6 Sept: Trend table outlook for FX, Commodities, Indices

By | September 6, 2019

There is plenty of green on the map again on Friday as the risk outlook turns more positive, underpinned by the announcement of renewed trade talks, along with more positive headlines related to Brexit/Italy. Both Jpy and Chf weakness are more apparent today and they seem set to remain under pressure, while the winners in the FX space have again been Gbp, Aud and Nzd. the Euro has been caught in the middle and may be best traded through the crosses today (Long EurJpy/ EurChf or Short EurGbp?). The US$ will be the main attraction later, following the US employment data, where a good number should see gains against most of the majors.

In other markets, stocks are sharply higher while WTI had a rocky ride and ended unchanged after a 2% round turn, up then down. There are easier things to trade right now given the exaggerated volatility, so I would stand aside.

The trade announcement bought about a sharp turn lower in the metals and it seems as though we are in for continued volatile trade, dominated by risk on/off headlines, but right now the momentum looks to be headed lower.

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*Trade of the day: September 6, 2019; 6:08 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 @ 1.1090. SL @ 1.1115, TP @ 1.1000

Buy EurUsd @ 1.0990. SL @ 1.0950, TP @ 1.1100

Sell AudUsd @ 0.6830. SL @ 0.6855, TP @ 0.6750

Buy AudUsd @ 0.6780. SL @ 0.6750, TP @ 0.6850

Buy NzdUsd @ 0.6350. SL @ 0.6295, TP @ 0.6385

Sell Gold @ 1530. SL @ 1545, TP @ 1525

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EurUsd:   The Euro has continued to recover from Tuesday’s low of 1.0925 by reaching a high of 1.1084 on Thursday before turning lower on cross activity and profit taking to settle pretty much unchanged on the session at 1.1035. While I think it will be choppy at current levels for much of the day, the charts still look as though we could see higher levels again, where resistance would arrive at 1.1050/60 ahead of the 1.1085 high and then at 1.1100 and 1.1110 (38.2% of 1.1411/1.0925). Above here would then target 1.1125(61.8% of 1. 1249/1.0925) and the 26 August high of 1.1163 but which seems unlikely to be visited again for a while. On the downside, support will be seen at 1.1000, 1.0965/70 and then at 1.0940/50 ahead of the 1.0925 low. Below that opens the way to 1.0900 and to 1.0860 (76.4% of 1.0340/1.2555), below which there is a chart gap that would take us to 1.0772. Buying dips, with a SL placed below 1.0990 may again be the plan for today although the NFP outcome will decide the direction.

US$Jpy:  was the beneficiary of the trade-talk announcement, spiking up to 107.22 before closing the day at 106.90, where it seems likely to sit while waiting on the US jobs data. The charts still look positive though, and above 107.20/26 (2 Aug high) would allow a run towards 107.45 (61.8% of 109.31/104.44) ahead of 108.00 and even 108.15 (76.4) albeit unlikely in the near term.  On the downside, the initial support now sits at 106.70/75 below which would allow a return to 106.50, 106.20 (200 HMA) and to 106.00. Below here seems unlikely today, but further bids would arrive at 105.75/85 and the 27 August low of 105.59. Further out, bids would arrive at 105.50, at 105.15 and at 105.00 (all minor). Beneath 105.00 there would again be little support ahead of the 26 August, 104.44 low and then the January flash-crash low (104.01). Looking to buy dips with a SL under 106.20 may be the plan today.

AudUsd:  The Aud$ has squeezed higher once again on Thursday before running into the Fibo resistance at 0.6830 (38.2% of 0.7081/0.6675), 0.6878 (50%) which has so far, capped further gains. A break of 0.6830 though could see a sharp run higher, with little to prevent it from heading towards 0.6870/80 and then on to 0.6900 and then to 0.6926 (61.8%). On the downside, minor support will be seen today at 0.6800 and then at 0.6775 (38.2% of 0.6687/0.6829). I don’t really see it under there today but if wrong, further bids would arrive at 0.6750/55 and at 0.6740 (61.8% of 0.6687/0.6829). Further out, I still suspect that we may see a return to 0.6700/05, below which would open the way back to 0.6688, where we have a minor double bottom – 3 Sept/26 August lows – and which comes ahead of 0.6675 (7 Aug low). Below 0.6675, there is 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)). I suspect that we may see another mild squeeze to the upside today as trade sentiment improves, although in the medium term any negative headlines, which seem quite possible still, I think that the Aud$ will suffer because of the trade war/recession concerns, so I still prefer to sell rallies for the medium term move to new lows.

NzdUsd: having made a new multi year low at 0.6269 on Tuesday, the Kiwi has continued to squeeze higher and reached 0.6394 on Thursday ahead of a mild retreat to currently sit at 0.6366, unchanged from yesterday, and leaving the technical levels intact. The initial resistance will arrive at the session highs, where the initial Fibo level is at 0.6390 (23.6% of 0.6789/0.6269) and then at 0.6400, (23 Aug high), beyond which would allow for a run towards 0.6425 (23.6% of 0.6938/0.6269) and to 0.6466(38.2% of 0.6789/0.6269). On the downside, 0.6353 was the Thursday low and would again see bids ahead of 0.6330 below, which could head back to 0.6300 and then to the trend low of 0.62690, which looks pretty safe right now. Below this however, the next meaningful support is seen at the September 2015 low at 0.6235, while more distant bids would arrive at the August 2015 low at 0.6125.  With the short term momentum indicators currently looking more constructive, I suspect that buying dips is once again the near term plan although, in the longer term, I still think we have plenty of downside potential.

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