So the main event today was the FOMC minutes, which frankly didn’t really point to much, though that didn’t stop the markets trying to make more out of them than there really was. The key sentence for me was ‘few FOMC members see tapering soon’. This seemed to be taken two ways, on the Dovish tone that there is disagreement in the Fed, and on the Hawkish tone that tapering will happen shortly. Realistically, I think the market jumped the gun on this one as I suspect the tapering decision is still largely dependent on unemployment data.
The one thing that did raise a couple of alarm bells though, was the fact that Retail Traders were again setting some of the direction, this typically means that the moves were pretty light and big players are still staying away at this moment in time. This also means these rather aggressive moves on low volume can easily be reversed, so the key is to keep your wits about you with European PMI data tomorrow (with good data we could easily see it reverse today’s losses rapidly) and the US Jobless figure, where again good data will see the US Dollar strengthen.
EURUSD
Long: 1.3320
RTAS Order Book systems continue to hold longs in the EURUSD but the pair really tumbled today on light volume. Retail Traders were selling the pair into the close which we were slightly concerned to see but for the time being we hold our long position although the Order Book System is close to switching to shorts again.
Key levels in the EURUSD at the moment with the pair flirting with the 1.3400 mark. PMI and the Jobless number out of the US will be key tomorrow. Good European data and a weak US Jobless figure could send this pair rocketing with Retail Traders so Bearish. That said we could easily be starting to see the turn in the US Dollar finally. With September typically S&P500 negative (typically USD positive) this would be a good initial sign for the turn if the pair can hold below 1.3400.
GBPUSD
Long: 1.5620
RTAS Order Book systems holding longs this pair but back to break even as the pair really struggled at the 1.5700 mark. That said, at the close Retail Traders really set the direction and tone for this pair and we need to be careful with it, as an 80 pip drop on Retail Trader orders is pretty unusual.
Retailers now aggressively short this pair and if we start to see some buying on a move lower we would expect to see the turn in this pair, if we continue to see selling we would expect this pair to push higher once more.
Having broken the 200 day SMA, the GBPUSD is now looking relatively well supported with the 1.5600 level and then the 200 day SMA below at 1.5520 both providing support. If the pair does push higher we could now easily see it test the 1.5750 highs from June, if we continue lower the pair needs to break and hold below 1.5600 initially.
AUDUSD
Short: 0.9030
System switched to longs and then back to shorts today. Minor loss on the longs but nice profit on shorts again. More Retail Buyers stepping in and buying the dip in the pair really opened it up to more weakness. Now mixed support below with heavier support coming in around the 0.8840 mark. If Retail Traders continue to buy then we could easily see a push towards these levels.
Pair has be carving out a bottom recently but really failed to break that key 0.9222 level which we highlighted and has now dropped lower again. With no real support this pair could struggle again, however we maintain a choppy outlook for it as it finds its feet again.
USDCHF
Short: 0.9275
Order Book systems holding shorts as we continued to see Retail Buying today as the pair moved higher. Pair now needs to break and hold above the 0.9240 mark to really push higher and retrace some of the recent losses.
We now sit back in our key support zone we highlighted before and the pair is essentially range trading between the 200 day SMA and this support area. If it manages to break one of these areas we are likely to see a push in that direction, but until then we see this pair continuing its chop. We have therefore switched Order Book systems to a short term basis.
EURAUD
Long: 1.4510
The RTAS Order Book system now holding long this pair as it tested the key 1.4500 level for the third time and failed to break. Further Retail Sellers today helped push the pair even higher although we now sit back in extremes in the Order Book and at the key 1.4890 pivot level. If this pair now manages to break 1.4900 to the upside we could easily see the 1.5000 level tested.
1.4890 still acting as the next key resistance point and we can look for Order Book reactions around these levels, however Retailers have been aggressively short this pair since the 1.2400 level.
The aggressive RSI divergence on the daily timeframe does provide a slight warning sign to a reversal but we will need to see this confirmed within the Order Book for this to have any further follow through.
