It all looks rather mixed on Thursday, after a generally sideways session on Wednesday, and a cautious stance is required.
The ongoing possibility of a Brexit deal sees Sterling remain underpinned against all counterparties; although the short term momentum indicators suggest that the trend may see a bit of a correction. That said, the longer term charts still suggest that there is more to come on the topside, so looking to buy dips seems the way to go although the volatility in Sterling is likely to remain very high so the swings are likely to be large and a failure to reach a Brexit deal would see a sharp reversal. With parliament now looking likely to sit this coming Saturday, we could be in for some serious gapping at the Monday open so I would tend to be square by Friday’s market close.
The Euro looks better bid on Thursday and may be in for a test of 1.11+. It is also picking up steam against the Jpy and the Aud, so buying dips seems to currently be the plan.
Elsewhere, things look rather neutral, although note that we have a bit of economic data due in Australia today which may see some directional movement in the Aud$ and the related crosses.
*Trade of the day: October 17, 2019; 7:33 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 @ 1.1120. SL @ 1.1155, TP @ 1.1040
Buy EurUsd @ 1.1040. SL @ 1.0995, TP @ 1.1110
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 NzdUsd @ 0.6255. SL @0.6230, TP @ 0.6315
Sell Gold @ 1500. SL @1515, TP @ 1875
EurUsd: The Euro has traded up to a high of 1.1085, a 1 month high, after taking out some decent resistance in the 1.1060/70 area following the soft US Retail Sales data. The indicators now generally look constructive for further gains and a sustained break of the Fibo level at 1.1080 (38.2% of 1.1411/1.0878) would then allow for a run to 1.1100 and to 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/50% Fibo level at 1.1138/45, the 26th August high of 1.1163, 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 1.1050 (minor), 1.1030 (100 HMA) 1.1005(200 HMA) and then at 1.0990/1.1000. If/ when we get back under here, it would then 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 1.1040/1.1120 may be the idea again today, but with the momentum indicators looking positive, trading the Euro from the long side, looking to buy dips is preferred..
US$Jpy: has currently topped out at 108.85 on Tuesday/Wednesday, but sits nearby at the top of its range, with the uptrend still intact. The short term momentum indicators are in neutral mode but the longer term charts look positive, and the longer term charts still suggest that we may be building a reverse head shoulder base, with a possible target of around 112.50 although that remains a long way off. In the meantime we need to break above 109.00/05 (100 DMA) , which would then open the way to 109.30/35, which will be strong resistance if/when we get there (1 August high, 61.8% of 112.40/104.45). Further out, we may look towards 109.92 (30 May high) and, above 110.00, to 110.50 (76.4%). On the downside, minor support will now be seen at 108.55/60 ahead of 108.30 (23.6% of 106.48/108.85). Below this would allow for a return to 107.97 (38.2% of 106.48/108.85) and then to 107.85 (23.6% of 104.45/108.85), although this looks unlikely to be seen for a while. For the time being, buying dips seems to be the plan, with a SL below the Fibo level at 108.30.
AudUsd: The Aud$ fell to a low of 0.6722 on Wednesday but then bounced sharply after the soft US data, and currently sits at familiar levels at 0.6755, leaving the outlook in neutral. The Australian Unemployment will provide the direction today, and on the topside, minor resistance will be seen at 0.6770, at 0.6785, at 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, back below 0.6740/50 could then allow a move back towards 0.6720/25 and to 0.6700. Further out, I still think we may eventually see lower levels for the Aud$ 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).
Note that early tomorrow morning, RBA Governor Lowe will speak at a ‘Governor Talk’ event at the IMF annual meeting (7:00 am AEDT).
NzdUsd: As with the Aud$, the Kiwi traded with a heavy bias until the soft US data on Wednesday, which saw a sharp bounce from the low of 0.6240, to currently sit at 0.6290. On the topside, sellers are likely to arrive once again at 0.6300/10 (100 HMA/200 HMA), above which could return to 0.6330 and then to 0.6350/55 (0.6355 = 61.8% of 0.6449/0.6203). Beyond this seems unlikely today but further targets would be at 0.6391 (76.4%) and at the 12 Sept high at 0.6450. On the downside, support will again be seen at 6240/50, 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. For the next 24 hours, with the short term momentum indicators looking mildly constructive, buying dips, with a SL placed sub 0.6240 may be the plan, in looking for a squeeze to 0.6300/15 area.