{"id":37227,"date":"2019-10-29T14:25:53","date_gmt":"2019-10-29T03:25:53","guid":{"rendered":"https:\/\/www.icmarkets.com\/blog\/?p=37227"},"modified":"2019-10-29T15:59:40","modified_gmt":"2019-10-29T04:59:40","slug":"tuesday-29th-october-safe-haven-markets-offered-amid-risk-on-trade","status":"publish","type":"post","link":"https:\/\/www.icmarkets.com\/blog\/tuesday-29th-october-safe-haven-markets-offered-amid-risk-on-trade\/","title":{"rendered":"Tuesday 29th October: Safe-haven markets offered amid risk-on trade."},"content":{"rendered":"\n

Key risk events today:<\/strong><\/h3>\n\n\n\n

RBA Gov Lowe Speaks; US CB Consumer Confidence. <\/p>\n\n\n\n

EUR\/USD:<\/strong><\/h3>\n\n\n\n

EUR\/USD movement picked up a modest bid Monday\namid risk-on trade, adding 20 points, or 0.19%. Overall, however, it was an\notherwise quiet start to what indeed should be an eventful week ahead.<\/p>\n\n\n\n

The key observation on the H4 scale this\nmorning is the 1.11 handle and merging trend line support-turned resistance\n(taken from the low 1.0879). Rejection may lead to a test of 1.1062, the Oct 11\nhigh, followed by a possible run to the key figure 1.10. This notable\npsychological boundary joins closely with September\u2019s opening level at 1.0989\nand a 61.8% Fibonacci retracement value at 1.0994. <\/p>\n\n\n\n

Weekly flow, as underlined in Monday\u2019s\ntechnical briefing, is respecting a long-standing resistance area drawn from 1.1119-1.1295,\nfollowing a three-week advance. Increased selling from here has the 2016 yearly\nopening level at 1.0873 to target. Concerning trend direction, the primary\ndowntrend has been in motion since topping in early 2018 at 1.2555, suggesting\nthe recent three-week advance could merely be a correction within the overall\ntrend, which is of similar size to previous corrections.<\/p>\n\n\n\n

In conjunction with technical research\non the weekly timeframe, daily support at 1.1110 gave way last week (now likely\nto serve as resistance), potentially setting the stage for an approach to the\n50-day SMA (blue \u2013 1.1034), followed by a demand area coming in at 1.0851-1.0950\n(holds the 2016 yearly opening level at 1.0873 within on the weekly timeframe).\nThe 200-day SMA (orange \u2013 1.1202) continues to face a southerly trajectory,\nwhile the noted 50-day SMA appears to be flattening.<\/p>\n\n\n\n

Areas of\nconsideration:<\/p>\n\n\n\n

Outlook unchanged.<\/strong><\/p>\n\n\n\n

With all three timeframes suggesting a\ndownward bias \u2013 weekly resistance area at 1.1119-1.1295; break of daily support\nat 1.1110 and H4 testing the underside of 1.11\/trend line support \u2013 focus\nshifts to potential shorting opportunities. <\/p>\n\n\n\n

A sell at 1.11 is certainly an option\nthis morning; otherwise traders may wait for the 1.1062 level to give way, thus\nfurther confirming strength to the downside. A H4 close beneath 1.1062 followed\nup with a retest that holds its ground is likely enough to entice sellers into\nthe market, targeting the 50-day SMA on the daily timeframe as the initial\ntake-profit zone, closely shadowed by the 1.10 figure on the H4. <\/p>\n\n\n\n

Entry and risk levels can be set\naccording to the rejection candle\u2019s structure \u2013 ensure risk\/reward is\nsatisfactory before committing to a position. <\/p>\n\n\n\n

\"\"\/<\/figure>\n\n\n\n

GBP\/USD:<\/strong><\/h3>\n\n\n\n

Leaving the psychological level 1.28 unchallenged, the British pound mildly firmed against the buck Monday. Politically, UK lawmakers rejected Prime Minister Johnson\u2019s request for an early election; Johnson will now issue a bill for a 12th of December election. The EU also granted an extension request to 31st October, further diminishing the chance of a no-deal Brexit.<\/p>\n\n\n\n

Yesterday\u2019s candles, however, lacked vigour.\nTherefore, the possibility of a retest at 1.28 today is certainly there.\nTraders considering longs off this boundary may also want to acknowledge the\ngrey zone sited just beneath, made up of a weekly support at 1.2739, daily\nsupport at 1.2769 and a 161.8% H4 Fibonacci ext. point at 1.2738. This is\nlikely an area price will test should we run stops beneath 1.28.<\/p>\n\n\n\n

Areas of consideration:<\/p>\n\n\n\n

Outlook unchanged.<\/strong><\/p>\n\n\n\n

A conservative long from 1.2738\/1.2769 will\nlikely be for H4 action to test this zone and close back above 1.28. Entry at\nthe close of the breakout candle with a protective stop-loss order sited\nbeneath its lower shadow is, therefore, an option to consider, targeting a move\nto 1.29 and possibly higher, according to higher-timeframe action which shows\nroom to press as far north as a daily resistance area at 1.3019-1.2975. <\/p>\n\n\n\n

\"\"\/<\/figure>\n\n\n\n

AUD\/USD:<\/strong><\/h3>\n\n\n\n

Based on the continuation of positive\nUS\/China trade rhetoric, AUD\/USD action rotated higher Monday and extended\nFriday\u2019s modest gain. Yesterday wrapped up with H4 activity closing a few\npoints short of August\u2019s opening level at 0.6848. Interestingly, price failed\nto shake hands with a nearby area of support at 0.68\/0.6809 marked in grey before\nadvancing (formed by a trend line support extended from the low 0.6670, the\nround number 0.68, a support level at 0.6809, a 50.0 retracement ratio at\n0.6803 and a 38.2% Fibonacci retracement ratio at 0.6802). Beyond 0.6848,\ntraders\u2019 crosshairs are likely fixed on the 0.6882 22nd<\/sup> October\nhigh, shadowed by the round number 0.69.<\/p>\n\n\n\n

In terms of the higher-timeframe levels,\nweekly price remains consolidating between 0.6894\/0.6677 (light grey). With the\nprimary downtrend in play since early 2018, the current consolidation may\neventually breakout to the downside, despite price action toying with its upper\nedge at the moment. A decisive push lower likely clears the airstrip to as far\nsouth as 0.6359 (not visible on the screen).<\/p>\n\n\n\n

Price action on the daily timeframe reveals\nthe unit established a \u2018floor\u2019 ahead of support at 0.6808 in recent movement.\nBelow here we have the 50-day SMA lurking nearby (blue \u2013 0.6789), which is\ncurrently facing northbound after a sizeable downside move. Aside from 0.6882\nand the 0.6894 September 12 high, swing resistance resides around 0.6910.<\/p>\n\n\n\n

Areas of consideration:<\/p>\n\n\n\n

The 0.68\/0.6809 support area on the H4\ntimeframe remains of interest for potential long scenarios this week. In the\nevent we cross above August\u2019s opening level at 0.6848, nonetheless, an intraday\nlong may also be an option, targeting the 0.6882 22nd<\/sup> October high, followed\nclosely by the upper edge of the weekly range at 0.6894.<\/p>\n\n\n\n

Conservative traders threatened by the\noverall downtrend, however, might opt to wait for additional confirmation\nbefore committing funds to a long position. This could be as simple as a H4\nbullish candlestick pattern (on a retest at 0.6848), or even drilling down to\nthe lower timeframes and attempting to trade local structure, a trend line\nbreak\/retest formation, for example. <\/p>\n\n\n\n

\"\"\/<\/figure>\n\n\n\n

USD\/JPY:<\/strong><\/h3>\n\n\n\n

Safe-haven demand for the Japanese yen diminished\nfollowing a risk-on start to the week, consequently drawing the H4 candles\ntowards the 109 handle. This follows last Wednesday\u2019s advance, culminating in a\nbreak of a H4 bullish flag (108.94\/108.46) to the upside.<\/p>\n\n\n\n

The 109 handle has been a level of\ninterest for some time, due to its mouth-watering connection with daily\nresistances between 109.17\/108.99 (comprised of a resistance level at 109.17,\nthe 200-day SMA [orange\/109.05 \u2013 seen flattening] and Quasimodo resistance at\n108.99). In the event sellers make a stand from the said daily resistances,\nsupport at 106.80 is in view, fixed south of the 50-day SMA (blue \u2013 107.54)\nwhich is currently facing north. The only grumble to a downside move is weekly\nprice exhibiting scope for a pop higher to the 2019 yearly opening level at\n109.68, which happens to merge closely with a 127.2% Fibonacci ext. point at\n109.56.<\/p>\n\n\n\n

Areas of consideration:<\/p>\n\n\n\n

Outlook unchanged. <\/strong><\/p>\n\n\n\n

Those who entered long based on the\nbreak of the H4 bullish flag face robust resistance around 109, therefore\nreducing risk to breakeven and maybe liquidating a portion of the position here\nmight be an idea. <\/p>\n\n\n\n

Traders with eyes on 109 as a sell zone might\nopt to simply enter at market off the 109 base and position protective\nstop-loss orders above daily resistance at 109.17. Conservative traders,\nthough, may elect to wait and see how H4 action behaves before pulling the\ntrigger. This helps avoid whipsaws through 109, which are common viewing around\npsychological boundaries. As for downside targets out of 109, 108.70 appears a\nlogical starting block on the H4, followed by the upper edge of the noted\nbullish flag. <\/p>\n\n\n\n

\"\"\/<\/figure>\n\n\n\n

USD\/CAD:<\/strong><\/h3>\n\n\n\n

Monday observed limited change to\nUSD\/CAD, ranging little more than 25 points. As a result of this, much of\nthe following analysis will exhibit points aired in Monday\u2019s technical\nbriefing. <\/strong><\/p>\n\n\n\n

From the weekly timeframe, we can see\nthe pair has traded lower for three consecutive weeks \u2013 each session shaped in\nthe form of a near-full-bodied bearish candle. Support is not expected to\nemerge until the 1.3015 July 15 low, followed by Quasimodo support stationed at\n1.2887. The primary trend has remained north since bottoming in September 2017\n(1.2061). Currently, though, the candles appear to be in a secondary downtrend\nafter breaking trend line support (extended from the low 1.2247), with a market\npeak at 1.3661. <\/p>\n\n\n\n

According to the daily timeframe, the\nstage appears set for a run towards 1.3015 (essentially the July 15 low\nhighlighted on the weekly timeframe). <\/p>\n\n\n\n

USD\/CAD action on the H4 trades around\nthe lower edge of yesterday\u2019s range. The next port of call in terms of support\nrests at 1.3028 (not visible on the screen), with the relative strength index\n(RSI) seen chalking up bullish divergence out of oversold territory (blue line).\n<\/p>\n\n\n\n

Outlook unchanged. <\/strong><\/p>\n\n\n\n

Areas of consideration:<\/p>\n\n\n\n

On account of the above analysis,\nsellers appear to have the upper hand. A decisive retest seen at the underside\nof 1.31\/H4 resistance at 1.3115 (preferably in the shape of a H4 bearish\ncandlestick pattern) would help confirm this downside bias and open the door to\nbearish scenarios.<\/p>\n\n\n\n

Continued selling from current price,\nhowever, will likely land the H4 candles at 1.3028, the H4 support, bolstered\nby the 1.3015 July 15 low on the weekly timeframe. This, therefore, represents\na possible area active buyers may look to enter the field \u2013 entry\/risk levels may\nbe found on the back of a H4 bullish candlestick signal. <\/p>\n\n\n\n

\"\"\/<\/figure>\n\n\n\n

USD\/CHF:<\/strong><\/h3>\n\n\n\n

Risk-on mood spurred by trade optimism\nmildly weighed on the Swiss franc\u2019s safe-haven status Monday. Trend line\nresistance extended from the high 1.0027 on the H4 timeframe entered the mix\nand capped upside, possibly setting the stage for a retest at August\u2019s opening\nlevel at 0.9934. A push higher, on the other hand, exposes October\u2019s opening\nlevel at 0.9977, a trend line support-turned resistance taken from the low\n0.9843 and the key figure 1.0000 (parity). <\/p>\n\n\n\n

With respect to the higher timeframes,\nsupply on the weekly timeframe at 1.0014-0.9892 remains in play though does\nhighlight somewhat of a delicate tone. The beginning of October witnessed a\npenetration to the outer edge of the supply area\u2019s limit, possibly tripping a\nportion of buy stops and weakening sellers. Furthermore, a potential ABCD\ncorrection (black arrows) at 1.0214 implies higher prices could be on the\ncards, engulfing Quasimodo resistance at 1.0124 and drawing in trend line\nsupport-turned resistance extended from the low 0.9187. According to the\nprimary trend, price reflects a slightly bullish tone. However, do remain aware\nwe have been rangebound since the later part of 2015 (0.9444\/1.0240).<\/p>\n\n\n\n

In recent movement, daily price tested the\n200-day SMA (orange \u2013 0.9955) which held firm by way of a shooting star\ncandlestick pattern (considered a bearish signal). Downside from this angle\ncould see the 50-day SMA (blue \u2013 0.9905) re-enter the fold.<\/p>\n\n\n\n

Note the underside of a daily resistance\narea marks the 0.9986 point, sited only a few points north of October\u2019s opening\nlevel at 0.9977 on the H4. The H4 trend line support-turned resistance, as of\ncurrent price, aligns almost to-the-point with the underside of the daily\nstructure. Therefore, between 1.0000 and 0.9977 (green) on the H4 appears a\nreliable location to consider searching for shorting opportunities. <\/p>\n\n\n\n

Areas of consideration:<\/p>\n\n\n\n

Outlook unchanged.<\/strong><\/p>\n\n\n\n

A break of the H4 trend line resistance\nwill likely trip a number of buy stops, filling orders from traders attempting\nto fade the descending line and those anticipating a breakout higher. These\norders offer liquidity for bigger players to short from 1.0000\/0.9977 (green). <\/p>\n\n\n\n

Traders not comfortable selling at\n0.9977 and positioning protective stop-loss orders above 1.0000 may elect to\nwait and see how price action behaves before pulling the trigger. For example,\na lower-timeframe bearish flag may form or an ascending wedge or even a diamond\ntop, each offering high-probability opportunities to jump aboard any downside\nmove generated out of 1.0000\/0.9977. <\/p>\n\n\n\n

\"\"\/<\/figure>\n\n\n\n

Dow Jones Industrial Average:<\/strong><\/h3>\n\n\n\n

Major US equity benchmarks firmed across\nthe board Monday, cheering healthy earnings and progress on US\/China trade. The Dow\nJones Industrial Average added 132.66 points, or 0.49%; the S&P 500 added 16.87\npoints, or 0.56% and the tech-heavy Nasdaq 100 climbed 81.45 points, or 1.01%.<\/p>\n\n\n\n

Resistance at 27335 remains a focal\npoint on the weekly chart, sited only a few points south of the all-time high\n27388. And, despite a minor setback to 21452, the primary trend in this market\nremains facing northbound. Research on the daily timeframe shows price holding\nfirmly north of the 50-day SMA (blue \u2013 26661). Both the 50-day SMA and the\n200-day SMA (orange \u2013 26189) face north, with the next upside target set at the\nweekly resistance presented above at 27335.<\/p>\n\n\n\n

The\nDow\u2019s technical setting on the H4 timeframe has the candles greeting resistance\nat 27086, after tunnelling through October\u2019s opening level fixed at 26947 and trend\nline resistance pencilled in from the high at 27321. Clearance of 27086 potentially\noffers an early cue to a move towards the said weekly resistance level.  <\/p>\n\n\n\n

Areas of consideration: <\/p>\n\n\n\n

The area between H4 resistance at 27086\nand weekly resistance at 27335 is of interest this morning. A decisive close\nbeyond 27086 on a H4 basis likely unlocks the door to 27335, offering traders\npotential long opportunities, either on a retest motion at 27086 or simply\nentering on the breakout candle\u2019s close. <\/p>\n\n\n\n

\"\"\/<\/figure>\n\n\n\n

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EUR\/USD movement picked up a modest bid Monday amid risk-on trade, adding 20 points, or 0.19%. Overall, however, it was an otherwise quiet start to what indeed should be an eventful week ahead.<\/p>\n","protected":false},"author":1,"featured_media":35994,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[340,216,215,339],"tags":[],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.icmarkets.com\/blog\/wp-json\/wp\/v2\/posts\/37227"}],"collection":[{"href":"https:\/\/www.icmarkets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.icmarkets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.icmarkets.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.icmarkets.com\/blog\/wp-json\/wp\/v2\/comments?post=37227"}],"version-history":[{"count":6,"href":"https:\/\/www.icmarkets.com\/blog\/wp-json\/wp\/v2\/posts\/37227\/revisions"}],"predecessor-version":[{"id":37237,"href":"https:\/\/www.icmarkets.com\/blog\/wp-json\/wp\/v2\/posts\/37227\/revisions\/37237"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.icmarkets.com\/blog\/wp-json\/wp\/v2\/media\/35994"}],"wp:attachment":[{"href":"https:\/\/www.icmarkets.com\/blog\/wp-json\/wp\/v2\/media?parent=37227"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.icmarkets.com\/blog\/wp-json\/wp\/v2\/categories?post=37227"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.icmarkets.com\/blog\/wp-json\/wp\/v2\/tags?post=37227"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}