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Santos and three pairs trade ideas

Chris has three trade idea updates for you today – NOK/SEK, EUR/USD and Santos – along with a new idea involving the AUD/NZD.

Santos
Source: Bloomberg

NOK/SEK

I looked at long NOK/SEK trades on October 17 at SEK1.0917, with a view to take profits at SEK1.1148. I aimed to place a stop loss on the trade at SEK1.084. However, with NOK/SEK the pair moving to the SEK1.1000 area, stops could be moved to SEK1.0905 – just below the 61.8% retracement of the recent rally and approaching breakeven.

I continue to hold a long bias, but would have even more conviction on a close above SEK1.1024 – the 38.2% retracement of the SEK1.1309 to SEK1.0847 sell-off.

EUR/USD

I suggested short EUR/USD trades at $1.2714 yesterday and, with spot currently trading at $1.2645, the idea is working in the right direction for the pair.

Technically, we saw a bearish outside day reversal yesterday, suggesting the bears have taken control from the bulls, while the daily chart suggests we could be seeing the fifth wave of a pattern that started in May. I would be looking for a move through the recent low of $1.2500 to materialise in the medium term. Stops could be moved  to $1.2790 – just above the 61.8% retracement of the recent sell-off from $1.2840.

A nice turn lower in stochastic momentum is adding to my conviction here.

EUR/USD
Click to enlarge

Santos

I looked at buying weakness in Santos on October 13 when the stock was extremely oversold.

The stock fell to a low of $12.25 after the call and has recovered a touch to $13.00, with the 20-day moving average now at $13.14. On a positive note, we have seen the September downtrend break on reasonable volume, while the MACD crossed the signal line. The stochastic oscillator is moving higher.

The 20-day moving average is still headed lower so it suggests price may struggle to move above this shorter-term average, while the 38.2% retracement of the September to October sell-off comes in just above at $13.41.

AUD/NZD

This is one for the radar, with the daily chart showing a sizeable bullish reversal pattern. The pair is also breaking above the 20-day moving average at $1.1129. Given this average is headed sideways, it suggests we could see the pair head to the upper Bollinger band.

Fundamentally, we have seen a below-consensus New Zealand inflation print this morning of 1% (vs expectations of 1.2%). This has helped push the pair higher on the day and should ease expectations that the RBNZ will raise interest rates in Q1 2015. All-in-all a bullish stance is warranted for a potential move to the $1.1129.

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