It has been a volatile session on Tuesday, with plenty going on, and with the day ending with a lot of red on the heat map, suggesting that further safe haven demand may lie ahead.
In particular, stocks look increasingly heavy, and the S+P (chart, below) seems to be breaking down though neckline support, targeting somewhere around 2865.
Gold has traded the head shoulder formation beautifully so far, and as long as it does not break above 1485/90 it remain on target for a run down to around 1415. Keep stops tight though as a break above 1490 would see a sharp run back to 1550.
On the crosses, note that EurAud and AudChf both made Aud-bearish outside day reversals and may be worth looking at although both are rather choppy and won’t be an easy ride.
*Trade of the day: October 2, 2019; 6:33 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 @ 1.0935. SL @ 1.0980, TP @ 1.0830
Buy EurUsd @ 1.0880. SL @ 1.0840, TP @ 1.0990
Sell AudUsd @ 0.6750. SL @ 0.6785, TP @ 0.6690
Buy AudUsd @ 0.6670. SL @ 0.6650, TP @ 0.6745
Sell Gold @ 1486. SL @ 1496, TP @ 1440
Sell S+P 500 @ 2950. SL @ 2975. TP @ 2900
EurUsd: The Euro has now made a new 2 ½ year low at 1.0879 ahead of a decent boune as the dollar weakened after the soft US data and currently sits at 1.0935. While the longer term charts look increasingly heavy, the short term momentum indicators look positive today so buying dips towards 1.0900 is currently the preferred play. If wrong, a break of the 1.0879 low would then allow a run towards the next target at 1.0860(76.4% of 1.0340/1.2555), Under here, the 23 April 2015 low is at 1.0820, a break of which will find a weekly chart gap that would take us to 1.0775. On the topside, above the session high of 1.0942, we would see sellers at the Monday high of 1.0947, which, in turn lies just ahead of last Friday’s/Thursday’s highs at 1.0957/66. These will add up to provide strong resistance ahead of a possible return to 1.1000/03 (23.6% of 1.1411/1.0879). Although unlikely today, a steeper topside squeeze would then allow for a run towards 1.1040/50 and then possibly to the September 18/19 highs at 1.1072/75. Buying dips towards 1.0900 does seem to be the way to go today, with a SL placed above 1.0875.
US$Jpy: squeezed up to meet the mid-September high of 108.47 on Tuesday before collapsing on the release of the US data and currently sits just above the session low of 107.62. While the dailies remain pretty much neutral, suggesting a continuation of the recent choppy conditions, the short term momentum indicators do point lower now, so a retest of 107.60 and lower would not surprise. Targets would be at below which could revisit 107.40 (26 Sept low), to 107.25 (minor) and to 106.95 (24 Sept low/38.2% of 104.46/108.47), which should be strong support if we get there. On the topside, resistance will be seen right here at 107.75 (100 DMA), above which could see a return to 108.00 and eventually to the 108.47 high although that looks out of reach for now. A session of using the 100 DMA as a magnate would not surprise ahead of Friday’s NFP and a range of 107.50/108.00 may broadly cover it. If US stocks have another fall then the US$ will come under pressure and may head back towards the 107.00 area.
AudUsd: The Aud$ made a new 10 year low at 0.6670 on Tuesday ahead of a lame-duck bounce to 0.6700, where it currently sits, as the US$ came under some pressure of its own. The 4hour/daily momentum indicators still look heavy though and a break of the lows would then allow for a move to 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). The hourlies had become oversold and are now in recovery mode and point higher, so if we go get a bounce above 0.6710, look for a move towards 0.6724 (23.6% of 0.6894/0.6671) and then possibly to 0.6755 (38.2%). I don’t think we go above here today and it may be a sideways session while waiting on Friday’s US employment report. Look for 0.6670/0.6630 to cover it.
NzdUsd: As with the Aud, the Kiwi had another rough ride in falling to 0.6203, a new 5 year low, ahead of a bounce to currently sit at 0.6240 The hourly charts hint at the chance of a squeeze towards.6260 (23.6% of 0.6450/0.6203), to 0.6280 (200 HMA) and to 0.6298 (38.2%). The longer term charts look heavy though and on a break of 0.6200, there is little to hold the Kiwi up – as can be seen on the weekly chart, below, but more distant bids would arrive at the August 2015 low at 0.6125, which could be where we are headed if/when the RBNZ cut rates again, which seems highly likely. Use 0.6200/0.6260 as a guide today, with the preference to sell rallies for the longer term move.