26 Oct: Forecast: FX: US$/Majors + trade ideas

By | October 26, 2017


EURUSD: 1.1814
Preferred Strategy:   EurUsd is slightly firmer today, having traded up to 1.1817 ,closing at session highs as we now wait on today’s ECB meeting and the degree/duration of any tapering that Mario Draghi could announce at the press conference. Technically, there is once again little change. The major Head/Shoulder formation still seems to be under construction, with the neckline at 1.1880.  This level roughly ties in with the major descending trend resistance (1.1860) and should see good selling interest if we get there. The dailies are pretty flat, as are the 4 hour momentum indicators, and support remains at 1.1740/50, below which further good support lies at 1.1720/30. Under here, we could then test 1.1700 and the stronger level at 1.1660/70 although probably not today. On the topside, offers will arrive at the session high (1.1817) and at 1.1825. In the bigger picture, as long as we stay under 1.1880 I am happy to stay short Euros, with the need to keep a tight SL in place above 1.1910. The H/S objective is at around 1.1250.

Sell EurUsd @ 1.1850. SL @ 1.1910, TP @ 1.1700.

24 Hour: Prefer to sell rallies Medium Term: Mildly Bearish
FX Charts Position: Short
Resistance Support
1.1880 H/S Neckline 1.1780 200 HMA
1.1857 20 Oct high/Descending trend resistance 1.1742 24 Oct low
1.1825 (76.4% of 1.1857/1.1725) 1.1725 23 Oct /Daily cloud base
1.1817 Session high 1.1720 (76.4% of 1.1668/1.1880)
1.1805 (61.8% of 1.1857/1.1725) 1.1661 17 Aug low/100 DMA

Economic data highlights will include:

German Consumer Confidence, ECB Interest Rate Decision, Statement, Press Conference, US Goods Trade Balance, Pending Home Sales, Kansas Fed Mfg Activity

USDJPY: 113.69
Preferred Strategy: US$Jpy ran up to 114.24 today but then ran into headwinds as US stocks eased back because  of the higher US bond yields, causing US$Jpy to finish more or less unchanged at 113.80.  I think we are in for more of the same choppy trade today with the US House Budget/tax plan, the ECB Interest Rate Decision & Donald Trump’s Fed pick all being the main event risk heading into Friday’s US GDP release. With both the 1 & 4 hour charts still looking rather uninspired further choppy action looks possible although the dailies continue to pick up a more positive tone, and on the topside, back above 114.00, resistance will be seen at the session high of 114.25, above which there is not too much to stop the dollar heading towards 114.50 and beyond that, to the major descending trend resistance, currently at 115.05. On the downside, support will arrive at 113.47/50, the session low, and again at the 24 Oct low at 113.24. Below that, a test of 113.00 could be on the cards, beneath which would see us back in the previous 112/113 range. Minor support should arrive at 113.20/00 below which 112.80 (rising trend support) and Friday’s low of 112.50 should provide decent backup. Overall, with the daily momentum indicators look mildly positive, so buying dips still seems to be the plan although there may be slightly better levels to do so.

Buy US$Jpy @ 113.30. SL @ 112.95, TP @ 114.40.

24 Hour: Neutral Medium Term: Prefer to buy dips
FX Charts Position: Flat
                                         Resistance Support
115.05 Descending trend resistance 113.47 Session low
114.49 11 July high 113.24 24 Oct low
114.24 Session high 113.00 Minor
114.00 Minor 112.80 Rising trend support
113.85 Minor 112.50 20 Oct low

Economic data highlights will include:                        

Foreign Bond/Stocks Investment

GBPUSD: 1.3261
Preferred Strategy: Sterling surged to its highest in over a week on Wednesday after the Q3 UK GDP growth rose to 0.4% from 0.3% beating expectations of 0.3% and raising hopes for a BOE rate hike in November. Cable does remain very choppy so I prefer to continue with a neutral stance against the US$ although I still like being long GbpAud, which I think is eventually headed to 1.82. As far as Cable is concerned, the direction will come from the ECB decision. The momentum indicators are generally flat, although the hourlies are possibly rolling over to head a little lower.
24 Hour: Neutral Medium Term: Neutral
FX Charts Position: GbpUsd – Flat. GbpAud – Long
Resistance Support
1.3370 Minor 1.3220 Minor
1.3337 13Oct high 1.3200 200 HMA
1.3300 Minor 1.3170 100 HMA
1.3286 17 Oct high 1.3130 Minor
1.3271 Session high 1.3109 Session low

USDCHF: 0.9894
Preferred Strategy:  US$Chf traded up to the Fibo resistance at 0.9940 before reversing and then trading down to 0.9869.While the dailies look increasingly positive I suspect that the dollar will eventually take a look at 1.0000+ although it has to overcome Fibo resistance at 0.9940 first and may struggle to do so today unless the ECB are overly dovish, putting downside pressure of the Euro. However the 4 hour charts suggest some short term weakness and on the downside, support will be seen at 0.9870 and then again at around 0.9840.  Staying long and buying dips is still preferred.

Buy US$Chf @ 0.9845. SL @ 0.9795, TP @ 0.9990.

24 Hour: Prefer to buy dips Medium Term: Mildly Bullish
 FX Charts Position: Long
Resistance Support
1.0000 Psychological 0.9868 Session low
0.9990 (61.8% of 1.0343/0.9420) 0.9837 24 Oct low/100 WMA
0.9965 Minor 0.9815 200 DMA
0.9940 Session high/(76.4% of 1.0099/0.9420) 0.9800 Minor
0.9920 Minor 0.9780 Rising trend support

AUDUSD: 0.7706
Preferred Strategy:   The CPI miss yesterday has ensured that the Aud is under heavy pressure on Thursday and is currently struggling to hang on to support at 0.7690 (200 DMA). The 4 hour charts are heavy but oversold, while and the dailies are pointing increasingly lower, and a sterner test of 0.7690 seems inevitable, below which would target minor levels at 0.7670/50 although there is little meaningful support until 0.7630. On the topside, minor resistance will be seen at 0.7715 and again at 0.7730, above which could squeeze towards the 7750 and even to the session high of 0.7785 although this looks rather doubtful.

Sell AudUsd @ 0.7715. SL @ 0.7760, TP @ 0.7630

24 Hour: Prefer to sell rallies Medium Term: Mildly Bearish
FX Charts Position:   Short
Resistance Support
0.7785 (23.6% of 0.8102/0.7690) 0.7690 Session low /200 DMA
0.7860 Minor 0.7670 Minor
0.7845 Minor 0.7650 Minor
0.7830 Minor 0.7630 (61.8% of 0.7328/0.8124)
0.7715 Minor 0.7600 Minor

Economic data highlights will include:

Australian Import/Export

NZDUSD: 0.6891
Preferred Strategy:   The Kiwi remains very heavy on Thursday, and with the NZ Trade Balance coming up further losses seem very possible (exp $-900 mio). The dailies remain negative and as before, trading from the short side and selling rallies seems to be the plan. On the downside, a move back below the session low of 0.6860 would target the 0.6817 May 2017 low, below which there is not too much support ahead of 0.6670. On the topside, resistance will be seen at 0.6900/15 and selling into rallies is preferred.

Sell NzdUsd @ 0.6915. SL @ 0.6940, TP @ 0.6815

24 Hour: Prefer to sell rallies Medium Term: Bearish
FX Charts Position: Flat
Resistance Support
0.7009 (38.2% of 0.7210/0.6885) 0.6860 Session low
0.7003 24 Oct high 0.6840 (50% pivot of 0.6125/0.7557)
0.6960 (23.6% of 0.7210/0.6885) 0.6835 Minor
0.6930 Minor 0.6817 11 May low
0.6911 Session high 0.6800 Minor

Economic data highlights will include:

NZ Trade Balance