29 Apr: Trend table outlook for FX, Commodities, Indices

By | April 29, 2019

Friday’s US data has provided a mixed picture to start the week and a generally cautious stance is possible wise ahead of the FOMC Meeting, late Wednesday; early Thursday in Asia. The main interest once again lay in oil, where the market had obviously got itself long and now looks as though it may have put in a near term top. Elsewhere the other thing to watch is Gold, which may be in the process of breaking back above the S/H/S neckline, and could be about to the squeeze the shorts.

EurUsd:  EurUsd had a choppy session on Friday, pretty much unchanged on the day but not before briefly making a new low at 1.1110, last seen in May 2017. The short term momentum indicators are mixed although, further out, the medium term charts point towards further losses, with downside targets now being at 1.1100 and 1.1060/65, where the base of the descending wedge should see decent bids. A downside break would then open the way to 1.1020 (minor) and to 1.1000. On the topside, resistance will be seen at 1.1173 (Friday’s high) and at 1.1200. Beyond there brings minor resistance at 1.1225 and again at 1.1260 into play although I don’t think we go there at this stage. Right now a range play looks likely while waiting on Wednesday’s FOMC.

The DXY (98.05) eased back from Thursday’s 98.33 trend high (last seen in May 2017) but with the daily chart still looking positive, further gains would see a run towards 98.80, where the top of the rising wedge lies, and then towards 100.10 (76.4% of 103.82/88.25). On the downside, support will be seen at the previous resistance (and Friday’s brief spike low) at 97.85 (61.8% of 103.82/88.25) and then at 97.50 although this seems some way off. Buying dollars on dips is the plan although, as with EurUsd, I suspect we are in for some choppy, rangebound action ahead of Wednesday.

US$Chf: US$Chf spent the last few days in choppy consolidation below the 27 month high at 1.0230 (albeit a very brief new trend high was seen on Friday at 1.1236), and more of the same would not surprise at the start of the week.  While the short term momentum indicators are mixed, the medium term charts still seem positive, so an upside break would open the way to the next target at 1.0248 (11 Jan 2017 high), beyond which opens the way to 1.0320 (Jan 2017 high). Above that, do not stand in the way of the dollar as there is very little to stop it heading to 1.0720 (200 MMA).  On the downside, below Friday’s 1.0184 low, support will be seen at 1.0155/60 and 1.0125, ahead of 1.0105 (38.2% of 0.9894/1.0236) and 1.0065(50% of 0.9894/1.0236). Prefer to buy dips although further consolidation may be in order today.

 AudUsd: Having traded down to 0.6988 on Thursday, the Aud$ has recovered well in squeezing up to 0.7061 on Friday before settling into the weekend at 0.7040.The short term momentum indicators still look mildly positive and with the market now quite short and getting squeezed, further positive momentum would not really surprise. If so, the points to watch would be at 0.7050/60 and then at 0.7070 (38.2% of 7206/0.6988) ahead of the chance of a run back towards 0.7100, although if seen, would provide a decent selling opportunity, I suspect.  The medium term charts remain heavy though and eventually I think 0.7000 and the current low will give way for a run towards 0.6970, 0.6950 and eventually to 0.6900. I prefer to sell rallies in anticipation of the inevitable rate cut, but we may see better levels to do so.

NzdUsd: As with AudUsd, the Kiwi has bounced strongly after making a new trend low at 0.6580 on Thursday, and ended the week at 0.6660 after having reached an intraday high on Friday at 0.6681.  Short term resistance will be seen at current levels (0.6660 =23.6% of 0.6938/0.6580), beyond which would open the way back to 0.6680 and possibly to 0.6700. Above here would open 0.6715 (38.2%) and the 200 DMA at 0.6728, although not today I suspect. On the downside, support will again be seen at the recent 0.6630 pivot, ahead of 0.6600 and 0.6580. In the medium term, look for the chance of a decline towards 0.6560 (January flash crash low) and eventually to the long term rising trend support at 0.6500 – from March 2009.

US$Jpy: had another choppy session on Friday but closed pretty much unchanged at 111.60, after having made a new 4 month high of 112.39 last  Wednesday and then reversing lower in reaching 111.36 on Thursday. Further choppy, sideways trade now looks likely, and  I do not have too much of a view on this pair although if risk-sentiment turns lower, then the downside would come back into play with targets being at 111.20(38.2% of 109.70/112.16) and to 111.00, and under here would lead to 110.80/75 – 100 WMA. On the topside, resistance will again be seen at 112.00 (200 WMA) and at 112.40. Further targets would then be at 112.50/60 and eventually ay 113.05 (61.8% of 118.61/104.01) although this is a long way off. Keep an eye on US yields as a further weakness, possibly brought about by a dovish Fed on Wednesday, would see the downside come under pore sustained pressure.

On the crosses, a neutral stance is mostly required, as per the look of the trend-table, where little stands out, although AudNzd seems to have further downside in the days ahead. The weeklies still look form though so buying dips towards 1.0555(38.2% of 1.0275/1.0732) or the 100 DMA at 1.0500 may be a plan. On the topside, resistance will be seen at 1.0615/20 and at 1.0670. Above 1.0700 would then target last week’s high of 1.0732 and eventually towards the 100 WMA/200 WMA, which have converged at 1.0750 and will provide very strong resistance.

Gold and Silver seem to have caught the market rather short and are currently in the process of squeezing higher. Overall I still prefer the downside as I suspect the US$ strength will return to place downside pressure on commodities, but right now, tight stops should be in place.

The neckline for Gold is at 1285, right in line with the current price, and I would not really want to see it make a daily close back above here. If we do, a quick run back to 1300-10 is very possible. Should the SHS formation work as planned, the downside target is seen at 1218 but that is a long way off right now.

Silver has tested its own neckline on Tuesday and has since bounced to 15.07. This should act as some resistance (50% pivot of 13.89/16.21), but above which could then see a run toward the 100 DMA at 15.32. On the downside, we need to see a break of 14.80, in which case the the downside potential is at around 13.85oz, albeit that this may be wishful thinking.

Stocks: had another firm session on Friday, up around 0.3%/0.4%8%, with the indices either reaching or within touching distance of an all-time high. Further gains may be expected if the Fed continue their recent dovish tone and keep policy on hold for the foreseeable future, and then we are into blue sky territory. As before, the dailies are showing a degree of bearish divergence but the weeklies remain positive and the near term targets are, in the S+P at 2940 and in the DJI at 26950. We need to hold above rising trend support in order to maintain the upside momentum, but right now that seems to not too much of an issue and trading from the long side is the plan given the strong upside momentum in the weekly charts.

WTI: Took out a lot of long positions on Friday, with a fall of 3.5% hurting the market and a near term top now seemingly put in place. WTI finished the week placed precariously on the 4 month rising trend support, a break of which opens the way to the 200 DMA/Fibo support @ 23.6% of 42.23/66.57, currently at 60.85. Under there allows for 58.00 and 57.30 (38.2%). On the topside, resistance will be seen at 63.35, 64.35 (both minor) and then at 64.75 (200 HMA) although this now looks a good sell opportunity.

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*Trade of the day: April 29, 2019; 09:33 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 @1.1185. SL @ 1.1215, TP @ 1.1085

Buy EurUsd @ 1.1100. SL @ 1.1075, TP @ 1.1175

Buy US$Chf @ 1.0150. SL @ 1.0230, TP @ 1.0115

Sell AudUsd @ 0.7075. SL @ 0.7105, TP @ 0.6990

Sell WTI @ 64.50. SL @ 65.20, TP @ 63.00