the DXY remains firm, while the Aud looks heavy ahead of today’s employment data, and the Euro looks heavy in the short term as well.


*Trade of the day: August 15, 2019; 8:26 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 @ 1.1110. SL @ 1.1085, TP @ 1.1200

Sell EurUsd @ 1.1165. SL @ 1.1205, TP @ 1.1075

Sell AudUsd @ 0.6790. SL @ 0.6815, TP @ 0.6685

Buy AudUsd @ 0.6690. SL @ 0.6665, TP @ 0.6750

Sell NzdUsd @ 0.6450. SL @ 0.6480, TP @ 0.6385

Sell S+P @ 2860. SL @ 2890, TP @ 2750

Buy Gold @ 1500. SL @ 1485, TP @ 1550

Other strategies seem to be: –

Thursday has seen a return of Yen and Chf strength and this appears to be the ongoing theme. Of particular interest, keep an eye on AudJpy. All the Jpy/X charts look similar but the monthly chart for AudJpy, below, looks as though a break of 70.00 could see it head an awful lot lower. With the Japanese retail market sitting very long, SL selling could escalate if/when we break the neckline.


As with EurChf, US$Chf has sharply reversed the previous session’s bullish outside day, and looks heavy again. Much will depend on safe haven demand but right now it seems set to stay with us, so the trend lower seems set to continue despite the oversold nature of the daily charts.

Sterling is consolidating at current levels but it looks to be in increasing trouble in the medium term against both US$ and also against EurGbp

The S+P and the DJI fell heavily on Wednesday, and I think that this theme could continue, so selling rallies is preferred.

Gold to remain highly volatile and today saw a 0.75% bounce from the previous session lows. The longer term charts still have positive bias so buying dips is preferred.

EurUsd:   The Euro has been under pressure since the release of the soft German GDP data and the charts suggest that this could continue in coming sessions.  Right now, on the downside, the initial, minor support will arrive at right here at 1.1138/30 (50% of 1.1025/1.1248//Session low) and 1.1112 (61.8%). Below 1.1100 would allow for a move to 1.1080 (76.4%) and 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. On the topside, resistance will now be seen at 1.1160/65 (minor) and at 1.1185 (100 HMA/200 HMA) ahead of 1.1200. Beyond there, the neckline of the HS formation remains at 1.1215, while the 100 DMA (1.1225) has repeatedly stood in the way of further progress and will remain an obstacle if/when we get back there.. The resistance at 1.1215/1.1230 is very strong now, but above which would open the way to 1.1250 ahead of 1.1264 (61.8% of 1.1411/1.1025), 1.1300 (200DMA) and 1.1320 (61.8%). Right now the Euro looks rather heavy and I still prefer to sell Euro rallies as I think that 1.1000 and lower will be seen at some stage down the track.


DXY:  (97.96) The DXY is back at 98.00 and looks reasonably healthy heading into Thursday. The daily MACDs have yet to cross higher though, so momentum is not strong, while the weeklies are flat and while I think we may have further upside momentum today, the overall outlook remains for further choppy price action. Above 98.00 would open the way to 98.30/40 ahead of 98.70 and then to the trend top at 98.93, and further out, if 98.90/99.00 can be taken out, which looks unlikely for a while, we could see the measured, reverse H/S target at around 99.25 (EurUsd: 1.1000).On the downside, support will be seen at 97.70 (minor) and then at 97.36 (100 DMA) ahead of a possible return to the 9 August low at 97.03. Below 97.00 would find further support at the 200 DMA at 96.93, albeit not today.


US$Jpy:  was unable to hold on to the previous session’s gains and is now back at 105.70, under pressure from safe-haven demand for the Jpy. If the stock markets continue to head lower, then the picture will remain the same, and a return to the 105.05 trend low may not be far away. As we said before, beneath 105.00 there is little support ahead of the January flash-crash low (104.01) although that all looks pretty safe today, and buying dips seems to be the near term plan. On the topside, resistance will be seen at 106.00, above which would open the way back to 105.50 and to Wednesday’s high of 106.97. Above 107.00 would open the way to 107.17 (50% pivot of 109.30/105.05) and to 107.67 (61.8%) ahead of 108.00 and even 108.30 (76.4) albeit unlikely in the near term.


AudUsd:  The Aud$ has fallen from the session high of 0.6807 to currently sit at 0.6745 and looks heavy ahead of today’s employment data (exp 5.2%, +14K). A poor jobs report would see the Aud come under further pressure, with support to be seen at 0.6740, 0.6715/20, ahead of 0.6700 and then at 0.6675. Further out, below 0.6675, 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)). On the topside, resistance will be seen at 0.6770/75 and then at 0.6800. I doubt we head above here today but if wrong, on the back of an upbeat jobs report, further offers would arrive at 0.6815/20, the minor trend high, above which there is Fibo resistance at 0.6830 (38.2% of 0.7081/0.6675) ahead of 0.6878 (50%), 0.6900 and then at 0.6926 (61.8%).


NzdUsd: continues to chop around either side of 0.6450, currently at 0.6435, and currently going nowhere fast, which looks set to continue today, so a neutral stance is required. The daily/weekly charts remain heavy though, so I prefer the downside in the medium term, where support levels will arrive at the session low of 0.6420 and again at 0.6400 ahead of the 0.6375 trend low. If/when we break below 0.6375, the next meaningful support is seen at the January 2016 low at 0.6347 and then at the September 2015 low at 0.6235, below which opens the way to the August 2015 low at 0.6125.On the topside, resistance will be seen at 0.6468/75 (Session high/23.6% of 0.6789/0.6375), and again at 0.6498/0.6500 (9 Aug high). Above here would open the way to 0.6520 and to 0.6532 (38.2% of 0.6789/0.6375) although not today. In the meantime, selling rallies remains the plan.


Stocks: The S+P fell sharply lower on Wednesday, as the possibility of a recession grows, caused largely by the trade standoff between the US/China, and currently sits at 2835. The charts are now aligning lower and I suspect there is further pain to come on the downside, so support levels to look for are at 2822 (7 August low), 2800 (200 DMA), 2775 (6 August low) and then at 2728/21 (3 June/8 March lows). On the topside, resistance will be seen at 2875 (minor), 2900 and at 2910 (100 DMA). Selling rallies with a SL placed at around 2890, or ideally, above the 100 DMA does seem to be the plan but it is going to be a very choppy ride I suspect.