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

By | November 3, 2017


EURUSD: 1.1658
Preferred Strategy:  EurUsd remains choppy in a tight range either side of 1.1650 on Friday (1.1612/86), unmoved by the announcement of Jerome Powell as the new Fed Chair, and will now await the release of the US employment data.

As before, ideally the Euro should hold below1.1670 on a daily-close basis, this being the 100 DMA and the neckline of the head/shoulder formation, but a topside break would trigger stops and could see a run back to 1.1700+. The 4 hour charts still suggest that this is a possibility so I would be cautious, but overall, as long as we don’t see a daily close above 1.1700, I prefer to trade from the short side. In the longer term, with the head shoulder trade now fully in play, the target is at around 1.1250, and with the longer term momentum indicators pointing lower I still think we will head in this direction, and to add to the position into any near term strength. Back below 1.1600 will find strong support at 1.1575 and then again at 1.1510.

Sell EurUsd @ 1.1670 & @ 1.1700. SL @ 1.1730, TP @ 1.1500.

24 Hour: Prefer to sell rallies Medium Term: Mildly Bearish
FX Charts Position: Short  – Looking  to add to the position into strength
Resistance Support
1.1760 (61.8% of 1.1879/1.1574) 1.1612 Session low
1.1745 Minor 1.1593 30 Oct low
1.1725 (50% of 1.1879/1.1574) 1.1574 27 Oct low
1.1686/90 Session high/200 HMA/(38.2% of 1.1879/1.1574) 1.1550 Minor
1.1670 100 DMA/H.S. Neckline 1.1510 Rising trend support/(38.2% of 1.0570/1.2091)

Economic data highlights will include:

US Jobs/NFP/Average Hourly Earnings data

USDJPY: 114.08
Preferred Strategy:  US$Jpy remains choppy at close to 114.00, with the large option expiries containing any directional momentum, while waiting on today’s US jobs data.

The outlook remains unchanged and, technically, the short term momentum indicators still look mixed/flat, so a fairly nimble stance is required although the 4 hour charts still seem to be mildly positive. If so, on the topside, back above the 1 Nov high (114.27) would open the way to 114.45/50, an increasingly strong hurdle to overcome, but above which could see a test of the descending trend resistance, now at around 114.90. A break of 115.00 would then see little resistance until 115.20 and then 115.50.

On the downside, minor support will be seen at 113.75 and at the session low at 113.53, below which could then head back to the 31 Oct low (112.95) although this seems unlikely today. If wrong, a sustained break of 113.00 would see us back in the previous 112/113 range, where 112.75 would be the first level of support ahead of 112.30.

I remain fairly neutral, although I still like the dollar in the medium term. Wait for the NFP and go with the flow.

24 Hour: Prefer to buy dips Medium Term: Neutral
FX Charts Position: Flat
Resistance Support
115.50 13 March high 113.90 Minor
115.19 14 March high 113.70 Minor
114.90 Descending trend resistance 113.53 Session low
114.49 11 July high/27 Oct low 113.40 Minor
114.21/27 Session high/1 Nov high 112.95 31 Oct low

Economic data highlights will include:                                                                       

Japan Holiday

GBPUSD: 1.3060
Preferred Strategy: Cable had a tough day, after the BOE suggested there are no more rate hikes on the near term horizon, falling from around 1.3270 to a low of 1.3042 so far, and looking as though it could go further.

The short term momentum indicators now look heavy, albeit becoming oversold, and a break of the session low would allow for a run towards 1.3025 and then 1.3000, below which could see 1.2980 and lower.

On the topside, resistance will be seen at 1.3080 and then at the minor Fibo levels listed below. Stay square for now.

24 Hour: Neutral Medium Term: Neutral
FX Charts Position: Flat
Resistance Support
1.3180 (50% of 1.3320/1.3042) 1.3060 Rising trend support
1.3148 (38.2% of 1.3320/1.3042) 1.3042 Session low
1.3135 Minor 1.3026 6 Oct low
1.3105 (23.6% of 1.3320/1.3042) 1.2996 (61.8% of 1.2588/1.3656)
1.3080 100 DMA 1.2984 (76.4% of 1.2777/1.3656)

Economic data highlights will include:                                                                                                                                       

UK Services PMI

USDCHF: 0.9992
Preferred Strategy: US$Chf is  still stuck in range near parity, with Donald Trump’s Fed decision and the tax plan announcement causing only mild volatility.

The short term momentum indicators are flat and we should probably expect little interest for much of the session until the US employment figures are released, but with the daily momentum indicators generally looking positive, further dollar strength could be in store. If so, above 1.0040, there is little to hold the dollar up ahead of 1.0100, and beyond that to 1.1025 and 1.0170.

On the downside, support will be seen at 0.9940/50 and then again at 0.9900 although it would take a soft NFP number to see it down here I suspect.

For now, look for the dollar to chop around current levels, but with the view of buying dips for an eventual move towards 1.1000+.

Buy US$Chf @ 0.9940. SL @ 0.9990, TP @ 1.0070.

24 Hour: Prefer to buy dips Medium Term: Mildly Bullish  – Prefer to buy dips
FX Charts Position: Long
Resistance Support
1.0123 (76.4% of 1.0343/0.9420) 0.9970 Minor
1.0099 11 May high 0.9948 Session low /200 HMA
1.0075 Minor 0.9941 31 Oct low
1.0036/37 27 Oct high /1 Nov high 0.9920 Minor
1.0000 Pivot 0.9890 (23.6% of 0.9420/1.0037)

AUDUSD: 0.7714
Preferred Strategy: AudUsd took on a more positive light after yesterday’s domestic data and currently sits near the day’s high of 0.7729

With both the neckline of the head/shoulder formation and the 200 DMA having now been broken, and with the short term momentum indicators looking a bit more positive, further gains could be in store and a move of 0.7740/50 would not really surprise although it may take a decent Services PMI form Australia/China to take us there.

On the downside, support will be seen at 0.7700 and then again at 0.7670, although this seems unlikely to be seen, at least until the US jobs data.

Look for a choppy session and then go with the flow after the NFP release although the upside currently looks mildly favoured. A strong NFP number would quickly alter that theory I suspect, with the US$ likely to see a decent lift.

Sell AudUsd @ 0.7740. SL @ 0.7775, TP @ 0.7675

24 Hour: Neutral  – Prefer to sell rallies Medium Term: Neutral
FX Charts Position:    Short .  SL @ 0.7775
Resistance Support
0.7795 24 Oct high 0.7700 200 DMA
0.7775 Descending trend resistance 0.7672 Session low
0.7760 Minor 0.7648 1 Nov low
0.7740 (23.6% of 0.8102/0.7624) 0.7630 (61.8% of 0.7328/0.8124)
0.7729 Minor 0.7624 27 Oct low

NZDUSD: 0.6911
Preferred Strategy: The Kiwi saw a quick move up to 0.6942 after the dovish take on the US tax plan but it has since reversed to currently sit at 0.6910.

The 4 hour/daily momentum indicators  are looking a little more positive and further gains, above 0.6940 could see a run towards 0.6960/70 and then on to 0.7000 although this will depend on a weak NFP reading.

On the downside, a move back below the session low of 0.6882 could then see a return to 0.6860, below which would find strong support at 0.6830 and again at 0.6817, where we have a double bottom with the May low. Below that though would then find that there is little support ahead of 0.6670 although I don’t think we head anywhere close for the time being.

24 Hour: Mildly Bullish – Prefer to sell rallies Medium Term: Neutral
FX Charts Position: Flat
Resistance Support
0.7000 Psychological 0.6900 Minor
0.6970 (38.2% of 0.7210/0.6817) 0.6885 200 HMA
0.6960 (23.6% of 0.7434/0.6817) 0.6850 Minor
0.6942 Session high 0.6832/30 30 Oct low /31 Oct low
0.6925 Minor 0.6817 11 May low/27 Oct low