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

By | August 22, 2019

Stock markets rebounded from the selloff seen on Tuesday, but they, along with all other products, remain within the previously defined ranges as traders began to square up ahead of Jackson Hole. The FX markets have done very little and the outlook is unchanged from yesterday’s update. The same applies to the commodities.

Ahead of any headlines from Jackson Hole, I think further choppy trade may be in store although the PMI’s may provide some directional price action today, especially for the Euro. A weak set of EU PMIs could send EurUsd on its way towards 1.1000 but I don’t think we see it down there before then, if at all.

Overall, a neutral stance is currently required, although I still prefer the US$ over the other majors, given the relative strength of the various economies, while I suspect stocks are set to remain choppy, and will run into icreasing headwinds if/when we approach 3000 in the S+P, 26700 in the DJI.

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*Trade of the day: August 22, 2019; 8:18 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.

Generally I am neutral today ahead of Jackson Hole, but a couple of outlying orders might be:

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

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

Sell S+P @ 2975. SL @ 3005, TP @ 2875

EurUsd:   The Euro once again chopped around either side of 1.1100 on Wednesday, ending towards the lows of 1.1078 as the US$ strengthened a little after the FOMC Minutes. While the daily momentum indicators still look heavy, the short term momentum indicators are in neutral, and further sideways trade seems likely although there may be something more directional once the PMIs are released. As before, 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, 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 1.1175/85 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 1.1115/1.1025 as a guide today.

US$Jpy:  traded a little higher after the FOMC Minutes but remains within the recent range and below the Wednesday high of 106.68 after rising from the low of 106.15.   The short term momentum indicators look neutral today, but the dailies appear to be trying to turn higher, so if the dollar can recover, then above 106.65/70, further gains would lie nearby, at 106.76 (15 Aug high) and then at 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 106.20 (minor) and at 106.10 (200 HMA), but below 106.00 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 Wednesday, closing at familiar territory at 0.6780 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 major data although the CBA PMIs may create some waves.  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. As before, 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 (Wednesday 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 Thursday trade but continues to hold on above support at 0.6400 (Session low 0.6394), 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 sustained 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 (Wednesday high), 0.6445/50, 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.