The map looks rather more mixed today although risk aversion remains the general theme. Continuing to trade stocks from the short side and the metals from the long side is once again the idea, while the FX markets look mixed. I prefer to be short the Euro against the US$ and also the Jpy. The Jpy/Xs look a bit oversold on the daily charts and we could see a bit of a recovery but overall the idea of looking for levels to buy Jpy against all the majors remains intact. Keep an eye on Sterling, which looks as though it might have some upside potential against the Euro, albeit less so elsewhere.
*Trade of the day: August 16, 2019; 8:00 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 @ 1.1060. SL @ 1.1020, TP @ 1.1160
Sell EurUsd @ 1.1130. SL @ 1.1170, TP @ 1.1050
Sell AudUsd @ 0.6810. SL @ 0.6845, TP @ 0.6735
Buy AudUsd @ 0.6740. SL @ 0.6710, TP @ 0.6830
Sell NzdUsd @ 0.6460. SL @ 0.6480, TP @ 0.6385
Sell S+P @ 2875. SL @ 2905, TP @ 2775
Buy Gold @ 1510. SL @ 1490, TP @ 1550
Other strategies seem to be: –
The US$ is mixed but selling the Euro is still the main theme for me, while the movements in the Jpy and the Chf have been rather more benign today as the stock markets managed to stabilise a little.
The Aud and the Kiwi are consolidating, and may yet squeeze higher but I still prefer to look for levels to sel;l both currencies against both the US$ and the Jpy. As we said yesterday, 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.
Sterling is consolidating at current levels but it looks to be in increasing trouble in the medium term against the US$. EurGbp is a little lower on Friday and the dailies do point towards further Sterling strength in the sessions ahead, however, the weeklies still point higher and buying dips may be the plan for those who like to trade the Brexit headlines. Not me!
The S+P and the DJI fell stabilised on Thursday, but risk aversion remains and I think that this theme could continue, so selling rallies is preferred as another downside move looks very possible.
Gold to remain highly volatile and today saw a 0.50% bounce from the lows. The longer term charts still have positive bias so buying dips is again preferred.
EurUsd: The Euro plunged on the lower German yields and fell to 1.1090 on Thursday, pulling up just ahead of support at 1.1080 (76.4% of 1.1025/1.1248). The momentum indicators look heavy, so a run towards 1.1050 and an eventual return to the trend low of 1.1025 ahead of the 1.1000 H/S target would not really surprise. Further out, if/when we get below 1.1000, there is good trend support at 1.0965 – at which point I would square up any short Euro positions and take a nimble stance. On the topside, resistance will now be seen at 1.1130 and again at 1.1155/65 (all minor). I doubt that we head above here today, but if wrong look for further offers to arrive at 1.117585 (100 HMA/200 HMA) ahead of 1.1200. Beyond there, the neckline of the HS formation remains at 1.1215, while the 100 DMA (1.1220) has repeatedly stood in the way of further progress and will remain an obstacle if/when we get back there. The resistance at 1.1215/1.1230 is very strong now, but above which would open the way to 1.1250 ahead of 1.1264 (61.8% of 1.1411/1.1025), 1.1300 (200DMA) and 1.1320 (61.8%). I still prefer to sell Euro rallies as I think that 1.1000 and lower will be seen at some stage down the track.
US$Jpy: had a volatile day of trade either side of 106.00, including a brief spike up to 106.76 which was quickly reversed, to a low of 105.70, and then with the rest of the session spent chopping around near current levels. The short term momentum indicators are now neutral and the dailies may be trying to form a base, but the weeklies look heavy and 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. On the topside, minor resistance will be seen at 106.30, above which would open the way back to 106.76 (Session high) 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. A neutral stance is required today although I still prefer to look for levels to buy the Jpy, both against the US$ and on the crosses.
AudUsd: The Aud$ jumped on the back of Thursday’s jobs report and has spent much of the day consolidating within 0.6770/85, where it currently sits. The short term momentum indicators are pretty much neutral today and a sideways session may lie ahead in the absence of any Australian data. The dailies have become oversold and may be basing out so a squeeze towards 0.6800 should not be ruled out. I doubt we head much above here today but if wrong, 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%). Bids will now arrive nearby at 0.6765 and then again at 0.6735/45, at 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.
NzdUsd: continues to chop around either side of 0.6450, currently at 0.6445, 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 (14 Aug 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.