It has been a volatile session on Thursday, and at the end of the day, the Euro, Aud and Kiwi all look as though they may have some short term upside potential, while the US stock markets and WTI both look increasingly heavy. The metals also appear to have put in a near term base and could squeeze a little higher.
EurUsd: The Euro had a volatile session in heading down to 1.1106, a new 2 year low, before a sharp bounce to end at the day’s high, at 1.1180, making a bullish key-day reversal in the process. The short term momentum indicators look bid right now, and the initial resistance will be seen here, at 1.1180/85 (200 HMA/23.6% of 1.1449/1.1106) and then at 1.1200, ahead of 1.1125, 1.1240/45 (38.2% of 1.1449/1.1106/descending trend resistance) and the May 1/Monday spike high at 1.1265. On the downside, bids will arrive at 1.1150 and at 1.1125/35 ahead of the Thursday low at 1.1106. Below 1.1100 would target 1.1060/65, where the base of the descending wedge should see decent bids. A downside break would then open the way to 1.1020 (minor) and to 1.1000. Selling rallies remains favoured although another tight session is possible but I still think we are in for a test of 1.1100 and possibly lower at some stage, albeit rather slowly. Watch the PMIs today.
DXY: (98.10) The DXY made a new 2 year high on Thursday (98.39) but then revered sharply to currently sit at 98.80, a bearish key day reversal. Further losses look possible in the near term, and on the downside support is seen at 97.75 (minor) and 97.50 ahead of the stronger level at 97.25/15. Below this, there is not too much to hold it up until the 12 April low at 96.75 and then the 100 DMA/ rising trend support, seen at 96.67. Back above 98.00, further gains would allow for a run back to 98.39 and then towards 98.80, where the top of the rising wedge lies, and then towards 100.10 (76.4% of 103.82/88.25). A cautious stance is still required given the neutral look of the weekly charts, but the dailies still look mildly constructive, so I prefer to trade from the long side and to selectively buy dips in the dollar.
AudUsd: The Aud$ held on to the support at 0.6865 and then took advantage of the soft US$ to squeeze back up to 0.6900 (200 HMA) where it currently sits. The short term momentum indicators currently look positive and with the 4 hourlies showing some bullish divergence we could see a further recovery towards 0.6930/35, 0.6945 (23.6% of 0.7205/0.6865), 0.6965/70 (minor) and 0.0.6995/7000 (6995 = (38.2% of 0.7205/0.6865). The downside will again see strong bids at 0.6865 although this seems unlikely to be revisited today. If wrong, below 0.6865, there is very little support to be seen until 0.6827, the 17 January 2016 low. Under there would allow for a return to the flash-crash low at 0.6715 although that it still some way off but I think that is where we are heading. Selling rallies is still preferred, and my longer term downside objective is 0.6650/0.6700 so, as before, I prefer to look for levels to be short in anticipation of the inevitable rate cut.
NzdUsd: The Kiwi made a bullish key day reversal after making a new trend low of 0.6481, before rallying sharply to currently sit at 0.6525. The short term momentum indicators hint at further gains, where resistance will arrive at 6545, 0.6560, and 0.6588 (23.6% of 0.6938/0.6481) and at 0.6600. On the downside, support will be seen at 0.6500 and again at 0.6480. A downside break of there, unlikely today I think, would look at the 26 October 2018, spike low at 0.6465 and then at the early Oct ’18 low at 0.6424. While the upside currently looks the most likely direction, for the longer term play, I still prefer to look for levels to sell into.
Today is a shortened outlook as I have to go to a meeting.
*Trade of the day: May 24, 2019; 6:23 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 @1.1125. SL @ 1.1275, TP @ 1.1125
Buy EurUsd @ 1.1140. SL @ 1.1095, TP @ 1.1120
Sell AudUsd @ 0.6925. SL @ 0.6960, TP @ 0.6870
Sell NzdUsd @ 0.6560. SL @ 0.6605, TP @ 0.6485