BrokersEDGE research and news 2-20-19

March Euro Dollar futures news and research
Session close: Settled at 1.13655, up 43.5 ticks
Fundamentals: The Euro finished higher today and more than a penny from Friday’s reversal low. There has been a tailwind to risk-assets due to upbeat sentiment surrounding U.S and China trade talks. On the currency front, this has taken the safe-haven bid from the Dollar, lifting its pairs. Soft data from the U.S beginning with Retail Sales last Thursday followed by Industrial Production Friday helped to pull the Dollar Index from the highest level in two months despite dovish ECB talk inviting the use of TLTRO. The British Pound gained significant ground today on Brexit optimism while jobs data was unenthusiastic. Also bringing a bid to the Euro was German and Eurozone ZEW Sentiment continuing to work their way out of the gutter. Tomorrow will be pivotal with the Minutes from the Federal Reserve’s latest meeting due at 1:00 pm CT. Fed officials have been trying to find a middle ground, pointing to the potential need to hike this year while saying the balance sheet should be run-off if the economy allows. Today, Cleveland Fed President Mester and NY Fed President Williams were the latest to attempt that task. While we do attribute today’s strength to trade talks and Brexit hopium, tomorrow’s Minutes will be a market moving event and can either confirm or deny this recovery attempt in the Euro.
Technicals: Friday’s low of 1.1261 was defended by the bulls and brought a breath of fresh air into settlement for the Euro. Although this reversal did not even register a penny on that day, the significance is due to holding the November 12th low of 1.1245 which happens to be our major three-star support and a level that we said the Euro would be vulnerable to trade down to upon a close below 1.13375-1.1353. Major three-star resistance now comes in at 1.1374 and price action has run head-on into this; a close above here signals that this is not merely a dead-cat bounce. A failure to hold 1.1331 leaves the Euro vulnerable to waves of selling.
Bias: Bullish/Neutral
Resistance: 1.1374***, 1.1409*, 1.1442-1.1453**, 1.1485***, 1.15575-1.1563***
Pivot: 1.1331
Support: 1.13005**, 1.1283*, 1.1245-1.1261***

March Yen Futures news and research
Session close: Settled at .90555, down 17.5 ticks
Fundamentals: Today, the Yen was the only major currency in the red against a broadly weaker U.S Dollar. Risk-on exuberance has been a headwind for the currency but fresh comments from the Bank of Japan certainly did not do it any favors. BoJ Governor Kuroda said the central bank is ready to add stimulus if the strengthening Yen proves to hinder potential growth or their 2% inflation target. Tonight, we look to Trade Balance data from Japan at 5:50 pm CT. Tomorrow’s FOMC Minutes bring an interesting caveat for the Yen; a surprisingly hawkish tone would strengthen the Dollar but likely do more harm to risk-assets thus supporting the Yen or a surprisingly dovish tone would weaken the Dollar and lift the Yen. Ironically, the currency also finds itself at a technical crossroads, see below.
Technicals: It is go-time for the Yen at this level. The landscape has been laid and there are very favorable possibilities for the currency at this crossroads. Lower price action last Thursday was met by strong major three-star support at .9011-.9032; this level aligns multiple indicators including a retracement, a previous ceiling and the continuous 200-day moving average. A close below this level will encourage further selling. A continued hold here is crucial, but price action must not only get above first key resistance at .9091, a level in which it failed Friday, it must get out above .9114-.9116. This is the 50 and 200-day moving averages on the March contract. The 50-day is crossing out above the 200-day signaling a bullish Golden Cross. The landscape is set, we are upbeat, but risk must be managed.
Bias: Neutral/Bullish
Resistance: .9091**, .9114-.9116**, .91555-.9186**, .9238-.9249***
Support: .9011-.9032***, .8919-8931**, .88355-.8845***

March Aussie dollar futures
Session close: Settled at .7172, up 29 ticks
Fundamentals: The Aussie traded higher in a broadly healthy risk-environment. Equity markets and energies have had a strong move over recent sessions but the metals both precious and base have traded extraordinarily strong. While the Aussie is a commodity currency and this has been supportive, the Dollar’s weakness has also acted as direct support. Especially considering that the Dollar’s weakness is due to upbeat sentiment on trade talks between the U.S and Australia’s number one trade partner China. Although the RBA Minutes exuded economic uncertainties last night, these wider-reaching moves in outside markets have been supportive. Tonight, Wage Price Index is due at 6:30 pm CT.
Technicals: Last week, the Aussie responded to major three-star support at .7063-.7082 and this continues to lay a very healthy landscape for the currency. Price action closed out above the 50-day moving average and the .382 retracement today at .7050; the tape is bullish above here. Our next key resistance level comes in at .7208.
Bias: Neutral/Bullish
Resistance: .7179*, .7208**, .7278- .7300***, .7407****
Pivot: .7050
Support: .7063-.7082***, .7001-.7024**, .6825***

March Canadian Dollar Futures
Session close: Settled at .75735, up 22 ticks
Fundamentals: The Canadian gained ground again in what has been a constructive 2019. Positive sentiment around U.S and China trade talks along with strength in many commodity sectors has kept a bid under the currency. One key component here when compared to the Aussie is that the Bank of Canada has over recent years shown the willingness to raise rates, whereas the RBA has taken a dovish turn. The one thing traders must keep an eye on though is the inconsistent data out of Canada, this has been the ongoing case and last week’s Manufacturing Sales and Foreign Securities Purchases both missed. For now, and especially heading into tomorrow, the U.S Dollar will remain the driving force.
Technicals: The bears took their shot on Thursday, but the market battled back strongly to start this week after major three-star support held another test. First key resistance comes in at .7593-.7615 and this will prove critical over the next 24 hours.
Bias: Bullish/Neutral
Resistance: .7593-.7615**, .7649***, .7716-.7725**, .7835
Support: .74875-.7497***
LEJ9: 1.325 at 128.50, trading in a range of 1.85
LEM9: .55 at 118.625, trading in a range of 1.20
GFH9: 1.125 at 143.725, trading in a range of 2.55
GFJ9: .675 at 145.90, trading in a range of 2.125

Cattle Commentary: Cattle futures surged higher to start this week’s trade, despite a bit of a lack luster cash trade late Friday. The bulk of cash came n at 125 live and 200 dressed, steady with last week and mostly the last month. Snow storms sweeping across the Midwest have offered support but as we have mentioned before, some of this has to be anticipated. If the forecast comes in below expectations, expect to see a premium come out of the market. All in all, the market is mostly range bound. At the top end of the range, we were working with clients to the sell side and would consider being more aggressive through the week depending on the technical developments.

PM Boxed Beef / Choice / Select
Current Cutout Values: / 217.27 / 213.54
Change from prior day: / (.12) / .54
Choice/Select spread: / 3.73

Live Cattle (April)
April live cattle tested and held trendline support last Thursday and Friday, keeping the trend of higher lows intact. Fist meaningful support this week comes in from 126.675-127.25, a break and close below here opens the door for another leg lower. The next pocket we see comes in from 124.45-125.00, this pocket represents the 10-day moving average, a key retracement, along with other previously important price points.
Resistance: 129.475-130.00****
Support: 126.675-127.25***, 124.45-125.00****

March Feeder Cattle futures news
If you’ve been reading our reports or working with your trade desk, you know that we have been playing a range bound market. Friday tested the low end of the range, an area where risk/reward favors the bulls. We defined first support as 141.95-142.55, a pocket that held perfectly the last two sessions. Today’s price action takes us towards the upper ends of that range, an area where risk/reward starts to favor the bears. We have defined first resistance as 145.275-145.75.
Resistance: 145.275-145.75***, 147.20-147.575****
Support: 141.95-142.55**, 140.25-140.80****

April Lean Hogs futures LHJ
April lean hogs started this week’s trade with a gap lower and the bears didn’t look back. We went lock limit then came off, but the bears pressed on and got prices back to limit down. This caught a lot of traders and market participants off guard, likely leading to forced liquidation from those riding a long wave down along with those properly margined to just throw in the towel. Finding technical support below contract lows is a bit of a fool’s errand, we will go off of the continuous chart which is much less meaningful.
Resistance: 57.80-58.125****, 61.35-61.95**, 63.425-63.80****
Support: 54.90**

March E-mini S&P futures trading research and news
Yesterday’s close: Settled at 2778.75, up 1.75
Fundamentals: U.S benchmarks are stable at unchanged approaching the day-session. Yesterday, investors picked up where they left off Friday and bid equity markets north. The S&P and Russell 2000 set a new swing high although the NQ failed to take out its Friday morning spike by half a point. In fact, the NQ pared back and failed once again to clearly close out above its continuous 200-day moving average, the one more closet aligned with the cash and QQQ. This technical hurdle will be in the spotlight through the aftermath of the FOMC Minutes. This pivotal release at 1:00 pm CT will give investors and traders alike some insight into one of the most distinct flip-flops by the Federal Reserve in recent years. In an article posted January 31st, we called the Fed wrong in December and wrong again in January. By standing strong as a committee at their December meeting, officials resorted to individual jawboning to combat escalating fears and deteriorating market conditions. A battle in which they succeeded, leaving little reason to take a formal step down ‘dovish lane’. The broadest and pressing question today is whether the Fed truly and unequivocally took that step, or did they leave some middle-ground. In the past, the Fed has not only been able to orchestrate a middle-ground between the policy statement and Minutes it has used this strategy inversely in their favor when tightening. Do today’s Minutes give investors any reason to take some profits from a historical start to the year or does greed and gluttony continue to drive the risk-appetite.
U.S and China trade talks are also in the mix as meetings continue in Washington. Yesterday, President Trump said March 1st is not a “magical” date and U.S representatives went on record asking China to not devalue the Yuan. We are certain that talks are “progressing” until they aren’t. But we hold a firm belief that “progress” has nothing to do with substance and now that the March 1st date is vulnerable, China has no reason to come to the table on those structural issues; the stealing of intellectual property and forced technology transfer. When the talks stop “progressing” which they continually have because of the wide divide on structural issues, the markets will take notice. Now an extended deadline will soothe the blow. Traders must also keep an ear to the ground on two other budding hurdles on the trade front; those between the U.S and EU with potential auto tariffs and those on Brexit.
Technicals: Though price action extended yesterday in both the S&P and NQ to test our second major three-star resistance levels, they failed to close out above our first major three-star resistance levels at 2777-2782.50 and 7054-7070. Both of which have been adjusted slightly but will remain major three-star resistance instead of pivots but with a stronger emphasis on a closing basis. First key support levels remain from yesterday and each ultimately kept overnight waves of selling in check ahead of Tuesday’s session. A move below the major three-star support levels that sit next can knock Humpty Dumpty off its great wall. And that is always one of the interesting things about this more modern market; FOMO drives it higher and no one wants to exit until they feel they have to, once they do, they are walking on eggshells.
Bias: Neutral/Bearish
Resistance: 2777-2778.75***, 2790.75-2796***, 2814-2819***
Support: 2758.50-2763.50**, 2743.50***, 2729.50-2731.50**, 2719.50-2721.50**

NQ (March)
Resistance: 7063.75-7070***, 7095-7101***, 7139-7169***
Support: 7016.25-7021**, 6972-6982.25***, 6955**, 6928.25*, 6905.50-6914.25***, 6810.50-6837.25***

March Corn futures trading CH
Yesterday’s Close: March corn futures finished yesterday’s session down 4 ¾ cents, trading in a range of 7 ¼ cents. Funds were estimated sellers of 20,000 contracts on the day.
Fundamentals: Weakness in the broader grain sector fed on itself yesterday and corn was one of several casualties. Export inspections yesterday morning came in at 941,811 metric tons, within the range of expectations. March option expiration is on Friday, the amount of open interest between the 370-380 strike may help keep a floor in the market for the next few sessions. Keep in mind that we will also be rolling out of March futures and into May over the next week. Due to the shortened week, the weekly EIA ethanol report will be released a day later, tomorrow.
Technicals: The chart has softened up a lot over the past three sessions, moving our bias to neutral. The breakdown below support yesterday opened the door for additional long liquidation towards our next pocket from 367 ¼-368 ½. This pocket represents a key retracement on the year along with previous support back in November. If this were to give way on a closing basis, look out below.
Bias: Neutral
Resistance: 376 ¼-378 ¾***, 382-384 ½**
Support: 367 ¼-368 ½****, 354 ¾****

March Soybean futures commodity SH
Yesterday’s Close: March soybean futures finished yesterday’s session down 6 ¼ cents, trading in a range of 16 ½ cents. Funds were estimated sellers of 8,500 contracts on the day.
Fundamentals: Lack of clarity and a broader weakness in the grain sector was too much for the bulls to overcome, that weakness has spilled over into a softer overnight/early morning trade. Export inspections yesterday morning came in at 1,031,294 metric tons, within the range of expectations. March option expiration is Friday, glancing at the strikes with higher open interests, we would thing that the 9.00 strike would offer support to round out the week, not to say we can’t trade lower first.
Technicals: The market broke trendline support in yesterday’s session, the technical damage opened the door for another round of selling. Our next support pocket comes in from 890 ½-891 ¼, this pocket represents a key retracement on the year, along with he lows from the middle of January.
Bias: Neutral
Resistance: 912-913***, 920-922 ½***
Pivot: 900-902 ¼
Support: 890 ½-891 ¼**, 880 ½**

March Wheat future commodity WH
Yesterday’s Close: March wheat futures finished yesterday’s session down 14 ¼ cents, trading in a range of 16 ¾ cents. Funds were estimated sellers of 11,000 contracts on the day.
Fundamentals: When has been in a free fall for the past three sessions. That same theme has carried over into the early morning trade as futures are snowballing lower as we speak, making new contract lows. Export inspections yesterday morning came in at 357,000 metric tons, below the range of expectations. Much of the selling in wheat over the past three sessions has been on the back of a technical breakdown. Forced liquidation via margin calls look to be flowing in this morning.
Technicals: In yesterday’s report we mentioned a failure to hold support at $5.00 “could lead to a retest of the contract lows of 482 ¼, from December of 2017.”. That flush happened a lot faster than we would have expected but here we are, in uncharted territory. The RSI (relative strength index) is at the lowest level in this contract’s lifetime.
Bias: Neutral
Resistance: 499-501 ¼****, 512**, 522 ¼-525***, 531-532**
Support: 480-482 ¼**, 466 ¾-471**

April Crude Oil futures news and research
Yesterday’s close: Settled at 56.45, up 0.47
Fundamentals: Crude Oil is holding ground and finished yesterday’s session on a strong note although Gasoline and Heating Oil were laggards. Rising U.S production will remain a constant in the headlines, especially with prices closer to $60 than $50. There is not a lot of new news this morning, but traders want to keep a close eye on risk-sentiment with the FOMC Minutes in focus and U.S-China trade talks continuing in Washington. Inventory data will come into focus today with expectations as the session unfolds leading into the private API survey at 3:30 pm CT (one day delayed due to the holiday).
Technicals: Yesterday’s pullback to a low of 55.66 was very constructive for Crude in maintaining its breakout. However, we did take a more cautious approach yesterday. We reiterate, price action must hold and close out above 55.55-55.75 in order to maintain its breakout and keep a path of least resistance higher. A failure to do so would encourage a wave of profit taking down to major three-star support at 54.80.
Bias: Neutral/Bullish
Resistance: 57.20-57.35***, 57.69**, 58.16-58.35**, 59.63***
Pivot: 55.55-55.75***
Support: 54.80***, 54.19**, 53.51-53.58***

April Gold futures
Yesterday’s close: Settled at 1344.8, up 22.7
Fundamentals: Gold posted a tremendous session yesterday and extended gains overnight to hit the highest level since April 19th. Today’s FOMC Minutes are squarely in focus. The broadest and most pressing question today is whether the Fed truly and unequivocally took a step down ‘dovish-lane’, or did they leave some middle-ground. In the past, the Fed has not only been able to orchestrate a middle-ground between the policy statement and Minutes it has used this strategy inversely in their favor when tightening. Exuding such would encourage a wave of profit-taking in Gold. This would be a healthy pullback, and the exact reason we have said traders want to capitalize on this rip in one manner or another. Don’t hesitate to contact our trade desk at 312-278-0500.
Technicals: Gold is running into the resistance at the psychological 1350 mark. We find it vulnerable in the near-term for a pullback to support at 1337 and major three-star support at 1331.1; both of which would be extremely constructive. We remain unequivocally Bullish in Bias Gold in the long-term and believe this is the year in which we see a move out above $1400.
Bias: Bullish/Neutral
Resistance: 1350**, 1369.4***
Support: 1337**, 1331.1***, 1321.7-1323.4**, 1312.9-1315.4**, 1306.3-1306.5***

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Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. DAW Trading (“DAW”) uses various outside sources for research material regarding futures and options on futures trading therefore the views and opinions expressed in this letter may not necessarily reflect the view of DAW or its staff. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to DAW.

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