8 May: Forecast: FX: US$/Majors + trade ideas

By | May 8, 2018


EURUSD: 1.1922
The US$ briefly headed to a new trend high against the Euro following the uninspiring Sentix report on Monday, with the pair trading down to the rising trend support at 1.1897 before a mild bounce, to finish the day at 1.1925.  Tuesday is light on data and it could be a fairly tight session ahead.
1 hour/4 hour indicators: Bullish Divergence Daily Indicators: Down Weekly Indicators:  Turning lower.
Preferred Strategy:  A cautious outlook is called for again today, with the momentum indicators looking mixed. The short term momentum indicators are hinting at some bullish divergence although the longer term charts tell us that this dollar uptrend is not finished with yet. Overall, while keeping a core short Euro position it would be wise to lighten up a little down here as we could see a bounce and need to leave room to sell into it.

Having bounced off the rising trend support at 1.1897, this remains the initial support, a break of which would open the way to a minor level at 1.1850 and 1.1815 ahead of the stronger support at 1.1800/1.1788 (76.4% of 1.1553/1.2555).

On the topside, minor resistance will be seen at 1.1950, ahead of the Monday high of 1.1977, and then 1.1995/1.2000 and the 200 DMA at 1.2010. The 2 May high was 1.2030, which seems unlikely to be revisited today, but if wrong, look for a squeeze back to 1.2065.

While keeping a core short position, selling into near-term rallies seems to be the plan.

Sell EurUsd @ 1.1985. SL @ 1.2035, TP @ 1.1825

Resistance Support
1.2030 2 May high 1.1910 (76.4% of 1.1715/1.2555)
1.2012 200 DMA 1.1897 Rising trend support /Session low
1.2008 03 May high 1.1850 Minor
1.1994 4 May high 1.1816 22 Dec low
1.1977 Session high 1.0800 Minor

Economic data highlights will include:

German Industrial Production, Trade Balance, Current Account – Mar, US NFIB Business Optimism Index, API Weekly Crude Oil Stock Inventory

USDJPY: 109.07
US$Jpy has been choppy on Monday but ended up pretty much unchanged, just above 109.00,  after a range of 109.40/108.75, with the dollar again underpinned by the 100 DMA.
1 hour/4 hour indicators: Neutral. Daily Indicators: Turning lower. Weekly Indicators:  Turning higher
Preferred Strategy:  The short term momentum indicators are neutral on Tuesday, while the daily charts are suggesting that a medium term top may be in place, and in the absence of any key data until Thursday’s US CPI, we may see further sideways trade near 109.00 but with a possible retest of the 100 DMA. Below this would find further bids nearby, at Friday’s low of 108.63 and then at 108.50/55, a break of which could then head back to the neckline of the head/shoulders formation, currently at 108.10. If seen this might be a decent buy opportunity but I would be keeping a pretty tight SL placed below 107.70.

On the topside, resistance will be seen at the session high of 109.40 ahead of minor resistance at 109.75, a break of which could possibly see a return to strong resistance at 110.00 although this looks doubtful today. If wrong, on a break of 110.00 look for a move to 110.20/25, which should also be strong, ahead of 110.50 and 110.85. Note that the reverse SHS formation, with the neckline break being  at 107.85, suggests a target at somewhere near 110.70.

Resistance Support
110.20/25 200 DMA /(61.8% of 114.73/104.60) 108.72/75 100 DMA /Session low
110.02 2 May high 108.63 4 May low
110.70 Minor 108.54 24 Apr low
109.40 Session high 108.30 Minor
109.20 Minor 108.10 Neckline

GBPUSD: 1.3558
Cable was quiet on Monday due to the UK Bank Holiday and traded within a range of 1.3515/75 against the dollar but made some minor gains on the crosses; with EurGbp currently back below 0.8800.
1 hour/4 hour indicators: Mixed.- Turning higher Daily Indicators: Down Weekly Indicators:  Turning lower
Preferred Strategy:   The short term momentum indicators look mildly positive on Tuesday, and if Cable does manage a minor squeeze higher, near term resistance will again be seen at 1.3575/85 ahead of 1.3600. Beyond there, 1.3640/50 and the 2 May high 1.3665 would see sellers although that seems some way off right now.

The longer term charts still look very heavy though, and a retest of 1.3515 and then the recent trend low of 1.3485 would not surprise in the days ahead. A break of this would open the way to the January low at 1.3457 and the major Fibo level at 1.3400 (38.2% of 1.1821/1.4376)

Selling rallies is preferred.

Resistance Support
1.3665 2 May high 1.3535 200 DMA
1.3629 3 May high 1.3515 Session low
1.3600 Minor 1.3485 4 May low
1.3585 4 May high 1.3457 11 Jan low
1.3575 Session high 1.3425 Minor

USDCHF: 1.0025
US$Chf, headed up to 1.0055 on Monday before closing at 1.0025. The dollar remains firm, with the dailies suggesting that the trend higher will continue although the 4 hour charts do show some minor bearish divergence.
1 hour/4 hour indicators: Bearish Divergence Daily Indicators: Up Weekly Indicators:   Up
Preferred Strategy:  With the medium term indicators still looking positive for further gains in US$Chf there is no change to the view of trading from the long side although the short term charts are starting to hint at the chance of a minor dip due to the bearish divergence that seems to be building.

If the dollar can make further gains, then a break of the trend high of 1.0055 would open the way to 1.0065/70 and to 1.0100. Further out we are potentially looking at a run up to 1.0170 and even to the December 2016 high of 1.0343 albeit probably not for a while to come.

The short term momentum indicators could be hinting at a short term top, and if so, on the downside, support will be seen at 1.000 and at 0.9980. Under here would head to minor levels at 0.9965/35/15 ahead of the 1 May low of 0.9890. This looks unlikely right now but if wrong, on a break of 0.9890, further bids should arrive at 0.9870 and at 0.9845/50.

Buy US$Chf @ 0.9980. SL @ 0.9890, TP @ 1.0100

Resistance Support
1.0170 March 2017 high 1.0000 Minor
1.0107  Apt 2017 high 0.9985 Session low
1.0099 May 2017 high 0.9965 4 May low
1.0067 (76.4% of 1.0343/0.9187) 0.9935 2 May low
1.0055 Session high 0.9890 1 May  low

AUDUSD: 0.7513
The Aud has chopped around on Monday, although after testing the topside at 0.7542 it was mostly downhill, reaching a low of 0.7492 before a bounce to close at 0.7515. Direction today will come via the domestic March Retail Sales (exp +0.2%) and the China Trade Balance (exp Imports+22.3%, Exports +32.3%. TB; $24.8 bio).
1 hour/4 hour indicators: Neutral Daily Indicators: Possible basing formation. Weekly Indicators:  Turning lower
Preferred Strategy:   The short term momentum indicators are neutral today although the longer term charts still look heavy, with the dailies possibly building a bear flag, so looking to sell into any near term strength still seems to be the way to go.

If we do see a near term squeeze higher, then beyond the session high of 0.7542, minor resistance will be seen at 0.7550/60 and then again at 0.7575, ahead of the 26 April high at 0.7588 and 0.7600/05.

The longer term charts remains heavy and would seem to have further losses to come in the days ahead, and below 0.97490 would revisit the trend low of 0.7472. A break of this level would then head towards minor support levels taking us down to 0.7400, although there really is not too much to hold it up ahead of the 1 June 2017 low at 0.7371.

Sell AudUsd @ 0.7550. SL @ 0.7590, TP @ 0.7475

Resistance Support
0.7603 (38.2% of 0.7813/0.7472) 0.7491/92 4 May low /Session low
0.7588 26 April high 0.7472/74 1 May  low /2 May low
0.7575 (23.6% of 0.7915/0.7472) 0.7425 Minor
0.7559/50 4 May high/(23.6% of 0.7813/0.7472) 0.7400 Minor
0.7542 Session high 0.7385 (76.4% of 0.7160/0.8135)

Economic data highlights will include:

Retail Sales – Mar, China Trade Balance – Apr

NZDUSD: 0.7012
 The Kiwi had a choppy session on Monday, trading a range of 0.6993/0.7042, finishing in the middle of the range and leaving the outlook a little mixed on Tuesday.
1 hour/4 hour indicators: Neutral Daily Indicators:   Down-Possible basing formation. Weekly Indicators:  Turning lower
Preferred Strategy:   The Kiwi has closed back above 0.7000 on Monday after a dip to 0.6992. Further sideways trade near 0.7000 seems likely today unless the Australia Retail Sales give us a directional move in the Aud$, dragging the Kiwi with it.

On the topside, sellers will again be found on a bounce to 0.7040/50, beyond which allows for 0.7080 and then 0.7095/00, but probably not today.

On the downside, support will be again seen at 0.6980/90, below which would open the way to the December low at 0.6953. Under here, there is not much to hold the Kiwi up ahead of 0.6935 (76.4% of 0.6780/0.7438) and then 0.6910, long term rising trend support, which is where I think we are eventually heading break of 0.6900 would open up a move to 0.6815 and then to 0.6780

Sell NzdUsd @ 0.7050. SL @ 0.7085, TP @ 0.6955

Resistance Support
0.7130 Minor 0.6993/94 4 May low /Session low
0.7094 27 Apr high 0.6984 2 May low /03 May low
0.7080 (23.6% of 0.7395/0.6983) 0.6953 20 Dec low
0.7051 4 May high 0.6935 (76.4% of 0.6780/0.7438)
0.7041 Session high 0.6910 Rising trend support