22 May: Forecast: FX: US$/Majors + trade ideas

By | May 22, 2018



EURUSD: 1.1794
EurUsd set a new trend low on Monday, at 1.1716, on the back of the Italian political woes, before turning higher once the US got in, to finish at session highs of 1.1790. It is a light calendar today, but the German Q1 GDP and the Flash PMIs are a risk tomorrow.
1 hour/4 hour indicators: Turning higher Daily Indicators: Down -Becoming Oversold Weekly Indicators:  Turning lower.
Preferred Strategy:   The Euro has bounced form new trend lows, and with the short term momentum indicators now pointing higher, a squeeze to see what lies above 1.1800 would not surprise, where various minor highs lie up to 1.1850, above which would run into Fibo resistance at 1.1865. Further out, with the dailies also hinting at a near term base, we may now be in for a period of choppy, sideways  range trade in coming days with parameters at something like 1.17/1.19.

If wrong, on the downside, there will be minor support back to the 1.1716 trend low, and then 1.1700/10 although I don’t think we are going below there today. Once below 1.1700 though, look for an extension to 1.1670, which will be very strong support, and eventually to the November low at 1.1553.

Buy EurUsd @ 1.1750. SL @ 1.1700, TP @ 1.1850

Resistance Support
1.1865 (23.6% of 1.2475/1.1762) 1.1760 Minor
1.1853 16 May high /200 HMA 1.1740 Minor
1.1836 17 May  high 1.1716 12 Dec low/Session low
1.1821 18 May high 1.1700 (38.2% of 1.0340/1.2555)
1.1793 Session high 1.1670 Monthly cloud base /Weekly cloud top

Economic data highlights will include:

Richmond Fed Mfg Index, API Weekly Crude Oil Stock Inventory

USDJPY: 110.93
US$Jpy reached 111.39 on Monday, but  the dollar then came off its highs and has seen the pair settle at 111.00, but with the overall uptrend still intact.
1 hour/4 hour indicators: Mixed. Turning lower? Daily Indicators: Turning higher Weekly Indicators:  Turning higher
Preferred Strategy:  The short term momentum indicators look rather heavy on Tuesday and a run back towards the week’s opening level at 110.80 would not surprise although with the daily and weekly charts pointing higher, dips look likely to be well underpinned. Below there would see buyers at 110.60, below whish could see a move towards 110.15, where the 200 DMA would provide decent support.

If the dollar does head higher, then above the session high would allow a run back to 111.45/50, above which, several minor highs would see sellers ahead of long term trend resistance at 112.20, which would be tough to break at the first attempt, if we see it..

Buy US$Jpy @ 110.40. SL @ 109.95, TP @ 111.50

Resistance Support
112.20 Descending trend resistance 110.80 Session low
111.86 11 Jan high 110.60 18 May low
111.47 18 Jan high 110.40 Minor
111.39 Session high 110.15 200 DMA
111.25 Minor 110.02/06 16 May low / 17 May  low

Economic data highlights will include:

All Industry Activity Index

GBPUSD: 1.3431
Cable made another 2018 low on Monday, reaching 1.3390, following talk of a snap election in the Sunday Times. A dead-cat bounce has since seen it recover to 1.3430.A heavy UK calendar this week will determine whether the BOE are going to raise rates this year. PSNBR, CBI Distributive Trade Survey – Orders as well as the Inflation Report hearing, featuring most members of the MPC, including BOE Governor Carney
1 hour/4 hour indicators:  Mixed. Daily Indicators: Possible basing formation. Weekly Indicators:  Turning lower
Preferred Strategy:   The short term momentum indicators look heavy but the dailies may be forming a base, so a cautious stance is required, with direction to be decided through the week by the release of some heavy duty data.

On the downside, support will be seen at the trend low at 1.3390, where the major Fibo level at 1.3398 should see decent buying interest again. A break of 1.3390 would allow a run to 1.3300 and possibly to 1.3220, with not a lot to stand in its way, and some soft data could see a move towards that level quite quickly.

If Cable does manage a squeeze higher, near term resistance will again be seen at 1.3450 ahead of the Monday high at 1.3482.  Above here, 1.3500/10 and then 1.3525 will see sellers ahead of the 200 DMA at 1.3550 and to the 15 May high of 1.3571 ahead of 1.3600/10.


Resistance Support
1.3550 200 DMA 1.3398 (38.2% of 1.1822/1.4376)
1.3525 18 May high 1.3390 Session low
1.3510 200 HMA 1.3370 Minor
1.3482 Session high/100 HMA 1.3350 Minor
1.3440 Minor 1.3320 Minor

Economic data highlights will include:

Public Sector Net Borrowing Requirements – Apr, Inflation Report Hearing, CBI Distributive Trade Survey

USDCHF: 0.9965
US$Chf has been choppy and pretty much rangebound on Monday, with EurChf finding some support from easing US-China trade tensions.
1 hour/4 hour indicators: Turning lower. Daily Indicators: Turning lower Weekly Indicators:   Up
Preferred Strategy:  The short term momentum indicators look neutral again today, while the dailies look heavy, suggesting some choppy trade ahead with a possible downside bias, while allowing the daily charts to unwind. The weekly charts still point higher though, so looking to buy dips remains the medium/longer term strategy.

If the dollar does head lower, support will again be seen at 0.9950, ahead of minor levels at 0.9935/15 and the 1 May low of 0.9890. This looks unlikely right now but if wrong, on a break of 0.9890, further bids should arrive at 0.9880, the weekly cloud top, and then at 0.9845/50.

On the topside, 1.0000 will be the first target, which capped further gains on Monday, ahead of 18 May’s high at 1.0014 and then further highs in the 1.0030/40 area. Decent resistance will be seen at the trend high of 1.0055, which looks unlikely to be taken out for a while, but above which would open the way to 1.0065/70, which is a major Fibo level, and to 1.0100. Further out we are potentially looking at a run up to 1.0170 and even to the December 2016 high of 1.0343 albeit probably not for a while to come.

Sidelined – Look to buy dips.

Resistance Support
1.0067 (76.4% of 1.0343/0.9187) 0.9965 Session low
1.0055/56 7 May high /9 May high /11 May high 0.9949 18 May low
1.0041/32 15 May  high /17 May  high 0.9935 2 May low
1.0014 18 May high 0.9890 1 May  low
1.0001 Session high 0.9880 Weekly cloud top

AUDUSD: 0.7586
After dropping to 0.7502 in early Europe, the Aud moved higher in through the rest of the day to finish at the highs of 0.7585, underpinned by the positive talk between the US & China regarding trade deals, boosting risk assets.
1 hour/4 hour indicators: Turning higher Daily Indicators: Turning higher Weekly Indicators:  Turning lower
Preferred Strategy:   With the momentum indicators looking more positive on Monday, a further topside squeeze would not surprise, where  0.7600/05 will see sellers, above which  would allow a run towards 0.7620 and eventually to 0.7660, although this seems unlikely to be visited today. It could be that we now have a reverse head/Shoulder formation, which would eventually have a target of somewhere around 0.7720.

On the downside, support will be seen at 0.7560/70 ahead of minor levels back towards the 0.7500 pivot. Under here, unlikely today, would open the way back toward 0.7485, below here would find minor bids at 0.7470/75 and then at 0.7445. Further out, we could eventually see a return to the 9 May low of 0.7411, an 11 month low and decent buying interest should arrive at 0.7400/10. Below 0.7400 though, there really is not too much to hold it up ahead of Fibo support at 0.7385, the 1 June 2017 low at 0.7371 and the May 2017 low of 0.7328.

Resistance Support
0.7660 (61.8% of 0.7812/0.7411) 0.7565 Minor
0.7640 Minor 0.7540 Minor
0.7620 24 Apr high 0.7515 200 HMA
0.7603 (38.2% of 0.7916/0.7411) 0.7502 Session low
0.7586 Session high 0.7487 18 May low

NZDUSD: 0.6957
 The Kiwi fell to 0.6883 on Monday ahead of a squeeze higher which has seen it close the day at 0.6950, the session high
1 hour/4 hour indicators: Turning higher Daily Indicators:   Possible basing formation. – Turning higher? Weekly Indicators:  Turning lower
Preferred Strategy:   The short term momentum indicators look positive again today and we could see a run towards Fibo resistance at 0.6980, above which opens up a move to 0.7000, 0.7030 and eventually to the next Fibo level at 0.7058.

The initial support will arrive at 0.6920 and again at 0.6900 today. Back below 0.6900 would allow a return to 0.6870 and eventually back to 0.6850. This looks unlikely for a while now, but if wrong, further downside pressure could see a move to 0.6815 and perhaps to 0.6780 although unlikely in the near term. Below that though, there is very little support until 0.6670.

Resistance Support
0.7058 (38.2% of 0.7395/0.6850) 0.6920 200 HMA
0.7030 Minor 0.6900 100 HMA
0.7000 Minor 0.6872 18 May low
0.6978 (23.6% of 0.7395/0.6850) 0.6849 16 May low
0.6950 Session high 0.6828 11 Dec low