Investor worry works its way back into the mix

GBPUSD – technical overview

The market has seen a recovery out from the lowest levels since 2016, with the price recovering back above the daily Ichimoku cloud to take the immediate pressure off the downside. Ultimately, only back below the bottom of the daily Ichimoku cloud would compromise the more constructive outlook for the major pair. Next key resistance comes in the form of the 2019 high from March around 1.3380. Setbacks should ideally be well supported ahead of 1.2400.

• R2 1.3013 – 21 october high – Strong
• R1 1.3000 – Psychological – Medium
• S1 1.2749 – 17 October low – Medium
• S2 1.2657 – 16 October low – Strong

GBPUSD – fundamental overview

Boris Johnson's attempt to fast track his Brexit deal into law was defeated by a 322-308 margin, after a vote approving the broad principles of the deal had passed. The EU's Barnier said it could take two, three, or maybe even more years to reach a trade deal with the UK. Barnier will be heading up the EU's new task force for relations with the UK. The Pound was weighed down on all of his, while also not getting help from an abysmal October CBI manufacturing orders print, the lowest reading for this series in nearly 20 years. Looking ahead, the economic calendar is exceptionally thin, with no first tier releases due out of the UK or US.

USDJPY – technical overview

The longer-term downtrend remains firmly intact, with the major pair recently taking out major support in the form of the 2018 and 2019 lows respectively. Rallies should continue to be well capped below 110.00 in favour of  the next major downside extension towards the 2016 low at 99.00.

• R2 109.32 – 1 August high – Strong
• R1 108.95 – 17 October high – Medium
• S1 107.85 – 11 October low – Medium
• S2 106.48 – 3 October low  – Strong

USDJPY – fundamental overview

Most of the flow in the major pair continues to be driven off risk themes. We had seen both major themes producing positive, upbeat headlines, which had been fueling the run up in USDJPY, though with Brexit worry working back into the mix, the major pair is once again under pressure. We haven't heard as much from the US-China trade front, but all has kept to the positive side into the mid-week. Looking ahead, the economic calendar is exceptionally thin, with no first tier releases due.

EURCHF – technical overview

The market is attempting to recover out from its lowest levels in two years, with the recent break back above 1.1000 taking the immediate pressure off the downside and opening the door for a larger correction back towards next key resistance at 1.1160. Overall however, the medium-term picture continues to favour the downside, and the market could have a hard time pushing much beyond that solid previous support turned resistance around 1.1160.

• R2 1.1173 – 2 July high – Strong
• R1 1.1060 – 17 October high – Medium
• S1 1.0871 – 9 October low – Medium
• S2 1.0811 – 4 September/2019 low – Strong

EURCHF – fundamental overview

The SNB remains uncomfortable with Franc appreciation and continues to remind the market it will need to be careful about any attempts at trying to force an appreciation in the currency. But the SNB will also need to be careful right now, as its strategy to weaken the Franc is facing headwinds from a less certain global outlook. Any signs of sustained risk liquidation, will likely invite a very large wave of demand for the Franc that will put the SNB in the more challenging position of needing to back up its talk with action, that ultimately, may not prove to be as effective as it once was, given where we're at in the monetary policy cycle.

AUDUSD – technical overview

The market has been under pressure over the past several months, but has also been well supported on dips. The price action suggests we could be seeing the formation of a major base, though it would take a clear break back above 0.7100 to strengthen this outlook. In the interim, look for setbacks to continue to be well supported above 0.6700 on a weekly close basis.

• R2 0.7083 – 19 July high – Strong
• R1 0.6895 – 12 September high – Strong
• S1 0.6800 – Figure – Medium
• S2 0.6710 – 10 October low – Strong

AUDUSD – fundamental overview

Aussie had received a nice boost on upbeat comments from RBA Lowe earlier in the week, while also finding demand on the rise in Aussie consumer confidence readings. However, the run has come to a halt into the mid-week, with the commodity currency coming under pressure on a downturn in risk sentiment. Looking ahead, the economic calendar is exceptionally thin, with no first tier releases due.

USDCAD – technical overview

The longer-term structure remains constructive, with dips expected to be well supported for renewed upside, eventually back above the 2018/multi-month high at 1.3665. At this point, only a weekly close below the psychological barrier at 1.3000 would compromise this outlook.

• R2 1.3348 – 3 October high – Strong
• R1 1.3240 - 15 October high – Medium
• S1 1.3071 – 22 October low – Medium
• S2 1.3016 – 19 July/2019 low – Strong

USDCAD – fundamental overview

Justin Trudeau has lost his majority, but has been re-elected to lead a minority government, which will make his job a lot tougher in the term ahead. The Canadian Dollar had come back under pressure following an impressive run, perhaps knocked back on worry around the new political climate. Another source of Canadian Dollar weakness came from the unexpected decline in Canada retail sales. Looking ahead, the economic calendar is exceptionally thin, with no first tier releases due.

NZDUSD – technical overview

Despite recent weakness, there's a case to be made for a meaningful bottom, with the market rallying out from longer-term cycle low area around 0.6200. As such, look for setbacks to be well supported in the days ahead, in anticipation of a continued recovery. Only a weekly close below 0.6200 would give reason for rethink. Back above 0.6451 will strengthen the outlook and take the immediate pressure off the downside.

• R2 0.6451 – 12 September high – Strong
• R1 0.6436 –  22 October high – Medium
• S1 0.6343 – 18 October low – Medium
• S2 0.6241 – 16 October low – Strong

NZDUSD – fundamental overview

Kiwi price action has mostly revolved around updates on the macro front relating to broader risk. The latest headlines have been upbeat with respect to the outlook for a US-China trade deal. Kiwi has also benefited from broad based profit taking on US Dollar longs and has received and added boost from the news that the Bank of New Zealand raised its 2019-20 milk price forecast. However, we have seen some selling work into the mix into the mid-week, with Kiwi coming under pressure on risk off flow associated with renewed Brexit worry. Looking ahead, the economic calendar is exceptionally thin, with no first tier releases due.

US SPX 500 – technical overview

There have been signs of a major longer term top, after an exceptional run over the past decade. Any rallies from here, are expected to be very well capped, in favour of renewed weakness targeting an eventual retest of strong longer-term previous resistance turned support in the form of the 2015 high at 2140. The initial level of major support comes in at 2854, with a break below to strengthen the outlook. A monthly close above 3000 would be required to compromise the outlook.

• R2 3100 – Psychological – Strong
• R1 3029 – 26 July/Record high – Medium
• S1 2854 – 3 October low – Medium
• S2 2777 – 6 August low – Strong

US SPX 500 – fundamental overview

Although we've seen the market extending to fresh record highs in 2019, on the back of the Fed policy reversal, with so little room for additional easing, given an already depressed interest rate environment, the prospect for a meaningful extension of this record run, on easy money policy incentives, should no longer be as enticing to investors as it once was. Meanwhile, tension on the global trade front should continue to be a drag on investor sentiment despite any signs that would suggest otherwise. We recommend keeping a much closer eye on the equities to ten year yield comparative going forward, as the movement here is something that could be a major stress to the financial markets looking out.

GOLD (SPOT) – technical overview

The 2019 breakout above the 2016 high at 1375 was a significant development, and suggests the market is in the early stages of a bullish move that follows a multi-month consolidation. The next major level of resistance comes in around 1600, while in the interim, look for any setbacks to be well supported above 1400.

• R2 1558 – 4 September/2019 high – Strong
• R1 1536 – 24 September high – Medium
• S1 1459 – 1 October low – Medium
• S2 1400 – Psychological – Strong

GOLD (SPOT) – fundamental overview

The yellow metal continues to be well supported on dips with solid demand from medium and longer-term accounts. These players are more concerned about exhausted monetary policy, extended global equities, political uncertainty, systemic risk and trade war threats. All of this should keep the commodity well supported, with many market participants also fleeing to the hard asset as the grand dichotomy of record high equities and record low yields comes to an unnerving climax.

BTCUSD – technical overview

The market continues to correct and consolidate in the aftermath of a major surge in the second quarter of 2019. However, any setbacks should be very well supported around 7,000, with an eventual higher low sought out in favour of a bullish continuation back above the 2019 high and towards the record high from late 2017 further up. Ultimately, only a weekly close below 5,750 would compromise the constructive outlook.

• R2 10,972– 20 August high – Strong
• R1 9,825 – 24 September high – Medium
• S1 7,736 – 30 September low – Medium
• S2 7,447 – 6 June low – Strong

BTCUSD – fundamental overview

Bitcoin is going through a period of technical adjustment after the fierce Q2 run up, though we anticipate continued demand from institutional players starved for yield in a world where global equities are increasingly vulnerable. Plenty of demand is reported on dips down towards $7,000.

BTCUSD - Technical charts in detail

ETHUSD – technical overview

The market is in the process of a major correction after a surge in the second quarter of 2019. Look for setbacks to be well supported above of previous resistance turned support at 150 on a weekly close basis, in favour of the next major higher low and bullish resumption back towards and through the 2019 high up at 363. Ultimately, only a weekly close below 150 would compromise the outlook.

• R2 225 – 19 September high – Strong
• R1 200 – Psychological – Medium
• S1 153 – 26 September low – Medium
• S2 150 – Psychological  – Strong

ETHUSD – fundamental overview

Profit taking in the aftermath of the rapid Q2 appreciation has triggered a healthy period of correction and consolidation, while critique of the space from the likes of President Trump and Fed Chair Powell, along with worry associated with fallout in the global economy, are stories that could continue to keep the more risk correlated crypto asset weighed down in the second half of the year. Risk off in the global economy is expected to result in ETH underperformance relative to Bitcoin.