16 Oct: Trend table outlook for FX, Commodities, Indices

By | October 16, 2019

The possibility of a Brexit deal has seen Sterling move sharply higher against all counterparties once again on Tuesday, and the charts suggest that there is more to come so looking to buy dips seems the way to go, although the implied volatility for Sterling is now very high so the swings are likely to be large. I would not be a buyer here but would look to place a bid at around 200bp lower in GbpUsd.

Note that GbpAud made a new trend high in reaching levels last seen in June 2016, and looks like it has the legs to continue above 1.9000. Having said that, the 50% pivot of the entire decline from 2.2405(August 2015) to 1.5631(Oct 2016) lies right ahead at 1.9010 (chart) and should be strong resistance. Look to buy a dip towards 1.8700. The other Sterling crosses also all look very positive and the same theory applies.

While risk sentiment remains positive, the Jpy is under pressure (particularly GbpJpy) and Gold may be building further downside momentum.

GbpAud-weekly

GbpJpy-weekly

 

Elsewhere, US stockmarkets all look bid again on both the short term and on the medium term time frames, and could receive another boost today if the upcoming corporate reports outperform, as they did yesterday, so look to buy dips. Today sees, BOA, MS, Netflix, Alcoa, amongst others.

—————————————————————————————————————————————–

*Trade of the day: October 16, 2019; 8:29 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 @ 1.1070. SL @ 1.1105, TP @ 1.1000

Buy EurUsd @ 1.0985. SL @ 1.0945, TP @ 1.1080

Sell AudUsd @ 0.6800. SL @ 0.6835, TP @ 0.6730

Buy AudUsd @ 0.6720. SL @ 0.6690, TP @ 0.6785

Buy GbpAud @ 1.8700. SL @ 1.8475, TP @ 1.9000

Buy GbpUsd @ 1.2600. SL @1.2400, TP @ 1.3000

Sell Gold @ 1488. SL @1495, TP @ 1465

——————————————————————————————————————————————–

EurUsd:  The Euro was soft in Europe, breaking below 1.1000 but then reversed direction, being dragged higher by Cable, to finish the session back where it began, at 1.1030, leaving us with a neutral stance in early Wednesday trade. Further choppy conditions look likely and we currently remain well below the Friday high of 1.1062, where it ran into the base of the daily cloud and the weekly Kijun, which will continue to provide strong topside resistance. While the short term momentum indicators are mixed/neutral, the medium term indicators still look constructive so we could eventually see a return to the Friday high, and beyond the strong resistance Ichimoku resistance, the September 18/19 highs sit at 1.1072/75 and come ahead of the Fibo level at 1.1080 (38.2% of 1.1411/1.0878) and the 13 September high at 1.1109. A break of this level would add upside momentum and could then see a test of the 100 DMA at 1.1145, and eventually the 61.8% Fibo level at 1.1205 and the 200 DMA at 1.1215.On the downside, support will now be seen at 1.0990/1.1000, below which would open the way to 1.0965/70 (minor) and then to 1.0940 (8 Oct low). I don’t think we go close to this for a while, but if wrong, below 1.0940 would allow for 1.0900, a break of which would then open the way back to the 1.0879 low. Further out, we could eventually see a run towards the next target at 1.0860(76.4% of 1.0340/1.2555), and then to the 23 April 2015 low at 1.0820. A break of this would find a weekly chart gap that would take us to 1.0775 but don’t get excited about this any time soon. A range of 1.0980/1.1070 may be the idea again today.

 

US$Jpy:   has traded up to 108.85 on Tuesday and sits right at the top of its range heading into early Wednesday trade. All the momentum indicators currently look positive, and the longer term charts suggest that we may even be building a reverse head shoulder base, with a possible target of around 112.50 although that remains a long way off, and will probably only come about if there are some very positive headlines from the US/China. In the meantime we need to break above 109.00/05 (100 DMA) , which would then open the way to 109.30/35, which will be strong resistance if/when we get there (1 August high, 61.8% of 112.40/104.45). Further out, we may look towards 109.92 (30 May high) and, above 110.00, to 110.50 (76.4%). On the downside, minor support will now be seen at 108.60 ahead of 108.30 (23.6% of 106.48/108.85). Below this would allow for a return to 107.97 (38.2% of 106.48/108.85)  and then to 107.85 (23.6% of 104.45/108.85), although this looks unlikely to be seen for a while. For the time being, buying dips seems to be the plan, with a SL below the Fibo level at 108.30.

 

AudUsd:  The Aud$ has once again seen a retreat back to 0.6750, where it currently sits, leaving the outlook in neutral. On the topside, minor resistance will be seen at 0.6770, at 0.6785 and then on the approach to 0.6800 and at the Friday high/minor Fibo level at 0.6810 (61.8% of 0.6894/0.6770). Beyond that, the targets to watch would be at the larger Fibo level at 0.6828 (38.2% of 0.7081/0.6770), 0.6840 (76.4% of 0.6894/0.6770) and 0.6876 (50% of 0.7081/0.6770), above which could then stretch to the 12 September high at 0.6894 and eventually to 0.6925 (61.8% of 0.7081/0.6770). On the downside, bids are again in evidence at 0.6745/50, beyond which could then allow a drift back towards 0.6730 and to 0.6700.  Further out, I still think we may eventually see lower levels for the Aud$ (Note today’s sharp downgrade of the Australian economic outlook from the IMF) and if/when we go back below 0.6700 Fibo extension support would arrive at the 0.6670 low, which will be very strong, but a break of which would then head towards 0.6638 (76.4% of 0.6894/0.6670 from 0.6810)  ahead of 0.6600. Under here would allow for a move to 0.6585 (100%) and eventually to 0.6500 although that remains some way off. In the big picture, the next major Fibo support level on the monthly chart is not seen until 0.6250 (76.4% of 0.4773 (April 2001)/1.1082 (July 2011).

                                   

NzdUsd: The Kiwi has traded a range of 0.6257/0.6313 on Tuesday and after running out of steam ahead of last Friday’s high of 0.6353 it does now look a little heavy although the charts are telling us little. The Q3 CPI is due today, which is unlikely to help the Kiwi too much, although if it does come in above expectations sellers are likely to arrive at 0.6300/10 (100 HMA/200 HMA), above which could return to 0.6330 and even to 0.6350/55 (0.6355 = 61.8% of 0.6449/0.6203), at 0.6391 (76.4%) and at the 12 Sept high at 0.6450. On the downside, support will be seen at the session low, 0.6257, ahead of 0.6220 a break of which would open the way back to the 0.6203, 4 year low. In the distance, on a break of 0.6200, there is little to hold the Kiwi up, but more distant bids would arrive at the August 2015 low at 0.6125.