24 Oct: Forecast: FX: US$/Majors + trade ideas

By | October 24, 2017


EURUSD: 1.1748
Preferred Strategy:    EurUsd is heavy but remains within the middle of the day’s range (1.1725/75) and more of the same seems possible today although the PMIs could produce something directional. Otherwise traders will likely wait for Thursday’s ECB Meeting for guidance, with Mario Draghi’s press conference likely to be the main focus of the week, when we discover the level of tapering to be undertaken by the ECB over the next few months. Technically, the Head/Shoulder formation still seems to be under construction, with the neckline at 1.1880.  This level ties in with the major descending trend resistance and should see good selling interest if we get there. The dailies are pretty flat but the 4 hour momentum indicators have a dovish tilt and if we break the good support at 1.1720/30 we could then test 1.1700 and the stronger level at 1.1660/70. On the topside, today will find offers at the session high (1.1775) and at 1.1800 although I am not sure that we manage to get up there again in the short term. In the bigger picture, as long as we stay under 1.1880 I am happy to stay short Euros, with the need to keep a tight SL in place above 1.1910. The H/S objective is at around 1.1250. Sell EurUsd @ 1.1820. SL @ 1.1890, TP @ 1.1700.
24 Hour: Prefer to sell rallies Medium Term: Mildly Bearish
Resistance Support
1.1857 20 Oct high 1.1725 Session low /Daily cloud base
1.1825 Minor 1.1720 (76.4% of 1.1668/1.1880)
1.1800 200 HMA 1.1700 Minor
1.1777 Session high 1.1668 6 Oct low
1.1760 Minor 1.1661 17 Aug low

Economic data highlights will include:

EU/US Flash PMIs, Richmond Fed Mfg Index, API Weekly Crude Oil Stock Inventory

USDJPY: 113.42
Preferred Strategy: US$Jpy made it up to 114.09 on the back of the election result but it has been unable to maintain those gains and is falling to new lows into the NY close, currently at 113.25. With both the 1 & 4 hour charts looking heavy, it looks as though we may be in for further downside action and a test of 113.00 could be on the cards, below which would see us back in the previous 112/113 range. Minor support should arrive at 113.20/00 below which 112.80 and Friday’s low of 112.50 should provide decent backup. Below there, the 19 Oct low at 112.30, and the 18 Oct low at 112.12 would attract. On the topside, resistance will be seen at 113.75/85 ahead of the session high of 114.09. I don’t see it up here today, but above there, there is not too much to stop the dollar heading towards 114.50. The daily momentum indicators look mildly positive, so looking for levels to buy the dollar again seems to be the plan but the market is short of Yen and so caution is warranted as any need for safe haven demand could see some very quick and painful dips. Buy US$Jpy @ 112.85. SL @ 112.45, TP @ 114.40.
24 Hour: Mildly Bearish Medium Term: Prefer to buy dips
                                         Resistance Support
114.85 Minor 113.51 Session low
114.49 11 July high 113.20 Minor
114.20 Minor 113.00 Minor
114.09 Session high 112.80 Minor
113.80 Minor 112.50 20 Oct low /Rising trend support

Economic data highlights will include:

Nikkei Mfg Flash PMI

GBPUSD: 1.3199
Preferred Strategy: Cable remains firm on Tuesday, squeezing up to 1.3225 during the session and remaining underpinned at 1.3200 in to the NY close. A move above the session high would take out the minor descending trend resistance and could lead Cable up towards 1.3280 and potentially back to the mid October high of 1.3337, and with the short term momentum indicators looking constructive I suspect that this may be the likely direction. If wrong, support will be seen at 1.3160 and at 1.3130 ahead of 1.3100. While not getting overexcited for further positive momentum, I prefer to trade from the long side, looking to buy dips, hoping for a move back to 1.3300. Buy GbpUsd @ 1.3160. SL @ 1.1.3110, TP @ 1.3280.
24 Hour: Prefer to buy dips Medium Term: Neutral
Resistance Support
1.3350 Minor 1.3175 Minor
1.3337 14 Oct high/100 WMA 1.3157 Session low
1.3311 16 Oct high 1.3130 Minor
1.3286 17 Oct high 1.3087 20 Oct low
1.3226 Session high/Descending trend resistance 1.3075 Minor

USDCHF: 0.9849
Preferred Strategy:  US$Chf headed up to the strong resistance at 0.9880 on Monday but has come back to sit close the 100 WMA which may continue to act as a pivot today given the mixed look of the momentum indicators. Although the dailies look positive, the short term momentum indicators seem a little heavy so a range trade day may be on the card although overall I prefer to be long dollars, and a move above 0.9880 would see little to stop a run to 0.9940. On the downside, support will be seen at 0.9830 (Session low) and 0.9815 (200 DMA) a break of which would take us back into the area of prolonged consolidation. Staying long and buying dips is preferred. Buy US$Chf @ 0.9820. SL @ 0.9975, TP @ 0.9940.
24 Hour: Prefer to buy dips Medium Term: Mildly Bullish
Resistance Support
0.9940 (76.4% of 1.0343/0.9420) 0.9830 Session low
0.9920 Minor 0.9815 200 DMA
0.9900 Minor 0.9785 Minor
0.9880 (50% pivot of 1.0343/0.9420)/Session high 0.9767 200 HMA
0.9845 100 WMA 0.9753 20 Oct low/Rising trend support

AUDUSD: 0.7805
Preferred Strategy:   The Aud remains heavy at the start of the week, trading down to 0.7795 before settling at 0.7800 into the NY close. The 4 hour charts are heavy and the dailies seem to be increasingly turning lower and a test of the support at 0.7770 and seems possible at some stage, below which would  target the early October low at 0.7732. On the topside, resistance will be seen at 0.7820, above which could squeeze towards the session high at 0.7833 and then to 0.7850 although this looks rather doubtful.  Sell AudUsd @ 0.7830. SL @ 0.7860, TP @ 0.7735.
24 Hour: Prefer to sell rallies Medium Term: Mildly Bearish
Resistance Support
0.7889 16 Oct high 0.7795 Session low
0.7881 20 Oct high 0.7785 Minor
0.7855 Minor 0.7770 11 Oct low
0.7833 Session high 0.7750 Minor
0.7820 100 DMA 0.7732  6 Oct low

NZDUSD: 0.6965
Preferred Strategy:   The Kiwi made new trend lows today, at 0.6931, but has since seen a mild bounce, and with the 4 hour charts turning a little higher we could be in for a bit more of a short squeeze. The dailies remain negative and as before, selling rallies towards/above 0.7000 seems to be the plan. On the downside, a move back below 0.6930 would target 0.6900 and eventually the 0.6817 May 2017 low.
24 Hour: Prefer to sell rallies Medium Term: Bearish
Resistance Support
0.7050 Minor 0.6931 Session low
0.7035 (38.2% of 0.7210/0.6931) 0.6920 Minor
0.7015 Minor 0.6900 Minor
0.6996 (23.6% of 0.7210/0.6931) 0.6880 Minor
0.6989 Session high 0.6850 Minor