With global risk sentiment on the upswing and no visible major economic catalysts ahead, this textbook resistance setup is one to watch on AUD/CHF.
Intermarket Snapshot
| Equity Markets | Bond Yields | Commodities & Crypto |
| DAX: 12968.53 +0.57% FTSE: 7332.42 +0.11% S&P 500: 3040.80 0.60% DJIA: 27123.46 +0.61% |
US 10-yr 1.854% +0.053 Bund 10-YR -0.328% +0.047 UK 10-YR: 0.70% +0.02 JPN 10-YR: -0.137% +0.017 |
Oil: 53.93 +1.16% Gold: 1488.40 +0.02% Bitcoin: 93.72.71 -1.99% Etherium: 183.38 -0.47% |
Fresh Market Headlines & Economic Data:
- China Says Part of Phase 1 Trade Deal Text ‘Basically Completed’
- Brexit extension announced as Boris Johnson pushes for December election
- China’s industrial profits fall 5.3% in Sept as trade war toll mounts
- Oil falls on weak Chinese industrial data
- U.S. goods trade deficit falls in September, inventories mixed
- U.S. Wholesale inventories for September down 0.3% m/m, up 5.0% y/y
- Chicago Fed National Activity Index Points to Slower Economic Growth in September
- U.K. Retailers report record high stock levels as Brexit deadline looms – CBI
- EU nations agree Brexit delay until Jan. 31 as PM Johnson seeks election
- German import price index falls in September by -2.5% y/y
- Annual Euro area growth rate of broad monetary aggregate M3 decreased to 5.5% in September 2019 from 5.8% in August
- Japan Services Producer Prices: +0.5% vs. +0.5% previous
Upcoming Potential Catalysts on the Forex Calendar:
- U.K. PMs Vote on Election call at 5:00 pm GMT
- Japan Tokyo CPI at 11:30 pm GMT
- RBA Governor Lowe at 6:45 am GMT (Oct. 29)
- U.K. Housing prices at 7:00 am GMT (Oct. 29)
- U.K. Mortgage approvals, Consumer credit at 9:30 am GMT (Oct. 29)
- U.S. S&P/Case-Shiller home prices at 1:00 pm GMT (Oct. 29)
- U.S. Pending home sales & consumer confidence at 2:00 pm GMT (Oct. 29)
What to Watch: AUD/CHF
With not a lot of potentially market-moving economic catalysts ahead, we’re keeping it simple to start the week with this textbook setup on AUD/CHF. It looks like a risk-on kinda day with positive news coming from the geopolitical fronts, most notably the hopes of getting close to a China-U.S. trade deal pushing up equities and bond yields, while the yen and Swiss franc suffer on the session. Let’s roll with that sentiment on AUD/CHF as it seems to be breaking a strong area of interest.
On the one hour chart above of AUD/CHF, we can see a rising triangle formation in the works with rising ‘lows’ steadily approaching strong resistance around 0.6790 – 0.6800. The market has actually broken that area this morning, which could be seen as a technical signal to go long.
Right now, everything looks to be in the bulls favor on AUD/CHF, and if you’re in that camp, then you could go with a couple of entry strategies to play the break: 1. long full position at market or 2. scale in from current levels down to the strong level of interest around 0.6790. With a daily ATR of around 45 – 50 pips, shooting for a short-term target of around 40 pips is viable one for the next session, but a better idea may be to play it as a swing position, using the daily ATR as a stop guide and 2 to 3 times that as a target given the lack of near-term resistance levels ahead.
For the bears, we’ll need to see a negative turn in the U.S.-China trade story for this to become a legit short play, and if we do see that scenario play out, then a break of the rising ‘lows’ pattern is the signal to watch out for. Entering in that area also provides an attractive potential R:R with the October lows around 0.6665 more than two daily ATR away.
