It has been a rather uninspiring session for FX traders and it would seem likely to remain so, at least until the US session, when Fed Chair Powell testifies to Congress, although the US$ does seem set to retain its mildly bid tone given that the short term charts generally look supportive. Further losses in the stock markets would not surprise as the daily charts look increasingly toppish, while the metals also look a little heavy.
EurUsd: The Euro remains under some pressure but for now is hanging on above 1.1200, although the 4 hour/daily charts look heavy and if this level can be taken out then we could see a move towards 1.1178 (76.4%), which ties in with the 18 June low. Below there would then open the way to 1.1150 and to strong support at 1.1105/15. On the topside, resistance will be seen at the session high of 1.1235 and then at the 100 DMA 1.1255, ahead of minor levels at 1.1280, 1.1300 and at 1.1315 ahead of the 200 DMA at 1.1350.Above here looks unlikely in the near future, but further gains could then see a run towards 1.1400 and the 25 June high of 1.1411, beyond which the next target is at 1.1447 (20 March high), which ties in with the Fibo level (23.6% of 1.2555/1.1106). With the daily charts looking a little heavy I still prefer to look to sell rallies in the Euro.
DXY: (97.36) The DXY is a little higher on Tuesday, and with the daily momentum indicators still looking positive I think we could see further gains in the coming sessions. If so, the initial resistance will be seen at 97.43 (Friday high) and then at 97.76 (18 June high) although we are unlikely to see much movement until Powell speaks later today. Beyond here would then target 98.00 and the trend high at 98.37 (23 May). Below the 100 DMA (97.08), nearby support is seen at 97.00, below which would allow for a run back to 96.85 and to the 200 DMA (96.65) ahead of 96.40 (minor) and 96.00 (200 WMA) and then at last week’s low of 95.84. Buying dips currently seems to be the plan, with a SL placed below 96.60 (approx 1.1300 EurUsd)
US$Jpy: is higher again on Tuesday, once again underpinned by firm US yields and dovish comments from the BOJ. Having reached 108.63 on Friday, this has now been taken out, with the dollar reaching the 11 June high at 108.80, which has currently capped further gains. A break would find further sellers at the Fibo level at 108.90 (38.2% of 112.40/106.78), above which would open the way to 109.00 and higher, with minor resistance seen at 109.10/15. Beyond which would open 109.50 (50% of 112.40/106.78) and eventually back to 110.00. Support will now be seen at 108.50, at 108.25/30, at 108.00 and at 107.77 (Friday low) ahead of 107.53 (04 July low). This seems some way off right now but further support would arrive at 107.35 and 107.00. The short term charts are showing hints of bearish divergence, so I remain neutral on US$Jpy at these levels but prefer to look for levels to buy US$Jpy given the positive look of the daily charts.
US$Chf: continued to trade on a firm note in reaching a high of 0.9946 on Monday, and with the 4 hour/daily momentum indicators looking constructive, buying dips may still be the plan. Support would once again arrive at 0.9900 (0.9898;Session low) and then at 0.9880 (minor), ahead of the 200 WMA (0.9847) and the 100 WMA (0.9830), so looking to buy on approach to these, with a tight SL placed under 0.9830 might be an idea. On the topside, resistance will be seen at 0.9945/50 and then at the 200 DMA (0.9980) and at the 100 DMA (1.0013). Further out, 1.0100 would be a more distant target.
AudUsd: The Aud has traded a tight range on Monday (0.6966/93) but ended the day near the lows, and is now waiting on the NAB Business Conditions/Confidence.. With the 4 hour/daily charts looking increasingly heavy, a return to 0.6955/65 (0.6965; 38.2% of 0.6831/0.7048) could be on the cards, which should be strong support given that it is a minor triple-bottom, but a break of 0.6950 would suggest further declines towards 0.6940 (50%) and to 0.6913 (61.8%) and possibly lower. Below 0.6900 could open the way for a return to the 18 June low pf 0.6830 although that remains some way off. On the topside, minor resistance will be seen at 0.6990/7000, 0.7020 both minor and at 0.7035/40 (Daily cloud top/100 DMA),ahead of the 0.7048 trend high, which would be strong if we were to see it, being the 18 month descending trend resistance. If that gets broken at any stage, stops would be triggered and allow for a run towards 0.7070 – which should be strong – (61.8% of 0.7207/0.6831/ weekly cloud base, ahead of the 200 DMA at 0.7095.
NzdUsd: The Kiwi is unchanged from last Friday’s close on Tuesday morning, currently at 0.6625. The charts suggest further downside momentum, and a break of Friday’s low at 0.6600 would all for a move towards 0.6578 (61.8% of 0.6487/0.6726) and then to 0.6555 (minor) and to 0.6543 (76.4%). Selling rallies now seems to be the plan, where resistance should arrive at 0.6635/40, 0.6670, 0.6695 (100 DMA)/0.6705 (200 DMA). A mild short squeeze is possible but I don think will be very strong, and eventually lower levels seem likely.
Gold: has fallen back below 1400 but remains within the wide -and highly volatile – range of 1438/1380, leaving the outlook rather clouded. The daily charts have become overbought and are turning lower so I prefer to look to sell rallies, with a SL placed above 1410 (200/100 HMAs).A break would see the chance of further gains, back towards 1425 and then to the trend high at 1440. Beyond 1440 would look towards 1450 (12 May ’13 high), beyond which there is little in the way of 1481 (50% pivot of 1921/1048) and even 1500. On the downside, support will be seen at 1380/85 and then at 1376 (38.2% of 1275/1439) and to 1365 below which there is not a whole lot to stop it heading towards 1355/50. Given the negative look of the daily charts, trading from the short side is currently preferred.
Stocks: lost around 0.5% on Monday following on from Friday’s jobs data, which took some of the steam out of the indices as doubts grow of a July rate cut by the Fed, although the overall uptrend remains firmly intact while waiting on today’s important testimony to Congress from Fed Chair Powell. A dovish outlook from Powell would see a return towards the all-time highs for the S+P and the DJI, beyond which we could see a steady climb towards new blue sky territory. A good deal of caution is required at these levels though, as there are increasing warnings of bearish divergence both in the short term and in the long term charts, where the weekly RSIs in particular seem to be running out of steam. I prefer to trade from the short side with a tight SL place above the all-time high in either index.
WTI: ended a little lower on Monday, at 57.50, but confined within its recent range. The 100 DMA (59.12) and the 200 DMA (58.20) are crossing lower and will act as resistance, and will take some of the steam out of further upside momentum. If we do manage to break higher though, look for an extension towards the descending trend resistance/100 WMA, current at 60.30 but declining rapidly. Ahead of that, the 50% pivot of the whole move down from 76.87/42.23 lies at 59.50. A break of 60.30 would allow for steeper gains, towards 63.00/50 although that remains some way off. On the downside, support will be seen at 57.20/00 and again at 56.25/00 below which would open the way to 55.40 (50% pivot of 50.58/60.24). With the 4hour/daily/weekly charts in neutral, further choppy/sideways trade seems likely and I remain neutral.
*Trade of the day: July 9, 2019; 8:31 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 @1.1250. SL @ 1.1305, TP @ 1.1150
Buy EurUsd @ 1.1150. SL @ 1.1115, TP @ 1.1310
Buy US$Jpy @108.45. SL @ 108.15, TP @ 109.15
Buy UsdChf @0.9910. SL @ 0.9880, TP @ 0.9995
Sell AudUsd @ 0.6990. SL @ 0.7025, TP @ 0.6915
Sell Gold @ 1425. SL @ 1442, TP @ 1385
Sell S+P 2985. SL @ 3010, TP @ 2900