23 July: Trend table outlook for FX, Commodities, Indices

By | July 23, 2019

It has been a quiet session on Monday and much the same looks likely for Tuesday, as I suspect we are going to be in consolidation mode now, while waiting on Thursday’s ECB Meeting and then next week’s FOMC decision.

EurUsd: The Euro has had a quiet start to the week, confined to a tight range while waiting on the ECB Meeting on Thursday. EurUsd is currently holding on to the key support at 1.1190/1.1200 level, where the neckline of a head-shoulder formation may be building – which if correct would have a target of around 1.1000.  Ahead of that, if 1.1190/1.1200 is taken out, then we could see a move towards 1.1178 (76.4% of 1.1105/1.1411), which ties in with the 18 June low (1.1181), below which would then open the way to 1.1150 and to strong support at 1.1105/15. On the topside, resistance will be seen at 1.1235/40 (200 HMA), above which 1.1250 (100 DMA), 1.1270 and then 1.1280/85, where a minor triple top now lies, will see sellers – (19/15/11 July highs). Above there would target 1.1300 ahead 1.1320/27 (200 DMA/ 61.8% of 1.1411/1.1192) beyond which could eventually see a run towards 1.1360 (76.4%) 1.1400 and the 25 June high of 1.1411. This is a long way off but a 50 bp rate cut from the Fed could inspire further gains towards the next target at 1.1447 (20 March high), which ties in with the Fibo level (23.6% of 1.2555/1.1106). The momentum indicators do look mostly neutral on Tuesday, so a cautious stance s required, but from a structural perspective, keep a lose eye on the neckline at 1.1190/1.1200. It would take a dovish ECB to take the support out, so until Thursday expect further choppy sideways trade although the momentum indicators are beginning to hint at some downside momentum ahead.

DXY:  (97.30) The DXY is slightly higher on Tuesday, in creeping back above the 100 DMA (97.15).The 4 hour/daily MACDs are turning neutral, so a cautious stance is currently required, and the technical points are mostly unchanged albeit that they do look mildly underpinned. If so, further gains would then allow for a return to 97.45 (16 July high), 97.59 (9 July high) and eventually, to 97.76 (18 June high). Beyond here would then target 98.00 and the trend high at 98.37 (23 May) although that is a long way off. On the downside, back below the 100 DMA would find bids at 97.00 and then at 96.80/73 (200 DMA/12 July low) below which would open the way for a decline towards 96.40 (minor) and 96.00 (200 WMA), below which could see a decline to the 25 June/20 March lows of 95.84/74. This area should be quite strong support, but a break would see a move towards the 10 Jan low at 95.03.

US$Jpy:  saw a high of 108.06 on Monday in Asia although further progress was denied and we are now back at 107.85, with the charts looking rather mixed. I suspect further choppy, sideways trade lies in store and I doubt we move too far from current levels, at least ahead of Thursday’s ECB meeting, when EurJpy may provide some action. In the meantime, nearby support will arrive at 108.60/65 and at 108.40/45 ahead of the 18 July low of 107.20. Back below the Fibo support/107.20 low would allow for a test of 107.00 although I doubt we see that today. If wrong , then below here would then look to 106.77 (25 June low), which should be strong if/when we get there, but  beneath which there is only minor support, at 106.50 and 106.20, ahead of the next Fibo level at 105.98 (76.4% of 104.00/112.40). On the topside, a break of Monday’s high of 108.06 would then allow for a run towards the 16 July high of 108.38, beyond which, further targets would be at 108.50 (minor) ahead of 108.60 (12 July high), 108.85 and at 109.00. Neutral.

AudUsd:  The Aud had a tight Monday range of 0.7030/57 and, with the short term momentum indicators looking a bit heavy, a retest of 0.7000 may now be on the cards although ahead of that, 0.7022/20 (23.6% of 0.6831/0.7081/200HMA) will provide support. Below 0.7000/0.6995 (17 July low), look for further losses towards 0.6985 (38.2% of 0.6831/0.7082), 0.6970 (minor) and 0.6953 and 0.6956 (50%) with more distant downside levels to be found at 0.6930/35 (Daily cloud base), and at 0.6910. Below 0.6900 could open the way for a return to the 18 June low of 0.6830 although that remains a long way off and interim bids would be seen at 0.6880 (76.4% of 0.6831/0.7047) and at 0.6850. On the topside, resistance will be seen at 0.7050/60 ahead of the Friday high of 0.7082, when it pulled up at the base of the weekly cloud and just shy of the 200 DMA at 0.7089. The Aud$ has not closed above the 200 DMA since March 2018 and a break could be quite bullish , so if we do see a run above here, expect 0.7100 stops to be triggered, which could then propel the Aud$ on towards the 55 WMA at 0.7135 and eventually higher. The momentum indicators are mixed, with the short term charts looking heavy, but the longer term indicators still look mildly bullish. Expect a range trade day today within a 0.7000/50 range I suspect, although downside momentum may be growing.

 NzdUsd: The Kiwi made a new trend high on Friday, at 0.6789, and attempted to take this out by trading back up to 0.6786 on Monday, before retreating to 0.6755, where it currently sits. The 4 hour charts look a little heavy, and on the downside we could see a run back towards 0.6740/50 ahead of the Fibo level at 0.6715/18 (200 DMA/23.6% of 0.6487/0.6789) below which would open the way towards 0.6695/6700 and then 0.6675 (38.2% of 0.6487/0.6789). On the topside, resistance will be seen at 0.6785/90 and at 0.6800. Beyond there, unlikely today, look for a run toward s 0.6829 (76.4% of 0.6938/0.6487) and on towards 0.6850. The daily indicators generally still look mildly bullish, but the short term momentum indicators are turning lower, so trading from the short side is mildly preferred today. As I said before, we can probably expect an RBNZ rate cut in August, so the upside may be limited.

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*Trade of the day: July 23, 2019; 8:59 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.

Sell EurUsd @1.1220. SL @ 1.1255, TP @ 1.1160

Buy EurUsd @ 1.1160. SL @ 1.1140, TP @ 1.1235

Sell AudUsd @ 0.7040. SL @ 0.7065, TP @ 0.6970

Buy AudUsd @ 0.6975. SL @ 0.6945, TP @ 0.7040

Sell NzdUsd @ 0.6780. SL @ 0.6805, TP @ 0.6680

Buy Gold @ 1395. SL @ 1375, TP @ 1430