28 Aug: Trend table outlook for FX, Commodities, Indices

By | August 28, 2019

The FX markets have been mostly steady on Tuesday although Sterling squeezed higher and looks as though it may have further upside ahead of it, as per the momentum indicators on the daily EurGbp and Gbp Aud charts below.

The main interest of the day was in the metals, where Silver made a new 2 year high ad both Silver and Gold still appear to have plenty of upside potential ahead of them.

Stocks were slightly lower and seem set to stay volatile. I prefer to sell rallies still.


*Trade of the day: August 28, 2019; 8:27 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 @ 1.1115. SL @ 1.1185, TP @ 1.1075

Buy EurUsd @ 1.1040. SL @ 1.1015, TP @ 1.1140

Sell AudUsd @ 0.6790. SL @ 0.6820, TP @ 0.6705

Buy AudUsd @ 0.6720. SL @ 0.6695, TP @ 0.6800

Sell NzdUsd @ 0.6385. SL @ 0.6415, TP @ 0.6345

Sell S+P @ 2890. SL @ 2915, TP @ 2805

Buy Gold @ 1515. SL @ 1490, TP @ 1555

Other strategies seem to be: –

As above, Gold and Silver look strong and seem to have further upside ahead, although note, as per the weekly Silver chart, below, it is reaching strong Fibo resistance which may provide an interim barrier.

I still like to be short AudUsd and the Aud/Xs, particularly AudJpy and, as we have been saying, it looks as though it could head towards 70.00, which it briefly did reach on Monday, ahead of the sharp recovery to 72.00. Another run lower would not surprise in the medium term,  below which could see the cross move an awful lot lower very quickly, where 66.75 is the next Fibo target (76.4% of 55.06/105.42). The HS neckline is not so far away so keep an eye out for a break, which could take the cross sharply lower.

Keep an eye on GbpAud which I think is a buy on dips, albeit that the price action is very choppy. As we said before, look to buy declines towards 1.8000 (Tuesday saw a run down to 1.8025, ahead of another run higher to currently sit at 1.8200) with a SL placed at 1.7800 (or preferably 1.7700), but looking for a strong run higher. Much depends on Brexit here so it is going to be volatile but I think that we are eventually heading back towards 2.0000 so it could be a decent play. The cross finished above the 100 DMA and the 200 DMA for the first time since mid May, while at the same time moving sharply above the 100 WMA/200 WMA, which are crossing at 1.7895.

Also below is a daily EurGbp chart, where further downside momentum (ie Sterling strength, looks possible) .

EurUsd:   had a tight session (1.1115/1.1085) and the technical levels remain largely intact. On the topside, back above 1.1115, the first target is once again seen at around 1.1150/60 (50% of 1.1249/1.1052// Session high; 1.1162), beyond which, look for further offers to arrive at 1.1175(61.8%) ahead of 1.1200 (76.4%). Above here, the 100 DMA and the neckline of the HS formation remains at 1.1210/15, which repeatedly stood in the way of further progress 2 weeks ago and will remain an obstacle if/when we get back there. The resistance at 1.1215/1.1230 is very strong, but above which would open the way to 1.1250 ahead of 1.1264 (61.8% of 1.1411/1.1025), 1.1283 (200DMA) and 1.1320 (61.8%). On the downside the 200HMA/100 HMA are sitting at 1.1100 and will act as a bit of a magnate, but below 1.1085, we could then see a return to 1.1065 ahead of 1.1050. This could well hold today given that there is very little economic data on the calendar, but I suspect that we could see an eventual return to the trend low of 1.1025 (31 July low), ahead of the 1.1000 H/S target. Further out, if/when we get below 1.1000, there is good trend support at 1.0965 – at which point I would square up any short Euro positions and take a nimble stance. Use 1.1150/1.1050 as a guide today,.

US$Jpy:  fell back below 106.00 on Tuesday in what was a choppy session, but with the Jpy in demand on some safe haven buying because of the weakness in the CNH. The momentum indicators are now in neutral so a continuation of the choppy conditions seems likely, with traders likely to take their guide from the PBOC Fix in the CNY and on the price action in the CNH. On the downside, support will today be seen at 105.50, at 105.15 and at 105.00 (all minor). Beneath 105.00 there would again be little support ahead of Monday’s 104.44 low and then the January flash-crash low (104.01). On the topside, resistance will be seen at 106.00/05 ahead of the 200 HMA at 106.25 and then the Monday high at 106.41. Further offers will be seen at 106.70/76 (23/15 Aug highs), and then at the 13 Aug high of 106.97. Above 107.00 would open the way to 107.26 (2 Aug high) and to 107.45 (61.8% of 109.31/104.44) ahead of 108.00 and even 108.15 (76.4) albeit unlikely in the near term.

AudUsd:  The Aud$ has traded sideways/lower on Tuesday in a tight range but looks heavy heading into Wednesday trade. If so, on the downside, support will be seen nearby at 0.6745/50 and then at 0.6735 (23/14 Aug lows), below which would open the way back to 0.6700 and to 0.6688 – the Monday low, which comes ahead of 0.6675 (7 Aug low). Further out, below 0.6675, there is minor support at 0.6660, but under there would open the way to 0.6500 and, further out, the next major Fibo level is not seen until 0.6250 (76.4% of 0.4773 (April 2001)/1.1082 (July 2011)). On the topside, resistance will be seen at 0.6775/80 ahead of a possible run back towards 0.6800 although this looks unlikely. I doubt we see it back at 0.6800 today but if wrong, further offers would arrive at 0.6820, the minor trend high (8 Aug) and then at the Fibo resistance at 0.6830 (38.2% of 0.7081/0.6675) ahead of 0.6878 (50%), 0.6900 and then at 0.6926 (61.8%). We are probably looking at a range bound session, and 0.6735/0.6790 may well cover it. Note that the dailies still look constructive as they recover from having become oversold, so a rally is still possible but it is a worry that the Aud$ still looks heavy and overall I think that levels sub 0.6700 are still more likely in the medium term.

NzdUsd: As with the Aud$, the Kiwi looks heavy in early Wednesday trade and this being the case, the immediate support should arrive at the session low of 0.6356 ahead of 0.6340 (Monday low), which briefly took out the January 2016 low at 0.6347 and should therefore be very strong support if/when we see it again. As per the weekly chart below, once below 0.6340, it may be a quick trip to 0.6300, below which the next meaningful support is seen at the September 2015 low at 0.6235, while more distant bids would arrive at the August 2015 low at 0.6125. Resistance will now arrive at 0.6380, at 0.6400/05, (Friday high/200 HMA) and then at 0.6428 (20 Aug high), 0.6445(23.6% of 0.6789/0.6340), at 0.6460 (minor), 0.6475 (12 Aug high), and again at 0.6498/0.6500 (9 Aug high). Above here would open the way to 0.6512 (38.2% of 0.6789/0.6340) although not today. The longer term charts are heavy though, so I still prefer the downside from a structural perspective.


















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