There is plenty going on ahead of tomorrow’s FOMC Meeting, with the obvious interest being in the oil price, where the medium term indicators seem to suggest still higher levels ahead for WTI. The metals have also been volatile on Monday, but at the end of the session the price action has been inconclusive and mixed, so I would stand aside.
Stock markets are lower today, mixing up the short term momentum indicators, but the longer term charts suggest higher levels ahead – with the next directional move likely to be dependent on the Fed, tomorrow. In the meantime buying dips seems to be the plan, but a cautious stance is required.
The FX markets have seen a resurgent US$, and the hourly charts in the DXY (98.65) may be forming a bullish flag, so a test of 99.00 may lie ahead. This is reflected in a bearish EurUsd short term flag, although ahead of the Fed, tomorrow, I would not be surprised to see a continuation of choppy conditions near current levels. Elsewhere, the Nzd and the Jpy both look particularly weak, although any escalation of events in the Middle East would see a resurgent Jpy on the back of safe haven demand.
On the crosses, AudNzd has now broken above 1.0800 and would now seem headed towards 10.865 and then possibly towards 1.0900-20, so buying dips is preferred. Elsewhere a short Jpy strategy seems to be the plan, although as above, this would need to have some pretty tight stops in place incase political tensions increase.
Note the UsdCnh seems to have further downside, which will come about if progress is made between the US/China in the trade negotiations.
*Trade of the day: September 17, 2019; 8:45 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 @ 1.1050. SL @ 1.1090, TP @ 1.0950
Buy EurUsd @ 1.0950. SL @ 1.0915, TP @ 1.1040
Sell AudUsd @ 0.6885. SL @ 0.6905, TP @ 0.6800
Buy AudUsd @ 0.6835. SL @ 0.6815, TP @ 0.6885
Sell NzdUsd @ 0.6375. SL @ 0.6405, TP @ 0.6300
Buy AudNzd @ 1.0785. SL @ 1.0745, TP @ 1.0865
Sell Gold @ 1510. SL @ 1525, TP @ 1475
EurUsd: Having squeezed up to the strong resistance at 1.1110 last Friday (38.2% of 1.1411/1.0925/descending trend resistance) the Euro was unable to carry on and, having been rejected at those levels the Euro is now back at 1.1000 and looks a little heavy in the near term. A neutral stance is probably best ahead of Wednesday’s FOMC but if we do head lower, look for minor support to arrive at 1.0965/70 and then at 1.0940/50 ahead of the 1.0925/27 double bottom. I don’t see it down here today, but if wrong, below 1.0925 opens the way to 1.0900 and to 1.0860 (76.4% of 1.0340/1.2555), and further out there is a weekly chart gap that would take us to 1.0772. On the topside, resistance will be seen at 1.1040 (100 HMA/200 HMA crossing) and again at 1.1075/85 ahead of the 1.1000-10 level. Above here would then target 1.1125(61.8% of 1. 1249/1.0925) and the 26 August high of 1.1163 but which seems unlikely to be visited for a while. If wrong, further resistance lies at 1.1175(76.4% of 1. 1249/1.0925), at 1.1185 (100 DMA) and then at 1.1260 (200 DMA) although that remains some way off yet.
US$Jpy: Having gapped down to a low of 107.50 in early Monday trade, US$Jpy has slowly recovered through the day to currently sit near session highs of 108.16, and looking bid in early Tuesday trade. Stiff resistance remains intact right here (100 DMA/76.4 of 109.31/104.44) but with the daily momentum indicators pointing higher, we could see a run towards 108.45/50 (minor), beyond which would open the way to 108.80/109.00 and then to the 1 August high at 109.31. On the downside, the initial support now sits at 108.00/107.90 (minor) and then at 107.65 (Rising trend support), below which could then see a return to 107.50 (Session low) and to 107.40/35 (200 HMA /23.6% of 104.43/108.15). Buying dips with a SL sub 107.75 may be the plan today.
AudUsd: The Aud$ had another sideways session on Monday although the bias is mildly lower, but confined to a 30 point range below the 0.6880/85 resistance, with the next directional move likely to be dependent on the FOMC, Wednesday. The short term momentum indicators are mixed in early Tuesday trade, with the short term momentum indicators looking a little heavy, while the longer term charts still look constructive for further gains in the days ahead. A break of 0.6880/85 would see further offers at 0.6895/0.6900 above which could accelerate towards 0.6926 (61.8% of 0.7082/0.6676), and then to 0.6950 (minor) and to 0.6985 (76.4%).On the downside, the initial support will be seen at 0.6855 (session low), at 6845/50 (0.6845 = 23.6% of 0.6687/0.6894) and again at 0.6815 (38.2%). This seems unlikely to be visited today, but if wrong, below there could see a decline towards 0.6790 (50% of 0.6687/0.6829). I don’t really see it under there for a while but if wrong, further bids would arrive at 0.6765 (61.8%) and at 0.6735(76.4%). In the absence of any data today, 0.6840/0.6890 may well cover it.
NzdUsd: The Kiwi has traded with a heavy bias over the last few days, and this seems set to continue given that the RBNZ has demonstrated its willingness to take bold steps to adjust policy, and sits in contrast to the action of the Fed which has been more measured. The charts look aligned for further downside action, and if so, look for a drift towards support at 0.6337 (61.8% of 0.6268/0.6450) , below which could head back to 0.6310 (76.4%) and to 0.6300. Further support would arrive at 0.6280/85 (minor) and then at the trend low of 0.6269 (3 Sept low). The weekly/monthly indicators also look heavy and on any move below 0.6270, the next meaningful support is not seen until the September 2015 low at 0.6235, while more distant bids would arrive at the August 2015 low at 0.6125. On the topside, resistance will be seen at 0.6355/60, at 0.6375-80 and then at 0.6400/10 although this now seems unlikely for a while. Above here would allow a move towards 0.6420/25 and on to the trend high of 0.6450. More distant levels to watch would be at 0.6466(38.2% of 0.6789/0.6269) and 0.6498 (9 August high) and possibly towards 0.6530 (50% pivot of 6789/0.6269). Right now, looking to sell any rally to 0.6375 seems to be the plan, with a SL placed above 0.6405. For those not wanting any US$ exposure ahead of Wednesday’s FOMC, buying dips in AudNzd at around 1.0785 (SL @ 1.0740) and looking for a run towards 1.0900/20 may be a plan.