Note: The S/R levels (AKA likely bank trader order levels) as depicted in their respective timeframes in this and prior articles have not changed, and will likely NEVER change regardless what happens in financial markets. What follows is my own world view, developed from an institutional trading career dating back to 1995.
On Monday, we said to pay attention to the more useful US stats of the week; namely, the US new home sales number and the services PMI. Both these stats showed better-than-expected increases which, over all, indicates robust economic health in the US.
The dollar is a firmer across the board with all that other stuff in the background i.e. Sino-US trade talks, slowing global growth etc.
Since there’s a BOC rate coming up, we’ll post a comment on the USDCAD.
To start, there’s no discernible trend in the D1.
From the H4 onwards, USD was only supported due to the US new home sales and services PMI numbers.
On the H1, it’s clear the dollar has already traversed a minor and then major trend set (yellow and violet boxes respectively). If USD can close above 1.3380 convincingly, we could be looking at a try for 1.3450-70.
The BOC statement might indicate future rate expectations, unless they decide to hike today.
Oil is supported above 55.75; we suspect that level will remain a key pivot while the market figures out how to play shale oil against OPEC.
Gold is still stuck around 1285 in the middle of move towards 1270.
The euro is coming back to traverse to a minor trend downwards i.e. back into the yellow zone in the H1 chart. The target in this case is to clear 1.1290 and then head to 1.1235 dollars.
That blue zone you see corresponds to a major downtrend set in the M15 chart, where you’ll see the euro testing the low of that box which coincidentally also corresponds to the the mid-point of the yellow zone in the H1.
When confluence like this happens, expect plenty of price action.
The pound had already touched our 1.3110 support target that we mentioned overnight, and is now back to 1.3170. Price action is pretty much staying inside the bounds of that blue zone in the H1 chart.
The M5 chart is a little choppy. Based on the slope of the 60-bar MA in H1 alone, we’re inclined to sell any strength in the M5 with a stop loss one S/R level away.
The AUD “plunged” about 40 pips on the back of a lower-than-expected Australia GDP number. This was the number that many expected to influence the RBA’s next rate decision.
A “plunge” of 40 pips is nothing. Looking at the H4, the Aussie will have to crack out of the yellow zone for any meaningful trend change or extension.
The trend was already down anyway, and we don’t have to tell you to sell on strength every time, right?
The Japanese yen is boring as per normal. On the M5 chart, the dollar is getting set to test 111.70 for a move toward 111.50 yen.