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

By | July 25, 2019

There is a fair bit of blue on the heat map today, highlighting the indecision in the markets although I still like the US$ given the positive look of the DXY, but it will be the report from the ECB later today that largely decides the next direction. Sterling is also looking a little more positive right now and, although I am short EurGbp at a decent level, – with a SL at breakeven –   I am generally avoiding it because of Brexit.  On the crosses, EurChf looks particularly heavy, although trading this is tricky as we are approaching levels at which the Swiss national Bank could intervene, while AudNzd seems to be slowly approaching parity. I don’t really see why, as neither economy looks great, but the charts look heavy.

EurUsd: The Euro has had another tough session after breaking below the H/S neckline at 1.1200 on Tuesday, heading down to a low of 1.1125 on Wednesday and ending the day near the lows ahead of today’s ECB Meeting, at which the chances of a rate cut seem to be growing. 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 1.1125, the initial support is at 1.1105/15, which will be strong, but if 1.1100 gives way there is not a lot to stop the Euro heading quickly towards the 1.1000 target. A dovish ECB could well be the catalyst to help it on its way, particularly after the soft PMIs yesterday, which could encourage the ECB to cut rates today. On the topside, the initial resistance will be at 1.1155/60 (Session high/23.6% of 1.1282/1.1125), above which, sellers will arrive at 1.1185 (38.2%) and 1.1200 (50%).  This level will be critical; If 1.1200 gets taken out again, the H/S formation will be invalid and could see an aggressive move higher and would open 1.1222 (61.8%) and 1.1245 (100 DMA/76.4%) 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:  (97.68) The DXY is unchanged on Thursday, and having briefly taken out the resistance at 97.76 (18 June high), by reaching 97.81, it then closed a little lower, at 97.70. 97.80 will continue to act as a bit of a hurdle, but the momentum indicators remain positive and I suspect it will be taken out later today, looking for a move to 98.00 and eventually to 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 lies at the neckline – at 97.45, and back below the 100 DMA, at 97.18, 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). I prefer to be long Usd against the Euro, with a SL at the neckline 97.45 (1.1200).

US$Jpy:  is unchanged on Thursday after a tight 30 point range, leaving the outlook unchanged, and with the momentum indicators looking neutral, further choppy sideways action seems likely. On the topside, further gains, beyond 108.27, would look for a run towards the 16 July high of 108.38, with further targets being at 108.55/60 ((76.4% of 108.98/107.21/12 July high), 108.85 and 109.00. On the downside, support will be seen at 107.95/108.00 (200 HMA/100HMA), below which, bids would arrive at 107.60/65 and at 107.40/45 ahead of the 18 July low of 107.20. I remain neutral on US$Jpy.

AudUsd:  The Aud has moved lower on Wednesday, breaking the strong support at 0.6995/0.7000 and heading down to 0.6971 (Session low). The hourlies are now recovering from having become oversold, and may provide some interim support but the 4hour/daily charts look heavy,  and below 0.6970 would look to 0.6962/55 (rising trend support/50% of 0.6831/0.7082), a break of which would then head towards 0.6925 (61.8%/Daily cloud base), and 0.6900. Below 0.6890(76.4%) could open the way for a return to the 18 June low of 0.6830 although that remains a long way off. On the topside, minor resistance will now be seen at 0.6990/0.7000, above which would allow a return to further levels 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. Further out, the longer term momentum indicators are mixed, with the medium term charts looking heavy, but the 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. Right now I remain short and today will look for a target of 0.6950, possibly 0.6925, with a SL above 0.7000.

 NzdUsd: The Kiwi has stabalised near 0.6700 following the sharp fall of the previous session. The charts are inconclusive but I prefer to remain short looking for a move towards 0.6600. Levels of support are currently at 0.6690 (Session low), a break of which would open the way to 0.6675 (38.2% of 0.6487/0.6789), 0.6640 (50%) and at 0.6625 (Rising trend support). On the topside, resistance will be seen at 0.6718/20 (200 DMA/Session high), above which the 200 HMA sits at 0.6732 and the 100 HMA is at 0.6742. Selling rallies with a SL above 0.6750 is the plan.

On the crosses, EurGbp did as we expected yesterday and headed lower, to 0.8905, ahead of a mild recovery to currently sit at 0.8926. The 4 hour/daily charts look increasingly heavy so I think staying short is the best plan, looking for a break below 0.8900, targeting minor support at 0.8875 and then heading towards 0.8835 (38.2% of 0.8489/0.9050). On the topside, resistance will be seen at 0.8955/60 and then at 0.9000. Staying short and adding to the position at 0.8950, with a SL at 0.8885, or preferably at 0.9010 seems to be the plan.


*Trade of the day: July 25, 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.

Sell EurUsd @1.1180. SL @ 1.1215, TP @ 1.1080

Sell AudUsd @ 0.6995. SL @ 0.7025, TP @ 0.6925

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

Sell EurGbp @ 0.8950. SL @9010, TP @ 0.8840