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

By | November 29, 2017


EURUSD: 1.1844
EurUsd has drifted lower, accelerating late in the day as it came under pressure from the move in EurGbp on the back of the Brexit headlines. Currently sitting towards the 1.1825 session low, the short term momentum indicators hint at further losses to come, although the dailies still look constructive.

If we do head lower, minor support will be seen at the session low ahead of 1.1800/05. A break of this would then allow a run towards 1.1775 and 1.1755 although I would be surprised to see it back down there today.

On the topside, minor resistance will be seen at 1.1875 ahead of 1.1900 and 1.1920. Further out, offers will arrive at 1.1950/65, 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 Wednesday, I prefer to look to sell into rallies towards 1.1880, but with a tight SL placed above 1.1920.

EU Nov consumer confidence & German  Nov HICP & CPI are data risks for the EU on Wednesday, Janet Yellen and other Fed speakers arrive en masse in the US session.

Sell EurUsd @ 1.1880. SL @ 1.1925, TP @ 1.1780

24 Hour: Mildly Bearish – refer to sell rallies Medium Term: Neutral
FX Charts Position: Short
Resistance Support
1.1960/64 27 Nov high / (76.4% of 1.2091/1.1553) 1.1825 Session low
1.1950 Minor 1.1805 (38.2% of 1.1553/1.1943)/Rising trend support
1.1920 Session high 1.1775 100 DMA/55 DMA
1.1900 Minor 1.1755 (50% of 1.1553/1.1943)
1.1875 100 HMA 1.1730 Minor

Economic data highlights will include:

EU Economic Sentiment Indicator, Industrial Confidence, Services Sentiment, Business Climate, German Preliminary CPI (Nov), US Q3 Preliminary GDP , US Personal Consumption/Expenditure, Pending Home Sales, Janet Yellen testifies to Congress

USDJPY: 111.47
US$Jpy had another choppy ride on Tuesday but is closing towards the high of its 110.93/111.64 range

The 4 hour/daily momentum indicators are mixed, although the daily charts still look heavy, so another test of 111.00 would not surprise at some stage, below which would open the way towards 110.80/85 and eventually towards the strong support at 111.30.

On the topside, resistance will be seen at 111.70 but the 4 hour charts look positive and a break would allow a run towards 111.95/112.05, which should be strong but a break of which would open up 112.35/40.

Preferred Strategy:  Another choppy range-day between 111/112 would not surprise. I mildly prefer buying dips, with a SL place at 110.80

Buy US$Jpy @ 111.10. SL @ 110.80, TP @ 112.00

24 Hour: Neutral –Prefer to buy dips Medium Term: Neutral
FX Charts Position: Flat
Resistance Support
112.05 200 WMA 111.25 100 HMA
111.95 Daily cloud top 111.02 (50% pivot of 107.31/114.73)
111.75/70 (23.6% of 114.73/110.83)/100 DMA/200 DMA 110.92 Session low
111.68 27 Nov high 110.83 27 Nov low
111.62 Session high 110.30 100 WMA /Daily cloud base

GBPUSD: 1.3365
Cable took no prisoners today, falling to 1.3220 ahead of a sharp spike up to 1.3386, a new 8 week high, after the UK press report of a Brexit settlement price.

As before, 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 1.3220 and buying dips would currently seem to be the plan although we can expect it to stay volatile so a nimble stance is required.

Preferred Strategy:  Overall I remain fairly neutral – as per the 4 hour charts – albeit growing cautiously bullish. A break of 1.3380 would suggest a run to 1.3450. I prefer to trade Cable from the long side against the crosses rather than the US$, and remain long GbpAud.

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) 1.3335 Minor
1.3450/55 Descending trend resistance/28 Sept high 1.3315 100 HMA
1.3430 Minor 1.3280 Daily cloud top
1.3415 (61.8% of 1.3656/1.3073) 1.3221 Session low
1.3386 Session high 1.3210/12 100 WMA /22 Nov low

USDCHF: 0.9843
US$Chf is a little higher today although the range has been tight (0.9800/52), and with the 4 hour/daily momentum indicators now mixed it means a neutral stance seems best, but with a mild preference today of buying dips towards the 200 DMA..

On the topside, once back above the session high, would find offers at minor Fibo levels every 20 points up to 0.9940 although I don’t think we get up there yet.

The daily momentum indicators still point lower, but may be flattening out. In the near term, 0.9800 should be decent support but a sustained break would allow a run towards 0.9775 and possibly to 0.9725/30 and then to 0.9700/05,

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 @ 0.9800. SL @ 0.9770, TP @ 0.9900

24 Hour: Prefer to buy dips Medium Term: Neutral
FX Charts Position: Long
Resistance Support
0.9946 21 Nov high 0.9835 100 WMA
0.9905  (76.4% of 0.9946/0.9776) 0.9805/00 200 DMA /Session low
0.9880  (61.8% of 0.9946/0.9776) 0.9776 27 Nov low
0.9860 (50% of 0.9946/0.9776) 0.9750 Minor
0.9852 Session high 0.9727 (50% of 0.9420/1.0037)

AUDUSD: 0.7598
Having traded between 0.7587/0.7919 on Tuesday, the Aud is closing towards the lows and looks heavy at the start of the Asian session although with the short term momentum indicators looking fairly flat we may be in for more choppy trade near current levels in the absence of any data today.

On the topside, the initial resistance will arrive at 0.7620 and again at 0.7640/50. Despite the bearish key reversal seen yesterday, 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.

I would be a little wary on the topside, and if we break below 0.7590/85 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. Against the US$, I like to sell AudUsd at around 0.7610/20 with a SL at 0.7675 and a TP at 0.7540.

24 Hour: Prefer to sell rallies Medium Term: Neutral
FX Charts Position:    Short AudUsd,  (long StgAud)
Resistance Support
0.7700 7 Nov high 0.7587/85 Session low/200 HMA
0.7665 13 Nov high /(23.6% of 0.8102/0.7531) 0.7570 Minor
0.7650 Minor 0.7550 Minor
0.7644 27 Nov high 0.7531 21 Nov low  /100 WMA
0.7620 Session high 0.7500 Minor

NZDUSD: 0.6914
The Kiwi had a mostly positive session in reaching 0.6945, although it is beginning to look heavy heading into the NY close but is currently hanging on above 0.6900.

With the daily momentum pointing higher, another test of 0.6925 looks possible at some stage, above which would allow a move back to the session high of 0.6945, albeit probably not today.

The 4 hour momentum indicators appear to be rolling over though, and if we do head lower, then below 0.6900 the  initial support 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.

The Financial Stability Report is due shortly.

24 Hour: Prefer to sell rallies Medium Term: Mildly Bearish – Prefer to sell rallies
FX Charts Position: Flat
Resistance Support
0.7000 Minor 0.6902 Session low
0.6980 9 Nov high 0.6885 Minor
0.6945 Session high 0.6844 24 Nov low
0.6933 (23.6% of 0.7434/0.6783) 0.6820 Minor
0.6925 Minor 0.6779 17 Nov low

Economic data highlights will include:                

W: RBNZ Financial Stability Report