Tuesday was a rather wild ride in almost all markets, with safe haven demand leading the way ahead of a more positive outlook later in the US session. At the end of the session the dollar index (DXY) is actually unchanged and the FX outlook is mixed for the next 24 hours, with further choppy sideways trade the most likely outcome. On the crosses, the short term charts for the Yen crosses indicate some Jpy weakness, while the Aud is recovering from yesterday’s selloff. In the medium/longer term though the opposite for both currencies still seems to be the play (i.e. Yen strength/Aud$ weakness), so selling AudJpy into near term rallies could be an idea. The same theme applies to NzdJpy, EurJpy and GbpJpy
Stock markets are carrying some mild positive momentum into the Thursday session but the longer term charts still look heavy, so selling rallies is preferred. Gold and Silver both still look as though they have further upside potential. WTI is volatile but showing increasing downside bias so selling rallies is preferred.
*Trade of the day: August 8, 2019; 8:25 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.
Buy EurUsd @ 1.1150. SL @ 1.1115, TP @ 1.1250
Sell EurUsd @ 1.1250. SL @ 1.1285, TP @ 1.1150
Sell AudUsd @ 0.6785. SL @ 0.6815, TP @ 0.6700
Buy AudUsd @ 0.6700. SL @ 0.6670, TP @ 0.6800
Sell NzdUsd @ 0.6500. SL @ 0.6540, TP @ 0.6400
Sell S+P @ 2900. SL @ 2925, TP @ 2725
Other strategies seem to be:
Continuing Yen strength on all fronts – another near term bounce in US$Jpy and in X/Jpy is possible but selling rallies is preferred
Look to sell rallies in the S+P and the ASX
Gold to remain highly volatile but the charts have an increasingly positive bias so buying dips is preferred
UsdCnh has settled into a wide range of 7.0400/7.1000 and this looks likely to contain it on Thursday, but the longer term charts are pointing up, and as long as the pair remains above 7.0000, I suspect that the dollar will eventually head higher so buying dips is preferred.
EurUsd: The Euro is once again unchanged on Thursday at 1.1200, although it was another choppy session, trading between 1.1178/1.1240, but leaves the technical outlook pretty much intact. The neckline of the HS formation, at 1.1215, was taken out again, as was the 100 DMA (1.1225), but as with Wednesday the Euro was unable to hang on above either of them, and leaves us with a rather neutral stance. 1.1215/1.1250 should again see decent sellers, so the upside may be slow unless we see a big selloff in the dollar. Above 1.1250 would open the way to 1.1264 (61.8% of 1.1411/1.1025), ahead of 1.1300 (200DMA) and 1.1320 (61.8%). On the downside, the initial, minor support will arrive at 1.1280 and again at 1.1165 (38.2% of 1.1025/1.1248/Session low) ahead of 1.1135/40 (/200HMA/50%) and 1.1112 (61.8%). Below 1.1100 would allow for an eventual return to the trend low of 1.1025 ahead of the 1.1000 H/S target. If/when we get below 1.1000, there is good trend support at 1.0965 – at which point I would square up any short Euro positions and take a nimble stance. Right now, it looks set to be another choppy/sideways session and 1.1150/1.1250 may well cover it, but I still prefer to sell Euro rallies as I think that 1.1000 and lower will be seen at some stage down the track.
US$Jpy: traded on the back of the US stock markets, where the early session selloff saw US$Jpy dive to 105.48, and where we now have a minor double bottom, ahead of a bounce into the close, to finish the day at 106.20. As with yesterday, the short term momentum indicators look mildly positive but the longer term momentum indicators are heavy, so selling rallies is preferred. Minor resistance will now be seen at 106.40 (23.6% of 109.30/105.48), at 106.70/80 and again at 107.00/10, beyond which could then head back to 107.40 (50% pivot of 109.30/105.51) and to 107.85 (61.8%) albeit unlikely. On the downside, minor support will be seen at 106.00 ahead of the Tuesday/Wednesday low of 105.51/48, but beneath which there is little support ahead of the January flash-crash low (104.01). Volatile conditions are likely to continue.
AudUsd: The Aud has recovered from yesterday’s spike low of 0.6675 to currently sit at 0.6760 (23.6% of 0.7082/0.6675). The short term momentum indicators are attempting to recover their oversold condition so further bounces are possible, where resistance is will again be seen at 0.6775/80, at 0.6800 (Tuesday high), 0.6818 (Friday high), and then at 0.6830 (38.2% of 0.7081/0.6675). Further resistance would be seen at 0.6877 (50% of 0.7081/0.6675) but that won’t be bothered for a while. On the downside, support will be seen at 0.6715/20 ahead of 0.6700 and 0.6675 although we are not going back there today. Below 0.0.6675, 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)). That is a long way off yet and in the meantime, as before, selling rallies is preferred. Note that the calendar for the Aud is empty today but tomorrow brings more from the RBA – SoMP and Gov Lowe will be speaking to the Senate Finance Committee.
NzdUsd: spiked to down to 0.6375 following the surprise 50bp rate cut yesterday but has since recovered some ground to sit at 0.6445. A choppy session looks likely today but the dailies are pointing strongly lower so trading from the short side is still preferred as I think we will eventually return to 0.6375 and lower. Resistance will arrive at 0.6475 (23.6% of 0.6789/0.6376), at 0.6500 and at 0.6515 (100 HMA ). On the downside bids will arrive at 0.6425 and 0.6600 (both minor) ahead of the 0.6376 low. Further out, the January 2016 low is seen at 0.6347 and then at the September 2015 low at 0.6235, below which opens the way to the August 2015 low at 0.6125. Selling rallies remains the plan.