Stocks rallied strongly on Thursday, and in the short term they seem to have further positive momentum ahead of them, but the longer term charts still appear to be heavy, so selling rallies remains the overall theme.
Elsewhere, the FX markets are looking choppy, although the Aud$ and Nzd$ do seem to have mild upside momentum, but as with stocks, I still prefer to sell rallies given the look of the longer term charts. The Aud$ will move on the back of the RBA statement today and is already moving a bit lower in early Asian trade due to the likelihood of a dovish outlook
On the crosses, there is no real change; in that the Aud looks heavy, while the Yen still seems to be in demand, which we will see if/when a reason for safe haven demand returns. – This seems to be happening as I write. A news headline has just come up, suggesting that the US is going to delay a Huawei licence in response to China stopping crop buying and has seen an instant move to safe-haven ground, with the Jpy moving higher and the Aud$ dropping by 20 points. More to come on this I guess.
Gold and Silver both still look as though they have further upside potential in the medium term but may be choppy for the coming session.
WTI is volatile but the dailies still suggest that selling rallies, with a SL placed above 55.00
*Trade of the day: August 9, 2019; 8:30 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 @ 0.6815. SL @ 0.6835, TP @ 0.6715
Buy AudUsd @ 0.6715. SL @ 0.6690, TP @ 0.6800
Sell NzdUsd @ 0.6500. SL @ 0.6540, TP @ 0.6400
Sell S+P @ 2960. SL @ 2985, TP @ 2880
EurUsd: The Euro is once again unchanged on Friday at close to1.1200, after another choppy session, trading between 1.1180/1.1231, and leaves the technical outlook pretty much intact. The neckline of the HS formation, at 1.1215, was briefly taken out yet again, as was the 100 DMA (1.1225), but as with Wednesday and Thursday 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$Jpy: traded mostly sideways until a quick 30 point selloff in the dollar after the Huawei headline, which spured the Jpy higher and currently the pair trades just above the low of 105.70. Further safe haven demand will see a return to 105.51/48, where we now have a minor double bottom, but beneath which there is little support ahead of the January flash-crash low (104.01). As before, the 4 hour momentum indicators look mildly positive but the longer term momentum indicators are heavy, so selling rallies is preferred. Minor resistance will now be seen at 106.00 and at the session high of 106.30, and then again at 106.40 (23.6% of 109.30/105.48). Above here would open the way to 106.70/80 and to 107.00/10, beyond which could then head back to 107.40 (50% pivot of 109.30/105.51) and to 107.85 (61.8%) albeit unlikely in the near term. Volatile conditions are likely to continue but with the daily/weekly charts pointing lower I think a move to 105.00/104.00 is on the cards. Sell rallies.
AudUsd: The Aud has recovered from Wednesday’s spike low of 0.6675 to reach a high of 0.6821 ahead of a U-turn which currently sees the Aud$ trade at 0.6785 ahead of the RBA SOMP/Governor Lowe testimony, due this morning.The 4 hour momentum indicators are attempting to recover their oversold condition, so further bounces are possible, where resistance is will again be seen at 0.6800 (minor), 0.6821 (Session 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 0.6750 and to 0.6715/20, ahead of 0.6700 and 0.6675 although we are not going back there today unless the RBA are overly downbeat in their outlook. 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.