28 Nov: Forecast: FX: US$/Majors + trade ideas

By | November 28, 2017


EURUSD: 1.1898
EurUsd has sharply reversed from the 1.1960 session highs, currently sitting near the low of 1.1895, and from the look of the short term momentum indicators it maybe that we are headed for a further test of the downside. The daily techs are also warning the Euro longs, with an inverted hammer formation hinting at lower levels ahead.

If so, on the downside, minor support will be seen right here, but below which could head back to 1.1875 where the daily cloud top will attract buyers. below that would open the way to 1.1850 and possibly towards 1.1800 although I would be surprised to see it back down there today.

On the topside, resistance will be seen at  the session high, if we get there, above which would see little resistance until 1.2000. Beyond this would open the way to 1.2030/50 and even on towards the 8 Sept low at 1.2096.

Preferred Strategy:  For Tuesday, I prefer to look to sell into rallies towards 1.1940, but with a tight SL placed above 1.1960.

Sell EurUsd @ 1.1940. SL @ 1.1970, TP @ 1.1850

24 Hour: Neutral –Prefer to sell rallies Medium Term: Neutral
FX Charts Position: Short
Resistance Support
1.2033 20 Sept high 1.1897 Session low
1.2004 22 Sept high 1.1875 Daily cloud top
1.1980 Minor 1.1852 (23.6% of 1.1553/1.1943)
1.1960/64 Session high / (76.4% of 1.2091/1.1553) 1.1835 Minor
1.1930 Minor 1.1800 Minor

Economic data highlights will include:

German Consumer Confidence, US Oct Preliminary Wholesale Inventories, Goods Trade Balance, Case Shiller House Price Index, House Price Index, Richmond Fed Mfg Index, API Weekly Crude Oil Stock Inventory , Fed Speakers:  Powell, Dudley and Harker, Treasury Secretary Mnuchin

USDJPY: 111.09
US$Jpy had another choppy ride on Monday, initially rising to 111.70 resistance which held, before heading lower to trade down to 110.83 in NY before settling on the Fibo pivot at 111.02. From here, US$Jpy  appears vulnerable to a risk-off liquidation trade, with  N Korea and wobbles in the Chinese stock markets in focus, especially given that CFTC spec Jpy short positions have grown to largest since 2013 despite the adverse price action.

The daily charts look increasingly heavy, while the short term momentum indicators are mixed so another test of 110.80 would not surprise below which would open the way towards the strong support at 11.30 and eventually towards 110.00

On the topside, resistance will be seen at the session high, and as with yesterday, selling into strength, with a SL placed above 112.05 would seem to be the plan.

Preferred Strategy:  It looks as though the market is still generally trapped in being short Jpy so there will be plenty of sellers into dollar rallies from those looking to cut positions. Selling rallies is preferred today:

Sell US$Jpy @ 111.50. SL @ 112.05, TP @ 110.35

24 Hour: Prefer to sell rallies Medium Term: Neutral
FX Charts Position: Flat
Resistance Support
112.05 200 WMA 111.02 (50% pivot of 107.31/114.73)
111.95 Daily cloud top 110.83 Session low
111.75/70 (23.6% of 114.73/110.83)/100 DMA/200 DMA 110.60 Minor
111.68 Session high 110.30 100 WMA /Daily cloud base
111.30 Minor 110.00 Psychological

Economic data highlights will include:

Japan Retail Trade

GBPUSD: 1.3320
Cable had a mostly solid session in reaching 1.3383, a new 8 week high, before reversing to close the day 1.3320, but with the near term uptrend intact. Although Cable currently looks ok, Brexit concerns will continue to weigh and the Ireland border flare-up could add to downside pressure.

The daily momentum indicators still appear to be looking mildly constructive, and further gains do seem possible, where a break of 1.3380/85 would allow a run to 1.3400+ and possibly to where the major descending trend resistance from the 2014 high comes in at 1.3450.

On the downside, minor support will again be seen 1.3280/00 ahead of 1.3240 and buying dips would currently seem to be the plan.

Preferred Strategy:  Overall I remain fairly neutral – as per the 4 hour charts – albeit growing cautiously bullish. A break of 1.3280 though would suggest that a near term top may be in place.

Buy GbpUsd @ 1.3290. SL @ 1.3250, TP @ 1.3440

24 Hour: Neutral  -Prefer to buy dips Medium Term: Neutral
FX Charts Position: Flat (Long GbpAud)
Resistance Support
1.3505 (76.4% of 1.3656/1.3073) 1.3309/01 Session low/(23.6% of 1.3038/1.3383)
1.3450/55 Descending trend resistance/28 Sept high 1.3285 Rising trend support
1.3415 (61.8% of 1.3656/1.3073) 1.3278 24 Nov low/Daily cloud top
1.3382 Session high 1.3210/12 100 WMA /22 Nov low
1.3360 Minor 1.3185 20 Nov low

USDCHF: 0.9817
US$Chf  fell to the neckline of the double bottom, at 0.9776 today, before bouncing to 0.9817, sitting just back above the 200 DMA.

With the daily momentum indicators pointing lower, a sustained break of the session low would allow a run towards 0.9725/30 and then to 0.9700/05, although the short term momentum indicators suggest that this is unlikely today.

On the topside, once back above the 24 Nov high at 0.9826 would find the 100 WMA and some minor Fibo resistance at 0.9840, with further offers likely to appear at 0.9860 and at 0.9880.

The dollar looks as though it may be trying to form a near term base and buying dips is preferred today.

Preferred Strategy:  Buy US$Chf @ 0.9780. SL @ 0.9720, TP @ 0.9880

24 Hour: Prefer to sell rallies Medium Term: Neutral   – Mildly Bearish
FX Charts Position: Long
Resistance Support
0.9880  (61.8% of 0.9946/0.9776) 0.9800 Minor
0.9860 (50% of 0.9946/0.9776) 0.9776 Session low
0.9840/38 (38.2% of 0.9946/0.9776)/100 WMA 0.9750 Minor
0.9826 23 Nov high/24 Nov high 0.9727 (50% of 0.9420/1.0037)
0.9810/17 200 DMA /Session high 0.9704 13 Oct low

AUDUSD: 0.7604
Having traded between 0.7592/0.7644 on Monday,  the Aud is closing towards the lows and appears to have put in a bearish key-day reversal.

With the short term momentum indicators looking fairly flat we may be in for more choppy trade near current levels on Tuesday in the absence of any data. Despite the bearish reversal, the daily charts still look positive and a test of the H/S neckline formation at 0.7660 could still be on the cards at some stage, which ties in with the 13 Nov high of 0.7665 and some minor Fibo resistance. Beyond this would then allow a run towards 0.7675/80 and possibly 0.7695/0.7700.

Given the bearish outside day though, I would be a little wary on the topside and if we break below 0.7590 we could quickly head down to 0.7565 and 0.7550 ahead of the stronger 0.7530/35, area, which will continue to be strong, but below which would target Fibo support at around 0.7515. A break of this would then look towards 0.7485 and 0.7460/70 (Rising trend support) albeit this is some way off.

Preferred Strategy:  Playing the Aud from the short side on the crosses seems to be the best plan right now and I prefer to remain long GbpAud or long EurAud. As before, I like to sell AudUsd at around 0.7650, with a SL at 0.7680.

24 Hour: Neutral Medium Term: Neutral
FX Charts Position:    Short AudUsd,  (long StgAud)
Resistance Support
0.7700 7 Nov high 0.7592 Session low
0.7665 13 Nov high /(23.6% of 0.8102/0.7531) 0.7585 200 HMA
0.7650 Minor 0.7570 Minor
0.7644 Session high 0.7550 Minor
0.7620 24 Nov high 0.7531 21 Nov low  /100 WMA

NZDUSD: 0.6912
The Kiwi had a mostly positive session, underpinned initially by a soft US$ and then later in the day by selling of AudNzd.

With the 4 hour/daily momentum pointing higher, another test of 0.6925 looks possible, above which would allow a move to 0.6935 and 0.6950, albeit probably not today.

The initial, minor support now lies at 0.6885, ahead of 0.6850 and then the stronger level at 0.6790/6800. Below this would find that there is little support ahead of 0.6670 although this remains a long way off and before then we are likely to see bids at 0.6750/60 and again at 0.6700/10.

Preferred Strategy:  Overall, with the longer term (weekly) charts looking heavy, I suspect the Kiwi is currently biding its time ahead of a more sustained test of the downside. In the short term though, I suspect another test of 0.6920/30 may lie ahead and it is possible that we could even see a return to the neckline of the major head and shoulders, at 0.6990, before heading lower. Today could be quiet and a neutral stance seems wise.

24 Hour: Neutral Medium Term: Mildly Bearish – Prefer to sell rallies
FX Charts Position: Flat
Resistance Support
0.7000 Minor 0.6885 Minor
0.6980 9 Nov high 0.6852 Session low
0.6950 Minor 0.6820 Minor
0.6933 (23.6% of 0.7434/0.6783) 0.6788 21 Nov low
0.6925 Session high 0.6779 17 Nov low

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