A traders’ playbook; Five charts that are front of mind
Will we see a re-test of the recent highs of 15,800? The current flow suggests this is the risk. On the daily chart, we see price closing above the 61.8 fibo of the July/Aug sell-off, as well as the 24 Aug highs. We see price holding above the 3-day EMA, with this ultra-ST moving average pulling above the 8-day EMA. Momentum accounts would be increasing net long positions on this move. On a micro level, Nvidia is eyeing a new high, and Apple is also showing good buying interest again and as long as those stocks, along with Microsoft, attract new buyers, then the skew of risk is that the NAS100 re-visits 15,800. Happy to cut longs upon a 3- & 8-day EMA bearish crossover, flipping to shorts on a daily close below 14,687.
We’ve seen shorts cover and clients are now running a reasonable AUDUSD long skew (64% of open positions are held long). We see price testing horizontal resistance at 0.6468 and a closing break could see 0.6550 come into play, perhaps even 0.6600 – it is make or break time for the bulls. The news flow has created increased tailwinds for AUD appreciation, with Chinese authorities announcing news to cut stamp duty for equity trading, and banks to cut mortgage rates for existing loans. USDCNH is consolidating, but for AUDUSD to really go hard the bulls want to see USDCNH kick lower, while a break above $3.80 for copper would also provide tailwinds. A US nonfarm payrolls (Sat 22:30 AEST) print below 160k could again offer solid upside for AUDUSD.
In the coming days we get German CPI (today 22:00 AEST) before the EU CPI (Thurs 19:00 AEST), with the market eyeing core EU CPI into 6.3% (from 6.5%). Expectations of ECB tightening have been taken down of late, with a hike at the 14 Sept ECB meeting currently priced at 50% - the CPI data will influence that pricing and impact the EUR. Technically we’ve seen good buying off the March uptrend support, and the 200-day MA, with daily momentum studies turning bullish. Given the poor EU growth dynamics, it's hard to trust the EURUSD move, but if market sentiment continues to be positive then USD sellers could push EURUSD into 1.0950/70. The preference for shorts is to wait for a close below trend support.
News that a US court had overturned the SECs call to block Greyscales case to transition from a Trust to an ETF, that tracks spot Bitcoin over the futures, resulting in strong buying interest. We see Bitcoin recently holding the range lows and has since pushed into 27,700. There is still work needed to get a full green light to roll out a spot ETF, but we’re certainly a step closer, and we should hear more on this in the coming days. Shorts will be concerned with holding exposures ahead of further news flow on the SEC's views on rolling out a spot ETF, so there are risks price will head to 29,200.
Time for something a little more exotic - Cocoa – For those who trade trends and momentum, cocoa is a market to put on the radar. Having rallied for five consecutive days, we see price closing at the highest levels since 2011. Some will see the chart and be compelled to initiate shorts given the outrageous bull trend since October, but this is a juggernaut right now and the buyers have firm control.
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