The last few trading have been both interesting and calm at the same time. There is a great deal of hesitation in Risk markets, both ways, as we are close to the U.S. Election, waiting for an outcome on U.S. stimulus and Brexit.
We have a some profitable trades lately. However, it is definitely choppy and we expect these types of conditions through the U.S. election. Let's look at some charts to help us see where we may be headed in different assets. Presently, both our short-term and long-term Risk Oscillators are slightly in overbought territory. Given all the uncertainties, we expect the oscillators to bounce between slightly overbought and oversold conditions. We are not covering the DXY here today as we had a special commentary posted yesterday.
Let's Go.
S&P500
Looking at the S&P 500 as a proxy for risk. It has been looking like the markets want to break out to the upside as evidenced with the inverted head and shoulders pattern above. The neckline has served as support and this index has not violated it. Further, we see a down-trending line serving as resistance. We expect this market to stay rangebound until we get more clarity on the all the macro issues.
GBP/AUD
This fast mover, we pointed out last week to watch the 1.8300 level. Well, it looks like it is ready to break through and continue up into the 1.8700 area. As we speak it is breaking out of a very long channel. It looks like it is safe to go long now. Make sure to use a SL as this one can move very quickly.
AUD/JPY
The AUD/JPY cross is another good proxy for risk. As we can see above it is still trading within a well defined descending channel. Currently it is hitting up against resistance. Therefore we would expect it to turn and move south going into the election period. As such, we closed our long position this morning.
AUD/USD
As noted in yesterday's commentary about the DXY. Dips in this pair should be bought, as eventually we expect the U.S. Dollar to continue its downtrend. We are presently looking for this pair to continue to meet resistance at our long-term moving average line in the short-term. However, as time passes and we get closer to resolving the uncertainties described at the top, we expect a continuation of the longer-term uptrend.
EUR/USD
The Euro is currently trapped within a bull flag pattern. Again, the resolution of the U.S. election, Brexit and U.S. stimulus setup a scenario where we can see the Euro break hard to the upside. In the meantime we expect it to stay choppy until we begin to see some resolution. Watching our long-term moving average as support around 1.16-1.17 area for new buying opportunities.
NZD/USD
The KIWI is trapped within the rising channel shown above. Presently trading in a tight range in between our long-term and short-term moving average. The RSI is trading right around the 50 level. We expect the U.S. Dollar to be the primary driving force in this pair. We are looking to buy dips unless we get a strong break below our long-term moving average.
GBP/USD
The Pound is currently in a trading range between our long-term moving average and the resistance neckline of what appears to be an inverted head and shoulders pattern as shown above. This is is inline with everything we are seeing in all the other markets. We are looking for breakout above 1.30 area to buy a trend. Again, as sustained breakdown below our long-term moving average would invalidate our thesis.
Thank you for reading and Happy Trading.
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