While the FX markets are pretty much unchanged, the real action has been in oil, silver and gold, which all looks as though they could continue their current directional bias – up for the metals, down for WTI. The US stock indices also look increasingly heavy. In the FX crosses, the momentum indicators are not strong but the general short term theme seems to be one of Jpy strength, but with mixed messages from the Aud, Nzd, Eur and Gbp.
EurUsd: The Euro did little on Wednesday and after being stuck in a tight range it is still holding on above the 1.1200 level, which has once again provided good support, going back to early July. The overall outlook remains fairly neutral, and given today’s thin calendar, we may expect more of the same in the session ahead. On the downside, support will once again be seen at important 1.1190/1.1200 level, where the neckline of a head-shoulder formation may be building – which if correct would have a target of around 1.1000. Ahead of that, if 1.1190/1.1200 is taken out, then we could see a move towards 1.1178 (76.4% of 1.1105/1.1411), which ties in with the 18 June low (1.1181), below which would then open the way to 1.1150 and to strong support at 1.1105/15. On the topside, resistance will be seen at 1.1235 (minor) and at 1.1250 (100 DMA) ahead of 1.1285 (11 July high) and then at 1.1300 ahead of the 200 DMA at 1.1320 (also 61.8% of 1.1411/1.1192) .Above here looks unlikely in the short term, but further gains could then see a run towards 1.1360 (76.4%) 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). I still prefer to look to sell rallies in the Euro, hoping for a break of 1.1190 and a move back towards 1.1100/15 although it may be another tight session ahead today so don’t look for too much either way I suspect.
DXY: (97.22) The DXY ended slightly lower on Wednesday but still above the 100 DMA (97.10). The daily momentum indicators do look mildly positive, so if we can see a topside break of the 16 July high at 97.45, look for further gains towards 97.59 (9 July high) and 97.76 (18 June high). Beyond here would then target 98.00 and the trend high at 98.37 (23 May) although that is a long way off. On the other hand, nearby support arrives at 97.10 (1 00 DMA) and at 97.00 (minor). Below 97.00, a downside break of 96.80/73 (200 DMA/12 July low) would open the way to 96.40 (minor) and 96.00 (200 WMA), below which could see a decline to the 25 June/20 March lows of 95.84/74. This area should be quite strong, but a break would see a move towards the 10 Jan low at 95.03. With the daily charts still looking mildly supportive I suspect we may see the US$ squeeze higher at some stage, so prefer to trade from the long side for now.
US$Jpy: is back near the 107.80 support that we previously mentioned and needs to hold this level in order to avoid deeper losses. If so, points to watch on the downside are at the current level at 107.88 (50% of 106.78/108.98), but below 107.80, the next targets will be at 107.62 (61.8% of 112.40/106.78) and 107.53 (04 July low). Under here would want to look at 107.30 (76.4%) and 107.00 but possibly not yet. On the topside, resistance will be seen at 108.00 and then at the Wednesday high of 108.31. Beyond there, further targets would be at 108.50 (minor) ahead of 108.60 (12 July high), 108.85 and at 109.00. Neutral, although a test of stop losses sub 107.80 seems to be looming.
AudUsd: As with Wednesday, Thursday sees the Aud open at 0.7010, and we now await the domestic jobs data for the next directional bias.On the downside, a break of 0.7000 (0.7005 = 100 HMA) would allow for a run towards 0.6985 (200 HMA), to 0.6970 (minor) and 0.6958 (Daily cloud base) although this looks unlikely to be bothered today. More distant downside levels lie at 0.6930/35 and at 0.6910. Below 0.6900 could open the way for a return to the 18 June low of 0.6830 although that remains a long way off and interim bids would be seen at 0.6880 (76.4% of 0.6831/0.7047) and at 0.6850. On the topside, resistance will be seen at 0.7023 (Session high) and then at 0.7045/50 which has provided the peak of the last two rallies and may be a double top. Beyond there though would allow for a move to 0.7060 (61.8% of 0.7207/0.6831), the weekly cloud base at 0.7077 and the 200 DMA at 0.7092. Right now, selling rallies with a SL above 0.7050 is the preferred plan.
NzdUsd: The Kiwi is being very resilient right now, after having made a new trend high of 0.6745 on Wednesday, before turning a little lower, to currently sit at 0.6730. While the daily charts still look mildly positive, the short term momentum indicators appear to be topping out and some minor downside momentum may now lie in store although a relatively quiet session seems likely. The 200 DMA at 0.6715 will possibly act as a magnate, but below which would see a return to 0.6600 and eventually to 0.6675 (100 DMA/ (23.6% of 0.6487/0.6733), beyond which would want to look at 0.6755 and 0.6640 but not today. On the topside, resistance will be seen at 0.6745/750 and at 0.6763 (61.8% of 0.6938/0.6481) ahead of the more distant 0.6782, (15 April high). Above here allows for 0.6800 but this seems some way off right now.
Gold: while it has been volatile within a 1400/1440 range in recent weeks, Gold appears to be building a large bull flag with plenty of upside potential, so it is worth keeping a close eye on. If the base of the flag pole is at 1275, then the target would be at around 1600, so we may be on the verge of a sizeable move, especially if the Fed start cutting rates aggressively.Until 1440 breaks though, further choppy, sideways trade is likely. Buying dips is preferred.
Silver: is leading the way higher for the metals and appears to have further to run although it is reaching some significant resistance, with descending trend resistance stretching back to early 2107 lying right ahead, beyond which, the 200 WMA currently sits at 16.30. While the weekly momentum indicators are flat, the dailies appear to be building some upside momentum, so buying dips is preferred, looking for a test of the 200 WMA, beyond which 16.65 would be the next target.
———————————————————————————————————————
*Trade of the day: July 18, 2019; 7:49 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 @ 1.1275, TP @ 1.1180
Buy EurUsd @ 1.1190. SL @ 1.1160, TP @ 1.1280
Sell AudUsd @ 0.7040. SL @ 0.7065, TP @ 0.6970
Buy AudUsd @ 0.6975. SL @ 0.6945, TP @ 0.7040
Sell NzdUsd @ 0.6750. SL @ 0.6755, TP @ 0.6680
Buy Gold @ 1415. SL @ 1395, TP @ 1440
By July 18, 2019
Source: FXCharts