It has been a very rocky session for stocks, as the indices broke below support and moved down by around 1.5%, with the S+P coming within just 7 points of the 2865 target that we mentioned yesterday. More of the same seems possible today, as all time frames are aligned lower, so once again I prefer to trade from the short side. The hourlies are at oversold extremes so a minor bounce is possible but I look to sell rallies.
The US$ has seen a sharply move lower in US$Jpy and this looks as though it may have further to run, while elsewhere, I am quietly thinking that the Euro, Aud and Nzd may all have a bit of upside potential. Buying dips is preferred in each of these against the US$, with a SL placed between their recent respective lows.
Gold has broken above the 1486 neckline of the head/shoulder formation, negating the chance of a move to the technical objective, so I would now avoid trading it for the time being. The short term momentum indicators suggest further gains may be possible in both Gold and Silver today, so buying dips in Gold with a SL sub 1485 may be the play.
WTI doesn’t like the current economic data and seems to have further downside potential.
On the crosses, EurChf is gyrating sharply, and the EurAud and AudChf idea, mentioned yesterday, currently sees EurAud – in the money – and AudChf – out of the money – by around the same amount. EurAud does look look for further gains, so possibly best to leave AudChf alone.
*Trade of the day: October 3, 2019; 6:26 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 @ 1.1000. SL @ 1.1030, TP @ 1.0920
Buy EurUsd @ 1.0920. SL @ 1.0875, TP @ 1.0990
Sell UsdJpy @ 107.50. SL @ 108.05, TP @ 106.50
Sell AudUsd @ 0.6760. SL @ 0.6785, TP @ 0.6690
Buy AudUsd @ 0.6675. SL @ 0.6650, TP @ 0.6745
Buy NzdUsd @ 0.6225. SL @ 0.6195, TP @ 0.6300
Buy Gold @ 1485. SL @ 1475, TP @ 1520
Sell S+P 500 @ 2900. SL @ 2925, TP @ 2850
EurUsd: The Euro continues to recover from its new 2 ½ year low at 1.0879 as the dollar weakened once again after the soft US data and currently sits at 1.0960. The short term momentum indicators look positive again today so buying dips towards 1.0900/30 is currently the preferred play. If wrong, a break of the 1.0879 low would then allow a run towards the next target at 1.0860(76.4% of 1.0340/1.2555), Under here, the 23 April 2015 low is at 1.0820, a break of which will find a weekly chart gap that would take us to 1.0775. On the topside, above the session high of 1.0962, the immediate resistance lies right ahead, at the 26 Sept high, at 1.0966, but above which could then see an acceleration back to 1.1000/03 (23.6% of 1.1411/1.0879). Although unlikely today, a steeper topside squeeze would then allow for a run towards 1.1040/50 and then possibly to the September 18/19 highs at 1.1072/75. Buying dips towards 1.0920/30 does seem to be the way to go today, with a SL placed below 1.0890.
US$Jpy: the collapse from the double top from the 1 October/mid-September high of 108.47 continued on Wednesday, with the pair currently sitting just above session lows of 107.03. The hourly charts are oversold but the 4hour/daily are looking increasingly heavy; and on the downside, below the session low would find the initial support at 106.95 (24 Sept low/38.2% of 104.46/108.47), which should be strong, if we get there. Beyond that, look for a run back to 106.70/75 (minor) and to 106.61 (6 Sept low) ahead of 106.45 (50% pivot of 104.46/108.47) and eventually to 106.00 (61.8). On the topside, minor Fibo resistance will be seen at 107.37 (23.6% of 18.47/107.03), 107.58 (38.2%) and then at 107.75 (50%/100 DMA), above which could see a return to 108.00 and eventually to the 108.47 high although that looks out of reach for now. With stocks looking heavy I think we are in for more downside in US$Jpy so selling near term rallies is preferred.
AudUsd: The Aud$ retested the new 10 year low at 0.6670 on Wednesday in early European trade but failed to break the downside support and we have since seen another lame-duck bounce to 0.6705/10, where it currently sits. The short term momentum indicators now look mildly underpinned as they turn a little higher, and it could be that we see a recovery above the 0.6717 session high for a possible move towards 0.6724 (23.6% of 0.6894/0.6671) and then possibly to 0.6755 (38.2%). Beyond that, stronger resistance will arrive at 0.6775/80 ahead of 0.6800 and the Fibo level at 0.6808 (61.8%) although I don think we see it up here today. The daily momentum indicators still look heavy though and a break of the 0.6770 lows would then allow for a move to 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). looking to buy dips under 0.6700, with a SL at/below 0.6650 may be the current plan.
NzdUsd: The Kiwi continues its slow recovery from the new 5 year low of 0.6203 to currently sit at 0.6270 and the short term momentum indicators now hint at the chance of a squeeze towards 0.6277 (200 HMA) and to 0.6298 (38.2% of 0.6450/0.6203). If we get above 0.6300, look for further sellers to arrive at 0.6310 (minor), at 0.6326 (50%) and then at 0.6348 (25 Sept high) ahead of 0.6355 (61.8%). The longer term charts look heavy though and we could see a return to 0.6220 (minor) and then to the 0.6203 low. On a break of 0.6200, there is little to hold the Kiwi up , but more distant bids would arrive at the August 2015 low at 0.6125, which could be where we are headed if/when the RBNZ cut rates again, which seems highly likely. Use 0.6220/0.6290 as a guide today, with the preference to buy dips for the 24 hour trade but to sell rallies for the longer term move lower as the RBNZ look to ease again in the months ahead.