Stocks have seen a bounce, partially recovering Monday’s losses although the longer term charts still look heavy, but elsewhere the markets generally look choppy and indecisive, with little clarity, especially in the FX markets.
EurUsd: The Euro has traded heavily in a tight range on Tuesday, but is still hanging on by its fingernails above 1.1200. The medium term momentum indicators are telling us little, and further choppy consolidation looks possible in the days ahead although the short term momentum indicators do look a little heavy and a test of the downside may be possible today. If so, once below 1.1200 (200 HMA), minor support arrives at 1.1175 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. On the topside, resistance will again be seen at the session high, around 1.1240/45 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). Selling rallies remains favoured although another tight session would not surprise.
DXY: (97.55) is back above 97.50 on Wednesday , although the daily momentum indicators still suggest that further choppy trade 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, above the current 97.50/60 level and on towards 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: recovered some lost ground on Wednesday, in line with the stock market recovery, as safe haven demand diminished, and after holding on above 109.00 it reached a session high of 109.76.. The short term momentum indicators are recovering after having become oversold, with the 4 hourlies hinting at some bullish divergence so the dollar may continue to benefit from 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 109.80 (23.6% of 112.40/109.00 / 100 HMA) and 110.00, beyond which would allow for a run towards 110.25 (200HMA) although that is currently some way off. On the downside, the initial support will be seen at109.45 (minor), 109.15 and then at 109.00, below which would target 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.
AudUsd: The Aud has been unable to bounce and remains at levels last seen in January 2016 (flash crash aside), and with the momentum indicators still looking heavy, the downside may be in for further tests. If so, a break of 0.6935 would open the way to 0.6915 (minor) and to 0.6900 and lower; and 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 0.6960/65 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, but it continues to consolidate above last week’s 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, there is not much going on today but the Aud looks a little heavy in the commodity bloc, with AudNzd, AudCad both turning lower in the short/medium term. 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. GbpJpy looks heavy too, although I am avoiding Gbp right now because of Brexit headlines, while UsdCnh is building a head of steam to test 7.000 at some stage, albeit that it is overbought in the near term. Dips may yet provide a decent buying opportunity..
Gold: has chapped around on Tuesday but is ending the day more of less unchanged. As before, the dailies are looking positive and if we get above 1300, a run towards 1310 (10 Apr high) and then to 1324 (25 March high) now looks possible. Downside support is at 1295 (100 DMA) and then at 1290. Buying dips seems the plan while the dailies look constructive..
Silver: as with Gold, Silver has been choppy, but currently unchanged at 14.78. I prefer to remain short for now, and looking to sell into rallies towards 14.90/15.00, but stops should be placed tight above 15.00/05 (50% pivot of 13.89/16.21), above which could then see a run toward the 100 DMA at 15.32. On the downside, support will be seen at 14.75 (minor) and again at the 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 require here if short, I prefer to trade this way, as I think 14.00 – and lower – is eventually on the cards, in line with a stronger US$.
Stocks: bounced on Tuesday, – care of Trump’s calming tweets -, and while the short term momentum indicators look positive the longer term charts do suggest lower levels ahead, so I prefer to look for levels to sell into, with a SL placed around 1% above current levels. Downside targets are at 2800 and then 2775/2760 (200 DMA/100 DMA) in the S+P and at 25200, 25000 and 24875 (8 Feb low) in the DJI.
WTI: remains choppy between 60.00 and 63.00 (60.75-62.16 – Tuesday), leaving the short term momentum indicators mixed/neutral., As we said before, WTI did register a bearish outside day on Friday, suggesting a bearish bias, although overall 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 15, 2019; 6:27 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 @1.1235. SL @ 1.12755, TP @ 1.1155
Buy EurUsd @ 1.1165. SL @ 1.1135, TP @ 1.1255
Sell AudUsd @ 0.6965. SL @ 0.7010, TP @ 0.6885
Sell WTI @ 63.00. SL @ 63.80, TP @ 61.00
Sell S+P @ 2865. SL @ 2885, TP @ 2800
Sell DJI @ 25850. SL @ 26050, TP @ 25100