20 Aug: Trend table outlook for FX, Commodities, Indices

By | August 20, 2019

Stock markets had another strong session to start the week, and the US indices do appear to have more in them on the topside although as I said before, we are in a highly volatile period and I would tend to stand aside ahead of the major headlines due later in the week. The longer term charts do look negative though and I remain wary of buying at these levels, and would think that we may now chop around until we begin to see the headlines coming from Jackson Hole on Thursday/Friday.

The FX markets are mixed, but the US$ generally remains firm and the DXY does look positive, suggesting the uptrend could continue although. as elsewhere, ahead of Jackson Hole, I think further choppy trade may be in store. The PMI’s, due Thursday, may provide some directional price action, especially for the Euro, where a weak set of figures from the EU could send EurUsd on its way to 1.1000 but I don’t think we see it down there before then, if at all.

Gold and Silver have both fallen sharply and may have further near term downside momentum, but the weeklies remain positive, so buying dips may be the longer term plan.

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*Trade of the day: August 20, 2019; 7:59 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.

Buy EurUsd @ 1.1050. SL @ 1.1020, TP @ 1.1160

Sell EurUsd @ 1.1115. SL @ 1.1155, TP @ 1.1050

Sell AudUsd @ 0.6800. SL @ 0.6830, TP @ 0.6735

Buy AudUsd @ 0.6730. SL @ 0.6705, TP @ 0.6830

Sell NzdUsd @ 0.6430. SL @ 0.6460, TP @ 0.6380

Sell S+P @ 2945. SL @ 2965, TP @ 2825

Sell Gold @ 1510. SL @ 1520, TP @ 1480

Buy Gold @ 1480. SL @ 1465, TP @ 1520

Other strategies seem to be: –

The US$ is mixed but selling the Euro does still the main theme for me, while the movements in the Jpy and the Chf have indicated an improvement in risk sentiment – for now – and the US$ seems to have some short term positive momentum against both.

The Aud and the Kiwi are consolidating, and may yet squeeze higher although they are currently struggling to do so, but I still prefer to look for levels to sell both currencies against both the US$ and the Jpy. As we said before, keep an eye on AudJpy. All the Jpy/X charts look similar but the monthly chart for AudJpy, below, looks as though a break of 70.00 could see it head an awful lot lower; 66.75 being the next Fibo target (76.4% of 55.06/105.42)  With the Japanese retail market sitting very long, SL selling could escalate if/when we break the neckline.

GbpUsd is chopping around above 1.2000/1.2100 support and it may yet squeeze higher in the near term but it looks to be in increasing trouble in the longer term charts against the US$ and I think is best avoided while the Brexit mess continues.  EurGbp  was choppy on Monday, and while the dailies do point towards further Sterling strength in the sessions ahead, the weeklies still point higher so buying dips may be the plan for those who like to trade the Brexit headlines. Not me!

Gold looks to remain highly volatile and Friday saw a 0.65% reversal to the downside. The longer term charts (weekly/monthly) still have positive bias although the dailies are now looking increasingly toppish, so, as with yesterday, either trading from the short side for the next 24 hours, or waiting to buy the dips for a structural move higher over time, seems to be the current plan.

EurUsd:   The Euro chopped around either side of 1.1100 on Monday but ended at session lows but above Friday’s low of 1.1065.  The 4 hour/daily momentum indicators still look heavy, so a run towards 1.1065 and to 1.1050 and an eventual return to the trend low of 1.1025 ahead of the 1.1000 H/S target would not really surprise. Further out, if/when we get below 1.1000, there is good trend support at 1.0965 – at which point I would square up any short Euro positions and take a nimble stance. On the topside, with the hourly charts now turning a little higher we could see another squeeze back above 1.1100 and to the session high of 1.1112, above which would open the way to Fibo resistance at 1.1135 (38.2% of 1.1249/1.1065)  and again at 1.1157 (50%). I doubt that we head above here today, but if wrong look for further offers to arrive at 1.1175 (200 HMA) ahead of 1.1200. Beyond there, the neckline of the HS formation remains at 1.1215, while the 100 DMA (1.1220) has repeatedly stood in the way of further progress and will remain an obstacle if/when we get back there. The resistance at 1.1215/1.1230 is very strong now, but above which would open the way to 1.1250 ahead of 1.1264 (61.8% of 1.1411/1.1025), 1.1300 (200DMA) and 1.1320 (61.8%). I still prefer to sell Euro rallies as I think that 1.1000 and lower will be seen at some stage down the track. Use 1.1135/1.1050 as a guide today.

 DXY:  (98.36) The DXY ended Monday at 98.36 and looks underpinned at the start of Tuesday trade, with the daily MACDs again crossing higher, albeit without too much momentum behind them. The weeklies are flat though and while I think we may have further mild upside momentum ahead of us, the overall outlook remains for some choppy price action, which may well be the case ahead of Jackson Hole, at the end of the week. Minor resistance now sits right ahead, at 98.40/50 above which would open the way to 98.70 (minor) and then to the trend top at 98.93. Further out, if 98.90/99.00 can be taken out, which looks unlikely for a while, we could see the measured, reverse H/S target at around 99.25 (EurUsd: 1.1000).On the downside, support will now be seen at 98.13 (Session low), at 98.00, at 97.70 (minor) and then at 97.36 (100 DMA) ahead of a possible return to the 9 August low at 97.03. Below 97.00 would find further support at the 200 DMA at 96.93, albeit not today.

US$Jpy:  traded within a 40 point range above 106.00 on Monday but finished towards the day’s high of 106.68 and looks mildly firmer heading into Tuesday. The hourly momentum indicators are in neutral but the 4 hour/dailies appear to be trying to turn higher, so further gains would target 106.76 (15 Aug high) and then the 13 Aug high of 106.97. Above 107.00 would open the way to 107.17 (50% pivot of 109.30/105.05) and to 107.67 (61.8%) ahead of 108.00 and even 108.30 (76.4) albeit unlikely in the near term. On the downside, support will today be seen at 106.25 (100 HMA) and at 106.00 (200 HMA), but below which would allow a move back towards 105.65 (14 Aug low) and then to 105.06 (13 Aug low).As we said before, beneath 105.00 there is little support ahead of the January flash-crash low (104.01) although that all looks pretty safe today. On the topside, minor resistance will be seen at 106.50. A neutral stance is required again today and direction will come from headlines on Monetary Policy  and on associated risk appetite but we probably chop around here until Thursday/Friday.

AudUsd:  The Aud$ stuck to a 25 point range on Monday but closed near the lows and leaves the outlook unchanged. The short term momentum indicators are in neutral, and another sideways session may lie ahead although the RBA Minutes are due this morning and may provide something directional, with a dovish outlook likely to keep the pressure on the downside for the Aud$. The inability of the Aud$ to recover in line with the rally in stocks and the improvement in risk sentiment is a worry, but the dailies have now become oversold and may be trying to turn higher, so a squeeze towards 0.6800 should not be ruled out. I doubt we head much above here today but if wrong, further offers would arrive at 0.6820, the minor trend high, above which there is Fibo resistance at 0.6830 (38.2% of 0.7081/0.6675) ahead of 0.6878 (50%), 0.6900 and then at 0.6926 (61.8%). Bids will continue to arrive nearby at 0.6750/60 (minor), at 0.6735 (14 Aug low), at 0.6715/20, ahead of 0.6700 and then at 0.6675. Further out, below 0.6675, there is minor support at 0.6660, but under there would open the way to 0.6500 and, further out, the next major Fibo level is not seen until 0.6250 (76.4% of 0.4773 (April 2001)/1.1082 (July 2011)).

 NzdUsd: looks heavy in early Tuesday trade but is so far holding on above support at 0.6400 and there is no change in the outlook. The daily/weekly charts are heavy so I prefer the downside in the medium term, and a break of 0.6400 would then open the way to 0.6375 trend low, seen after the aggressive RBNZ rate cut on 7 August. If/when we break below 0.6375, the next meaningful support is seen at the January 2016 low at 0.6347 and then at the September 2015 low at 0.6235, below which opens the way to the August 2015 low at 0.6125.On the topside, resistance will now be seen at 0.6420, 0.6440/50, at 0.6468/75 (14 Aug high/23.6% of 0.6789/0.6375), and again at 0.6498/0.6500 (9 Aug high). Above here would open the way to 0.6520 and to 0.6532 (38.2% of 0.6789/0.6375) although not today. In the meantime, selling rallies remains the plan.