9 Jan: Forecast: FX: US$/Majors + trade ideas

By | January 9, 2018



EURUSD: 1.1965
€/Usd has traded lower on Monday, falling to the Fibo support at 1.1960 in seeing a low of 1.1955. The recent move higher does seem to be running out of steam and while the momentum indicators are mixed, a move towards 1.1900/1.1885 would not now really surprise, with the 9 month rising trend support currently sitting at 1.1830. On the topside, back above the session high of 1.2055, unlikely I think, would allow for a run back towards 1.2080/90, and if we can take out the 8 Sept high of 1.2098, it would then open up the chance of a move towards 1.2160 and in the bigger picture, towards 1.24 (200 MMA). Today will look to the German Industrial Production, Trade Balance, the EU Unemployment and the ECB Non-Monetary Policy Meeting Minutes for inspiration but the bigger picture will continue to look towards the Italian election (Mar 4) and also as to how Angela Merkel comes out of her negotiations with the SDP and the CSU in order to re-establish her coalition power base.
1 hour/4 hour indicators: Mixed – Turning lower Daily Indicators: Possible topping formation Weekly Indicators:  Neutral
Preferred Strategy:  With the momentum indicators generally seeming to hint that a top may be in place, selling rallies does now seem to be the plan.

Sell EurUsd @ 1.2000. SL @ 1.2060, TP @ 1.1900

Resistance Support
1.2091 8 Sept high 1.1960/55 (23.6% of 1.553/1.2025)/Session low
1.2088/82 4 Jan high/5 Jan high 1.1920 Minor
1.2051 Session high 1.1900 Minor
1.2020 Minor 1.1885 (38.2% of 1.553/1.2025)
1.1990 200 HMA 1.1845 Minor

Economic data highlights will include:

German Industrial Production, Trade Balance, EU Unemployment, ECB Non-Monetary Policy  Meeting Minutes, US NFIB Business Optimism Index, API Weekly Crude Oil Stock Inventory

USDJPY: 113.08
US$Jpy briefly headed higher in Asia/Europe on Monday in reaching 113.38 before falling quite sharply to 112.87 and then consolidating near 113.00 for the balance of the session. With the momentum indicators generally looking pretty flat on Tuesday, and with little to provide inspiration until the US CPI on Friday, I suspect further choppy sideways trade within the broad 112/114 range is in store.
1 hour/4 hour indicators: Mixed. Daily Indicators: Neutral Weekly Indicators:  Neutral
Preferred Strategy:   As with Monday, I don’t really have too much of a directional view of US$Jpy right now although while the stock market continues to make gains the dollar should remain well underpinned. 113.30/40 should continue to see decent sellers although a break would allow 113.75/80 and possible 114.00. Above 114.20 would then see a break of the descending trend resistance which could see an acceleration higher. On the downside, support will be seen at there are buyers at 112.70 while stronger support lies in the 112/112.30 area.

US$Jpy range trade 112.50/113.50

Resistance Support
114.20 Descending trend resistance 112.87 Session low
114.00 Minor 112.80 200 HMA
113.75/80 12 Dec high /(76.4% of 114.73/110.83) 112.50 Minor
113.63 21 Dec high 112.35 200 WMA
113.38 Session high 112.02 15 Dec low

GBPUSD: 1.3566
Sterling traded a choppy, sideways range on Monday (1.3522/85) as traders concentrate on the changes to the UK cabinet announced by the PM, Theresa May. Brexit woes do seem to be waning for the time being and if this remains the case Sterling will outperform against the Euro, s selling that cross may be a plan.
1 hour/4 hour indicators: Neutral Daily Indicators: Turning higher?


Weekly Indicators:  Turning higher?
Preferred Strategy:   The short term momentum indicators are still mixed and a neutral stance is probably wise, but the dailies still look mildly constructive so, buying dips currently seems to be the plan while keeping a tight stop in place. With the Euro looking heavy, selling EurGbp may be a better plan.

Buy GbpUsd @ 1.3500. SL @ 1.3475, TP @ 1.3600

Resistance Support
1.3700 Minor 1.3550 Minor
1.3656 20 Sept high 1.3522 5 Jan low /Session low
1.3635 Minor 1.3494 3 Jan low
1.3612 3 Jan high 1.3480 200 HMA
1.3585 Session high 1.3475 (23.6% of 1.3038/1.3612)

USDCHF: 0.9774
US$Chf traded sideways in choppy fashion on Monday, confined to 0.9738/85 and leaving a neutral stance as the best option for Tuesday. While the daily charts are still pointing lower, they may be basing out and with the short term momentum indicators look a little more constructive, if 0.9785 can be overcome, we could then see a run back to 0.9800/05, beyond which would open 0.9830/40. On the downside, support will be seen at 0.9730/40 below which could see a decline to 0.9700, and potentially 0.9650 although this now looks less likely.
1 hour/4 hour indicators: Neutral –Turning higher? Daily Indicators: Turning lower – Possible basing formation? Weekly Indicators:  Neutral
Preferred Strategy:  The dailies are still heavy but the 4 hour charts are picking up some positive momentum, so, while a neutral stance is probably wise, I mildly prefer to look to buy dips today, hoping for a break of 0.9800.

But US$Chf @ 0.9740. SL @ 0.9690, TP @ 0.9825.

Resistance Support
0.9870 (61.8% of 0.9977/0.9699) 0.9738 5 Jan low/Session low
0.9835 (50% of 0.9977/0.9699) 0.9720 Minor
0.9805 (38.2% of 0.9977/0.9699) 0.9699 2 Jan low
0.9797 3 Jan high 0.9685 Minor
0.9780/83 100 DMA/200 DMA /5 Jan high/Session high 0.9655 (61.8% of 0.9420/01.0037)

Economic data highlights will include:


AUDUSD: 0.7841
After an early high of 0.7872, AudUsd traded down to a low of 7826, led by a sharp fall in AudJpy, but it has held on above 0.7825/30 support and has spent the rest of the session consolidating near 0.7840. Traders will now look to the ANZ Job Ads and the November Building Permits for guidance.
1 hour/4 hour indicators: Turning lower. Daily Indicators: Up – Possible topping formation? Weekly Indicators:  Neutral
Preferred Strategy:   The 4 hour indicators still look a little heavy so another move back towards 0.7825/30 would not surprise, below which, 0.7800/0.7810 would attract. On the topside, resistance will be seen at 0.7850 and at 0.7870 although this is now beginning to look a little toppish.

I remain neutral but it may be worth selling 0.7860, with a tight SL above 0.7890

Resistance Support
0.7935 Descending trend resistance 0.7850 Minor
0.7910 Monthly cloud base 0.7826 Session low/Rising trend support
0.7889 13 Oct high 0.7815 Minor
0.7872 Session high 0.7790 2 Jan low
0.7850 Minor 0.7780 100 DMA / (23.6% of 0.7500/0.7870)

Economic data highlights will include:

ANZ Job Ads, Building Permits

NZDUSD: 0.7177
The Kiwi traded up 0.7183 on Tuesday, closing nearby, and with the dailies looking positive further gains would seems possible in the days ahead, although with the 4 hour charts still showing a degree of bearish divergence a cautious stance is warranted. At these levels though I prefer to remain flat.
1 hour/4 hour indicators: Mixed. Daily Indicators: Up Weekly Indicators:  Turning higher
Preferred Strategy:  The outlook is pretty much the same as that for the Aud, and a neutral stance is currently preferred although if the dollar stays soft and risk-sentiment positive, then a run above 0.7200 should not be ruled out. The short term momentum indicators are showing some bearish divergence and another drift back towards 0.7145/50 would not surprise.
Resistance Support
0.7244 29 Sept high 0.7149/44 Session low/5 Jan low
0.7225 Minor 0.7130 Minor
0.7210 13 Oct high 0.7105 200 DMA/55 WMA
0.7200 Minor 0.7090 (23.6% of 0.6787/0.7186)/200 HMA
0.7183/86 Session high/5 Jan high 0.7065 100 WMA