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

By | July 26, 2019

The action mainly revolved around the Euro on Thursday following the ECB meeting although at the end of the session it is pretty much where it had started the day. Elsewhere, Stg, Aud$, Jpy and Nzd$ are all under some downside pressure, while the US$ remains firm. A general move out of risk assets on Thursday has sent stocks and the metals a little lower, although not significantly. WTI is flat.

EurUsd:  The Euro had a rocky ride following the ECB meeting, initially making a new 2 year low, while at the same time holding on above 1.1100, before a sharp bounce to 1.1185 and then drifting lower for the rest of the session to finish the day at 1.1145. The 4 hour indicators are turning a little higher but the dailies are building some downside momentum so I suspect we are in for a choppy day, but should be looking for an eventual break of 1.1100. The H/S formation remains intact and as long as we don’t go back above 1.1200, the downside target is now at around 1.1000, and below 1.1100 there is very little support to stop it getting there quite quickly. On the topside, the initial resistance will be at 1.1170 (minor) and 1.1186 (Session high) above which further sellers 1.1200.  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 1.1211 (61.8%) and 1.1240 (100 DMA/76.4%) and then 1.1280/85, where a minor triple top lies, although that is becoming rather distant.  As before, I prefer to be short and to add to the position, with a SL placed tight above 1.1200.

DXY:  (97.80) The DXY reached a high of 97.92 on Thursday and looks to me as though a break of 98.00 may be imminent although 97.80/90 may continue to act as a bit of a hurdle in the short term. , The momentum indicators remain positive though and if/when 98.00 is taken out we could eventually head back towards the trend high at 98.37 (23 May). The HS neckline has been broken and the eventual measured target would be at around 99.25 – a long way off but worth watching.  On the downside, support lies 97.60 (minor) and then at the neckline – at 97.45. 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). As before, I prefer to be long Usd against the Euro, with a SL at the neckline 97.45 (1.1200).

US$Jpy:  rallied sharply after the strong US data and, underpinned by strong US yields, the pair moved quickly from 108.00 to 108.75, before settling near the session highs. Further gains seem possible now, with the momentum indicators aligning higher and if so, look for a squeeze towards the 10 July high of 108.99. Beyond there would open the way towards 109.17 (61.8% of 110.67/106.77) and eventually to 109.74 (76.4%) and 109.92 (30 May high), ahead of 110.00. On the downside, minor support will be seen at 108.30/40 ahead of 107.95/108.00 (200 HMA), below which, bids would arrive at 107.60/65 and at 107.40/45 ahead of the 18 July low of 107.20. Looking to buy dips seems to be the current plan, although if US yields head back down, this will limit the upside for US$Jpy.

AudUsd:  The Aud has moved lower again on Thursday, reaching a low of 0.6941, and currently sitting at 0.6950, under ongoing pressure from the dovish outlook from the RBA yesterday. The hourlies are recovering from becoming oversold and now show a degree of bullish divergence, and may therefore provide some interim support, but the 4hour/daily charts look increasingly heavy  and below 0.6940 would then head towards 0.6925 (61.8% of 0.6831/0.7081/Daily cloud base) and to 0.6910 (10 July low). Below 0.6900/0.6890 (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 0.6970/80 and again at 0.6990/0.7000, above which would allow a return to further levels at 0.7020, 0.7040 and to 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. Right now I remain short and today will look for a target of 0.6950, with a SL above 0.7000.

NzdUsd: The Kiwi has moved sharply lower after breaking the neckline (0.6690) of a head shoulder top and now appears to have a measured target of around 0.6590, as long as we do not go back above 0.6690. Interim support will arrive at   0.6640 (50% of 0.6487/0.6789) and at 0.6625 (Rising trend support). On the topside, a break of the 0.6690 neckline would then allow for a move back towards 0.6718/20 (200 DMA/24 July high), above which the 200 HMA sits at 0.6732 and the 100 HMA is at 0.6742. Selling rallies with a SL above 0.6700 is now the plan.


*Trade of the day: July 26, 2019; 8:21 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 @ 0.6975. SL @ 0.7005, TP @ 0.6900

Sell NzdUsd @ 0.6680. SL @ 0.6705, TP @ 0.6600