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

By | August 21, 2019

Stock markets had a bit of a pullback on Tuesday, after 3 days of good gains, as traders began to square up ahead of Jackson Hole, and the short term momentum indicators suggest further mild downside momentum ahead.

The FX markets are mixed, and the US$ is generally slightly lower while the DXY is looking a little more neutral today. Ahead of Jackson Hole, I think further choppy trade may be in store although the PMI’s, Thursday, may provide some directional price action, especially for the Euro. A weak set of EU PMIs could send EurUsd on its way to 1.1000 but I don’t think we see it down there before then, if at all. Sterling looks a bit better bid, both against the US$ and on the crosses, but it is so choppy that it is not really worth being involved.

Gold and Silver have both regained the losses of the previous session and may continue to chop around near current levels, but the weeklies remain positive, so buying dips may be the plan.

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*Trade of the day: August 20, 2019; 8:28 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 @ 1.1070. SL @ 1.1040, TP @ 1.1160

Sell EurUsd @ 1.1150. SL @ 1.1185, TP @ 1.1050

Sell AudUsd @ 0.6810. SL @ 0.6835, TP @ 0.6735

Buy AudUsd @ 0.6740. SL @ 0.6705, TP @ 0.6830

Sell NzdUsd @ 0.6440. SL @ 0.6460, TP @ 0.6380

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

Buy Gold @ 1495. SL @ 1475, TP @ 1530

Other strategies seem to be: –

The US$ is mixed but selling the Euro into rallies does still the main theme for me, although right now, at these levels that may be premature.

The Jpy and the Chf have returned to a more cautious risk outlook following the stock market falls and in the short term the dollar looks a little heavy still against both.

The Aud and the Kiwi are consolidating, and may yet squeeze higher although they are currently struggling to do so, although in the cross, AudNzd looks slightly better bid in the medium term and may be worth a buy on dips. 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 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.

Gold remains volatile, and Tuesday saw a 0.75% bounce from the 1492 lows of the session. The longer term charts still suggest higher levels down the track.

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EurUsd:   The Euro once again chopped around either side of 1.1100 on Tuesday, where it currently sits after a range of 1.1065/1.1105. While the daily momentum indicators still look heavy, the short term momentum indicators appear a bit more positive and a minor topside squeeze would not now surprise although I don’t think we are going anywhere too far from current levels. If the dailies prove correct, then we could see a return to 1.1065 ahead of 1.1050 and an eventual return to the trend low of 1.1025 ahead of the 1.1000 H/S target, albeit we may need to wait until the end of the week for enough volatility to get us there. 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/4 hourly charts now turning a little higher we could see another squeeze back above 1.1100/10, towards the Fibo resistance at 1.1135 (38.2% of 1.1249/1.1065, and then towards 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 1.1140/1.1065 as a guide today.

US$Jpy:  traded lower on Tuesday as risk aversion took hold, falling from the days high of 106.68 to a low of 106.15  but did not test the 106.00 support  The short term momentum indicators look heavy today, but the dailies appear to be trying to turn higher, so if the dollar can recover, then above the session high, 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 106.15 (minor) 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. A neutral stance is required again today and direction will come from political headlines and on associated risk appetite but we probably chop around here until Thursday/Friday.

AudUsd:  The Aud$ was once again stuck in a tight range on Tuesday, closing at familiar territory at 0.6775 and leaves the outlook unchanged. The short term momentum indicators are in neutral, and another sideways session may lie ahead in the absence of any data.  The inability of the Aud$ to recover in line with the recent rally in stocks is a worry, but the dailies have now become oversold and may be trying to turn higher, so a squeeze back 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 (Session low: 0.6753), 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: once again  looks heavy in early Wednesday  trade but continues to hold 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 0.6428 (Session high), 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.