17 May: Trend table outlook for FX, Commodities, Indices

By | May 17, 2019

Stocks have seen a continuation of the bounce and rose for the third day in a row, underpinned by some decent corporate results from Cisco/Walmart. The FX markets have seen the US$ move higher against all its counterparts, with the Aud$, Gbp and Nzd$ all losing further ground. Gold was unable to overcome 1300oz and is now $10oz lower, while Silver also took a bit of a beating. WTI ignored increased inventory figures and chose to look at the increasing tensions between Saudi/Iran, which sent the price higher.

EurUsd:  The Euro has once again traded heavily and sunk t the support at 1.1165 ahead of a dead-cat bounce to end Thursday at 1.1175. The short term momentum indicators look heavy, allowing for a possible retest of 1.1165, ahead of further support at 1.1150/60 and then again at 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 1.1200 and 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. I think we are in for a test of 1.1100 and possibly lower at some stage, albeit rather slowly.

DXY:  (97.83) is up by around 0.3% on Friday and may be building for further gains although the weeklies are still in neutral so a nimble stance is required. Having taken out some minor resistance levels, a topside squeeze could now see a return to 98.00 and then possibly to the 98.33 trend high (April 26). 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).

On the downside support will now be seen at 97.50 ahead of the stronger level at 97.25/15, 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. A cautious stance is still required but I prefer to trade from the long side and to selectively buy dips in the dollar despite the fact that the weekly charts are currently not giving any hint of a move higher.

US$Jpy: has squeezed a bit higher on Thursday to finish towards its day’s highs, in line with the stock market rally,  as safe haven demand diminishes, but so far capped at 110.00.  Although the dollar is currently sitting against minor resistance 200 HMA/(23.6% of 112.40/109.00 ), the 4 hourlies still look quite positive and if 110.00 can be overcome, we could see a run towards 110.30 (38.2% of 112.40/109.00) and even to 110.70 (50% pivot of 112.40/109.00). Should 110.00 Cap the current rally, expect a return to 109.50 and eventually back to the recent 109.00 low, 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 dailies still point lower and the pair will be headline driven so a cautious stance is required as risk sentiment could change at any time.

AudUsd: The Aud remains heavy, now below 0.6900,  and at levels last seen in January 2016 (flash crash aside), and with the medium term momentum indicators still looking negative, the downside may be in for further tests. If so, a the session low at 0.6885 should see some decent buyers, this being a long term descending trend support line on the charts (see below), but  under here,  there is actually very little support to be seen until 0.6827, the 17 January 2016 low. Resistance now lies nearby, at 0.6900 and then at the session high of 0.6930 ahead of the more distant 0.6960 (23.6% of 0.7205/0.6885), 0.6985 (minor) and 0.7000. 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.

NzdUsd: The Kiwi remains heavy, although it continues to consolidate above last week’s spike low of 0.6525, and more of the same seems possible today. The momentum indicators are all pointing lower though and the downside seems set to come under further pressure at some stage. If so, the initial support is seen right here at current levels – 0.6525/35, but a break of which would look to the long term rising trend support at 0.6500 – from March 2009. This should be very strong (see monthly chart below) and may well contain the downside for now, but a break of which would look at the October 2018 spike low at 0.6465.  On the topside, resistance will be seen at 0.6560, 0.6580, 0.6600 and then at last Friday’s high at 0.6613 (200 HMA) and at 0.6625/35 (minor gap fill).-Stayshort-sell rallies is the plan.

On the crosses, there is not much going on today but the Aud looks a little heavy in the commodity bloc, with AudNzd, AudCad both turning lower in the medium term, while EurAud looks bid.. Elsewhere EurChf still looks as though it is heading lower, and the recent lows at around 1.1160 could come back into play at some stage. UsdCnh may be building a head of steam to test 7.000 at some stage, albeit that it is overbought in the near term. Dips may yet provide a decent buying opportunity.

Gold: has fallen back to 1286 after having been capped by sellers at 1300 and the short term momentum indicators suggest that it will remain heavy, while the dailies have returned to neutral. If we do get above 1300 at any stage, unlikely for now, a run towards 1310 (10 Apr high) and then to 1324 (25 March high) would then be the targets. Now back below the 100 DMA, at 1296, this will provide some resistance ahead of 1300, and on the downside, the initial support is now seen at 1280/98. Below here would see a return to 1275 and then to the 2 May low at 1265. Right now, with the momentum indicators looking mixed, some choppy trade near current levels would not surprise.

Silver: as with Gold, Silver headed lower on Thursday, reaching 14.50 which is currently supporting further losses. As before, I prefer to remain short, and looking to sell into rallies, with stops now placed above 14.80 or ideally above 15.00/05 (50% pivot of 13.89/16.21). Above here, which seems unlikely for a while, could then see a run toward the 100 DMA at 15.32. On the downside, the initial support will be seen at 14.44 (76.4% of 13.89/16.21), ahead of 14.20 (minor) and 14.00 but with an eventual, long term target being at 13.85. While a good deal of caution is required, 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 Thursday, 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.

WTI: remains choppy, but did head to the topside of the recent range on Thursday, in reaching leaving 63.55 before a dip back towards 63.00 into the close.  The dailies have now turned neutral, so a nimble stance is required and I am now neutral on the price. WTI is supported by political considerations, while increasing supply coming online, particularly from the US, suggests that the price still has downside potential. . 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. While I am neutral, I prefer to sell rallies at the top end of the range, but with a tight SL placed above 64.00. Stay nimble!

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*Trade of the day: May 17, 2019; 8:06 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 @1.1220. SL @ 1.1275, TP @ 1.1155

Buy EurUsd @ 1.1135. SL @ 1.1105, TP @ 1.1200

Sell AudUsd @ 0.6935. SL @ 0.6975, TP @ 0.6885

Sell NzdUsd @ 0.6565. SL @ 0.6605, TP @ 0.6465

Sell WTI @ 63.80. SL @ 64.60, TP @ 62.00

Sell DJI @ 26250. SL @ 26550, TP @ 25800