The FX markets were fairly rangebound on Friday despite the NFP missing expectations although the Aud and Nzd were firm and this looks as though this theme could continue, at least early in the week, so buying either seems to be the immediate plan, against the US$, Euro and the Jpy. As usual I would leave Sterling alone while the Brexit mess continues.
Stocks look set to be choppy although the overall bias seems to remain to the upside.
The metals seem to have further downside potential.
Note that UsdCnh has a weekly key reversal lower – along with some bearish divergence, – so any positive headlines regarding the trade talks would seem to suggest a decent pullback – which in turn would most likely help the commodity currencies higher. On the subject of key weekly reversals, note that both the Aud and Kiwi also both made key weekly bullish moves to the topside, which would add to the argument for a stronger commodity bloc in the medium term.
*Trade of the day: September 9, 2019; 11:44 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 @ 1.1070. SL @ 1.1105, TP @ 1.1000
Buy EurUsd @ 1.0990. SL @ 1.0950, TP @ 1.1100
Sell AudUsd @ 0.6880. SL @ 0.6905, TP @ 0.6885
Buy AudUsd @ 0.6825. SL @ 0.6795, TP @ 0.6875
Buy NzdUsd @ 0.6390. SL @ 0.6355, TP @ 0.6450
Sell Gold @ 1520. SL @ 1530, TP @ 1500
EurUsd: The Euro remained fairly rangebound on Friday and closed the week at 1.1205, pretty much at the previous session levels and leaves the outlook unchanged. While I think conditions will once again be choppy near current levels on Monday given the absence of any major data, the daily charts look as though they are trying to from a base, so we could see higher levels, where resistance would again arrive at 1.1050/60, ahead of the 1.1085, 5 Sept high, and then at 1.1100 and 1.1110 (38.2% of 1.1411/1.0925). Above here would then target 1.1125(61.8% of 1. 1249/1.0925) and the 26 August high of 1.1163 but which seems unlikely to be visited again for a while, although a return to the top side of the descending wedge (1.1300) cannot be ruled out at some stage.. On the downside, support will be seen at 1.1000, 1.0965/70 and then at 1.0940/50 ahead of the 1.0925 low. Below that opens the way to 1.0900 and to 1.0860 (76.4% of 1.0340/1.2555), below which there is a chart gap that would take us to 1.0772. Buying dips, with a SL placed below 1.0980 may again be the plan for today in what I suspect may be a rangebound session.
US$Jpy: Having briefly spiked up to 107.22 on Thursday US$Jpy then chopped around on Friday, in a 50 point range (106.60/107.10) before closing the week just under 107.00. The short term momentum indicators now look neutral/negative but the dailies still look positive, and above 107.20/26 (2 Aug high) would allow a run towards 107.45 (61.8% of 109.31/104.44) ahead of 108.00 and even 108.15 (76.4) albeit unlikely in the near term. On the downside, the initial support now sits at 106.60 below which would allow a return to 106.45 (100 HMA), 106.30 (200 HMA) and back towards 106.00. Below here seems unlikely today, but further bids would arrive at 105.75/85 and the 27 August low of 105.59. Further out, bids would arrive at 105.50, at 105.15 and at 105.00 (all minor). Beneath 105.00 there would again be little support ahead of the 26 August, 104.44 low and then the January flash-crash low (104.01). Looking to buy dips with a SL under 106.30 may be the plan today.
AudUsd: The Aud$ squeezed higher once again on Friday in reaching 0.6860 before closing a little lower (0.6850). After having made a bullish outside week, the charts do look constructive for further gains on Monday and a break of 0.6860 though could see a run higher, with little to prevent it from heading towards 0.6875/80, to 0.6900 and then to 0.6926 (61.8%). On the downside, minor support will be seen today 0.6820 (23.6% of 0.6687/0.6860) and again at 0.6800/0.6795 (38.2%). This seems unlikely to be visited today, but if wrong, below there could see a decline towards 0.6774 (50% of 0.6687/0.6829). I don’t really see it under there for a while but if wrong, further bids would arrive at 0.6750/52 (61.8%) and at 0.6727(76.4%). Although the dailies do point quite sharply higher, the short term momentum indicators are overbought and are showing some bearish divergence, so buying dips is favoured with a SL placed sub 0.6795, or alternatively waiting to sell into a run towards 0.6900.
NzdUsd: The Kiwi continued its strong recovery on Friday after having made a new multi year low at 0.6269 on Tuesday, reaching 0.6443 before closing the week at 0.6428, and as with the Aud$, the Kiwi also had a bullish outside week. This means that further gains look possible and above the 0.6443 high would allow a move towards 0.6466(38.2% of 0.6789/0.6269) and then onto 0.6498 (9 August high) and possibly towards 0.6530 (50% pivot of 6789/0.6269). On the downside, 0.6400 should provide support today, below which could see a return to Friday’s low of 0.6363 and Thursday’s low of 0.6353. Further declines would then target 0.6330, below which could head back to 0.6300 and then to the trend low of 0.62690, which looks pretty safe right now. The long term charts still look heavy though and below 0.6270 the next meaningful support is not seen until the September 2015 low at 0.6235, while more distant bids would arrive at the August 2015 low at 0.6125. With the short term momentum indicators currently looking more constructive, I suspect that buying dips is once again the near term plan although, in the longer term, I still think we have plenty of downside potential.