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

By | July 24, 2019

Tuesday has seen a higher US dollar, with a good chance of further gains ahead judging by the charts, with the DXY and Euro both having broken head shoulder necklines. On the crosses, keep an eye on Sterling, which seems to be attempting to build a base. in particular, EurGbp looks toppish to me and could see a move lower if Sterling does find some confidence, despite Brexit/Boris etc. Elsewhere, stocks were higher again and seem to be underpinned, at least in the near term, so further gains could be seen there as well. The ASX looks strong on all time frames and will remain underpinned by the prospect of lower Australian rates. If the dollar does head higher, then Gold will remain under pressure. Gold has been rather volatile recently and the large unwinding of the Gold/Silver cross has been partly responsible for this, and it looks set to continue. Selling Gold rallies is preferred. WTI looks underpinned today, and another drawdown in the EIA Crude Oil Stocks Weekly Change later on the coming session would most likely propel oil higher.

EurUsd:  The Euro has had a tough session in breaking below the H/S neckline at 1.1200, heading down to a low of 1.1144 and ending the day near the lows. The short term momentum indicators are oversold so some corrective price action may follow, but as long as we don’t go back above 1.1200, the downside target is now at around 1.1000. Below 1.1140, the initial support is at 1.1105/15, which will be strong, but once 1.1100 gives way there is not an  lot to stop the Euro heading towards the 1.1000 target. Either some weak EU PMIs or a very dovish ECB are probably going t be required in order to add momentum to the downside. On the topside, 1.1200 will be critical. If that gets taken out again, the H/S formation will be invalid and could see an aggressive move higher. Ahead of that the initial resistance will be seen at 1.1180 (23.6% of 1.1281/1.1144) ahead of 1.1197 (38.2%). Beyond 1.1200, would open 1.1230 (61.8%) and 1.1250 (100 DMA) and then 1.1280/85, where a minor triple top lies, although that is becoming rather distant.  I prefer to be short and to add to the position, with a SL placed tight above 1.1200.

DXY:  (97.30) The DXY is higher again on Wednesday, and having taken out a couple of minor resistance levels, it is now approaching 97.76 (18 June high). This may act as a bit of a hurdle, but the momentum indicators are looking positive and I suspect it will be taken out, looking for an eventually move to 98.00 and the trend high at 98.37 (23 May). The HS neckline has been broken and the eventual target would be at around 99.25 – a long way off but worth watching.  On the downside, support now lies at the neckline – at 97.45, and back below the 100 DMA, at 97.15, 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).

US$Jpy:  ground steadily higher on Tuesday in reaching 108.27 before closing at 108.20. The momentum indicators are very mildly positive, and further gains would look for a run towards the 16 July high of 108.38, beyond which, further targets would be at 108.50 (minor) ahead of 108.55/60 ((76.4% of 108.98/107.21/12 July high), 108.85 and 109.00. On the topside, resistance will be seen at 108.00 (200 HMA) ahead of 107.85 (100 HMA). Below there bids would arrive at 108.60/65 and at 108.40/45 ahead of the 18 July low of 107.20. I remain neutral on US$Jpy although the charts do seem to be pointing mildly higher.

AudUsd:  The Aud has moved lower on Tuesday, reaching the strong support at 0.6995 which currently remains intact.  Below 0.7000/0.6995 (Session/17 July low), look for further support at 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 now be seen at 0.7020,  0.7040 and at 0.7055/60 ahead of the 18 July 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/medium term charts looking heavy, but the longer term, weekly, indicators still look mildly bullish, so while I remain bearish in the short term, it could still be that we are building a base for an eventual move higher.. Expect a range trade day today within a 0.6985/0.7025 range I suspect, although downside momentum may be growing, so I prefer to be short.

 NzdUsd: The Kiwi turned aggressively lower after the RBNZ announcement yesterday on monetary policy in falling from a high of 0.6758 to a low of 0.6695, closing the day near the lows. The short/medium term momentum indicators point to further losses although the hourlies hint at the chance of a mild correction higher after having become oversold. If so, the 200 DMA at 0.6718 will be the initial hurdle, above which the 200 HMA sits at 0.6730 and the 100 HMA is at 0.6750. On the downside, support will be seen at 0.6695, a break of which would open the way to 0.6675 (38.2% of 0.6487/0.6789). Selling rallies with a SL above 0.6750 is the plan.

On the crosses, EurGbp is beginning to look toppish, so selling current levels, with a SL placed above 0.9020 is the plan. Both the 4 hour/daily charts look heavy and a move towards 0.8917 (23.6% of 0.8489/0.9050) and then to 0.8835 (38.2% of 0.8489/0.9050) could be on the cards. This trade comes with a Brexit health warning and may be best avoided, but the charts do suggest some Sterling strength ahead.

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*Trade of the day: July 24, 2019; 8:33 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 @1.1180. SL @ 1.1215, TP @ 1.1080

Sell AudUsd @ 0.7020. SL @ 0.7055, TP @ 0.6970

Sell NzdUsd @ 0.6720. SL @ 0.6755, TP @ 0.6650

Sell EurGbp @ 0.8965. SL @9025, TP @ 0.8840