17 May: Forecast: FX: US$/Majors + trade ideas

By | May 17, 2018


EURUSD: 1.1807
EurUsd set a new trend low on concerns that the 5 Star/League Parties are about to form an Italian Government with a proposal that the ECB write off the Italian government debt, sending shudders through the markets, but having fallen to 1.1762 it then bounced and has since consolidated near 1.1800. We may chop around here for now but Italian politics, ECB & Fed speakers will be the risks today.
1 hour/4 hour indicators: Mixed- Bullish Divergence Daily Indicators: Down -Becoming Oversold Weekly Indicators:  Turning lower.
Preferred Strategy:   The bounce off the trend low at 1.1762 now sees the hourlies pointing higher, and with the 4 hour charts showing some bearish divergence, this may be a hint that a correction higher is due within the overall downtrend.

If so, on the topside, resistance will be seen at minor levels up to the 1.1853 session high and then again up to 1.1900. If 1.1900 can be overcome, then look for a possible return to the Fibo level at 1.1930 although this looks doubtful today.

On the downside, below 1.1760 there is little support to be seen ahead of 1.1700/10 although I don’t think we are going there today, and buying dips may be a play right now, looking for a squeeze back to 1.1900.

Short term: Buy EurUsd @ 1.1750. SL @ 1.1695, TP @ 1.1850

Medium Term: Sell EurUsd @ 1.1925. SL @ 1.2005, TP @ 1.1785

Resistance Support
1.1930 (23.6% of 1.2475/1.1762) 1.1787 (76.4% of 1.1553/1.2555)
1.1900 Minor 1.1762 Session low
1.1875 Minor 1.1750 Minor
1.1853 Session high 1.1737 18 Dec low
1.1820 Minor 1.1716 12 Dec low

Economic data highlights will include:

EU Trade Balance – Mar, Construction Output – Mar, Philadelphia Fed Mfg Survey – May

USDJPY: 110.40
US$Jpy has been choppy on Wednesday, shrugging off the US/N Korea concerns, trading either side of the 200 DMA at 110.15, with more of the same looking likely although, with US yields looking strong, the dollar should now head higher.
1 hour/4 hour indicators: Mixed. Daily Indicators: Turning higher? Weekly Indicators:  Turning higher
Preferred Strategy:  The momentum indicators are rather mixed heading into Thursday, a cautious stance is required, but buying dips, towards 109.80/110.00 today, remains the plan.

If the dollar does head higher, then above 110.50, look for a run towards 110.85 (76.4% of 114.73/104.60). Beyond there, 111.00 would attract, above which there is not a lot of resistance ahead of 111.45/50.

The initial support will arrive at 110.15/00 ahead of 109.80 and the 100 WMA at 109.45 and then 109.20/15.

Sidelined – look to buy dips with SL under the 100 WMA at 109.50.

Resistance Support
111.47 18 Jan high 110.15 200 DMA
111.25 Minor 110.02 Session low
111.00 Minor 109.80 Minor
110.85 Minor 109.50 100 WMA
110.48/45/37 2 Feb High/15 May  high /Session high 109.15/20 12 May low /14 May low

GBPUSD: 1.3489
Cable retested the 2018 low today, reaching 1.3450 ahead of a bounce to finish the day at 1.3510.
1 hour/4 hour indicators:  Neutral Daily Indicators: Possible basing formation. Weekly Indicators:  Turning lower
Preferred Strategy:   The short term momentum indicators look mixed and a neutral stance is required on Thursday. Although Cable is likely to remain under pressure against the dollar, it is currently outperforming on the crosses and EurGbp does remain under pressure, today falling to 0.8730 ahead of a bounce back to 0.8750.

The longer term Sterling charts still look heavy, but may be forming a base, and below the trend low at 1.3450 would allow a run to the and the major Fibo level at 1.3400

If Cable does manage a squeeze higher, near term resistance will again be seen at 1.3535 ahead of the 200 DMA at 1.3550 and to the 15 May high of 1.3571 ahead of 1.3600/10.


Resistance Support
1.3607 14 May high 1.3475 Minor
1.3571 15 May  high 1.3450/54 15 May  low /Session low
1.3550 200 DMA 1.3425 Minor
1.3535 200 HMA 1.3398 (38.2% of 1.1822/1.4376)
1.3500 Minor 1.3350 Minor

USDCHF: 1.0011
US$Chf was choppy on Wednesday, trading a range of 0.9983/1.0018, and currently unchanged from this time yesterday at 1.0010, further choppy sideways trade looks possible.
1 hour/4 hour indicators: Neutral. Daily Indicators: Possible topping formation. Weekly Indicators:   Up
Preferred Strategy:  The short term momentum indicators look neutral again today, while the dailies still look a little toppish and it maybe that the recent uptrend has now run its course, possibly with some choppy trade ahead, allowing the charts to unwind. The weekly charts still point higher though, so looking to buy dips remains the medium/longer term strategy.

If the dollar heads lower, support will again be seen at 0.9975/85, ahead of 0.9955/60 and minor levels at 0.9935/15 ahead of the 1 May low of 0.9890. This looks unlikely right now but if wrong, on a break of 0.9890, further bids should arrive at 0.9870 and at 0.9845/50.

On the topside, above Tuesday’s 1.0020, decent resistance will be seen at the trend high of 1.0055, which looks unlikely to be taken out today, but above which would open the way to 1.0065/70, which is a major Fibo level, and to 1.0100. Further out we are potentially looking at a run up to 1.0170 and even to the December 2016 high of 1.0343 albeit probably not for a while to come.

Buy US$Chf @ 0.9960. SL @ 0.9930, TP @ 1.0100

Resistance Support
1.0107  Apt 2017 high 1.0000 Pivot
1.0099 May 2017 high 0.9983 15 May  low /Session low
1.0067 (76.4% of 1.0343/0.9187) 0.9957 14 May low
1.0055/56 7 May high /9 May high /11 May high 0.9935 2 May low
1.0041 15 May  high 0.9890 1 May  low

AUDUSD: 0.7514
The Aud fell to 0.7445 on Wednesday, creating a minor double bottom ahead of a bounce to 0.7522. Currently at 0.7515, the direction today will be provided by the Australian Unemployment figures (exp +20K, 5.5%).
1 hour/4 hour indicators: Turning higher. Daily Indicators: Turning higher Weekly Indicators:  Turning lower
Preferred Strategy:   With the hourly/4 hourly and daily momentum indicators all currently aligned higher it would seem that the Aud can see a runback to the session high and possibly on to 0.7535/40 and on to sterner resistance at 0.7565.  Above here would allow a squeeze back to 0.7585, which I think would be a decent area to re-sell the Aud, but above which opens up 0.7600/05 although this seems unlikely to be visited today.

On the downside, support will be seen at 0.7500 and then at 0.7575 and the 0.7445 trend low, but which looks safe right now. If wrong, we could then head towards the 9 May low of 0.7411. This is an 11 month low and decent buying interest should arrive at 0.7400/10. Below 0.7400, there really is not too much to hold it up ahead of Fibo support at 0.7385, the 1 June 2017 low at 0.7371 and the May 2017 low of 0.7328.

Buy AudUsd @ 0.7470. SL @ 0.7540, TP @ 0.7570

Sell AudUsd @ 0.7590. SL @ 0.7615, TP @ 0.7470

Resistance Support
0.7603 (38.2% of 0.7916/0.7411) 0.7500 200 HMA
0.7583 27 Apr high 0.7475 Minor
0.7566 12 May high/14 May high/(23.6% of 0.7813/0.7411) 0.7447 15 May  low /Session low
0.7537 15 May  high 0.7411 9 May low
0.7522 Session high 0.7371 2 June 2017 low

Economic data highlights will include:

Consumer Inflation Expectation – May, Unemployment – Apr

NZDUSD: 0.6897
 The Kiwi fell to 0.6850 ahead of a decent bounce that has allowed it to finish near session highs of 0.6915, currently at 0.6900.
1 hour/4 hour indicators: Mixed. – Bullish Divergence? Daily Indicators:   Turning lower Weekly Indicators:  Turning lower
Preferred Strategy:   The short term momentum indicators look a little more positive today and we could see another run towards resistance at 0.6915/25, above which opens up a move to 0.6950/0.6970 and even back to 0.7000 although this seems unlikely.

Back below 0.6850 would then allow a move to 0.6815 and perhaps to 0.6780 although unlikely today. Below that though, there is very little support until 0.6670.

Sell NzdUsd @ 0.6970. SL @ 0.7010, TP @ 0.6850

Resistance Support
0.6970 200 HMA 0.6875 Minor
0.6950 Minor 0.6849 Session low
0.6924 15 May  high 0.6828 11 Dec low
0.6915 Session high 0.6816 1 Dec low
0.6900 Minor 0.6780 17 Nov low

Economic data highlights will include: