Stocks have seen a continuation of the bounce after a volatile ride but further recovering Monday’s losses. Otherwise, the markets generally look choppy and indecisive, with little clarity, especially in the FX markets. Today’s Australian jobs data should provide some volatility for the Aud$, which may take the Kiwi along for the ride. Elsewhere look for another day of consolidation, with POTUS Tweets the most likely source of a directional move.
EurUsd: The Euro has once again traded heavily but within a tight range on Wednesday, having headed down to 1.1175 ahead of a bounce, to see us currently back at the familiar 1.1200 level. As before, the medium/long term momentum indicators are telling us little and, with little new to report, further choppy consolidation looks possible in the days ahead. The short term momentum indicators are mixed although the 4 hour charts look heavy, allowing for a possible retest of 1.1175, ahead of further support at 1.1150/60 and then again at last the 3 May 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 at around 1.1125 ahead of 1.1240/45 and 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: (97.57) is unchanged at close to 97.50 on Thursday , and 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 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.
US$Jpy: has been choppy within a tight range, but recovered early losses to finish towards its day’s highs, in line with the stock market recovery as safe haven demand diminished. The short term momentum indicators are still recovering after having become oversold, and with the 4 hourlies looking quite positive, the dollar may continue to benefit from a near term reprieve. The dailies are pointing sharply lower though and the theme of selling rallies still seems to be the plan. If we do see a further 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 at 109.40/45 (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 remains heavy and at levels last seen in January 2016 (flash crash aside), and with the medium term momentum indicators still looking heavy, the downside may be in for further tests. If so, a break of 0.6914, the session low, would open the way 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 0.6940 and then at 0.6960/65, ahead of 0.6983 (23.6% of 0.7205/0.6914) and 0.7000. Above here would open up 0.7025 (38.2% of 0.7205/0.6914) ahead of the post RBA high at 0.7047 although this looks a long way off now. I think we are heading lower though 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. Ahead of that though, today sees the Australian jobs data, and with the short term momentum indicators pointing higher it could be that we do see a near term squeeze to the topside if the number is a strong one. In the bigger picture though, any rally will only provide a better sell opportunity I suspect.
Gold: has chapped around on Wednesday but is ending the day more of less unchanged and capped by sellers at 1300. As before, the dailies still look mildly 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 1293/95 (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 again on Wednesday, and while the short term momentum indicators look positive the longer term charts do suggest lower levels ahead. The price action is very choppy and it is difficult to get set either way without being stopped out but overall I still prefer to look for levels to sell into, with a SL placed around 1% above entry levels. Downside targets are at the rising trend support at 2810 in the S+P, and then 2775/2760 (200 DMA/100 DMA) and at 25385 (100 DMA/200 DMA) and then at 25200, 25000 and 24875 (8 Feb low) in the DJI
WTI: remains choppy between 60.00 and 63.00 (60.93-62.44 – Wednesday ), leaving the short term momentum indicators mixed/neutral., As we said before, WTI did register a bearish outside day on Friday, suggesting a heavy 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 16, 2019; 8:21 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 @1.1240. SL @ 1.1275, 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