Sample Category Title

ES Short term Elliott Wave view suggests that the rally to 2669.73 ended Minute wave ((a)) higher of a zigzag Elliott Wave structure. Then the decline to 2651.94 low ended Minute wave ((b)) pullback as expanded flat structure. Where Minutte wave (a) ended at 2656.10, Minutte wave (b) ended at 2671.81 and Minutte wave (c) of ((b)) ended at 2651.94 low.

Above from there, the index is showing a strong rally to the upside and structure looks to be unfolding as an impulse Elliott Wave structure in Minute ((c)) leg higher of a zigzag structure. Where Minutte wave (i) ended at yesterday’s peak at 2694.62 in 5 waves and below from there Minutte wave (ii) pullback remains in progress to correct the cycle from 12/14 low 2651.94 low in 3, 7 or 11 swings. Near-term focus remain towards 2690.21-2686.60 100%-161.8% Fibonacci extension area to end the 3 waves back from the peak and see the buyer’s there for new highs ideally provided the pivot at 2651.94 low stays intact or should do a 3 wave bounce at least. We don’t like selling it and favors buying the Minutte wave (ii) pullback in 3, 7 or 11 swings as far as a pivot from 12/14 low 2651.94 low remains intact.

ES 1 Hour Elliott Wave Chart

GBP/USD - 1.3382

Most recent candlesticks pattern   : N/A

Trend                                 : Sideways

Tenkan-Sen level                 : 1.3382

Kijun-Sen level                    : 1.3377

Ichimoku cloud top              : 1.3384

Ichimoku cloud bottom        : 1.3352

Original strategy :

Sold at 1.3390, Target: 1.3290, Stop: 1.3425

Position : - Short at 1.3390

Target :  - 1.3290

Stop : - 1.3425

New strategy  :

Hold short entered at 1.3390, Target: 1.3290, Stop: 1.3420

Position : - Short at 1.3390

Target :  - 1.3290

Stop : - 1.3420

Although the British pound found good support at 1.3302 and staged a strong rebound yesterday, reckon upside would be limited and mild downside bias remains for another decline, below 1.3360 would bring test of 1.3330-35 but break there is needed to signal the rebound from 1.3302 has ended, bring retest of this level, break there would extend recent decline from 1.3550 top to 1.3280, then towards 1.3250, however, still reckon previous support at 1.3221 would remain intact.

In view of this, we are holding on to our short position entered at 1.3390. Above 1.3420-25 would defer and risk rebound to 1.3445-50 but said resistance at 1.3466 should remain intact and bring another decline later. 

Here are the latest developments in global markets:

FOREX: The dollar was slightly lower versus a basket of currencies as trading conditions were getting thinner ahead of the holiday period and attention remained on the tax story in the US. The antipodeans kept edging higher versus the greenback though their gains were subdued on a day with no sharp movements among major pairs.

STOCKS: The Nikkei 225 finished 0.15% lower on the day, while the Hang Seng traded higher by 0.9% at 0726 GMT; equities in mainland China and Australia edged higher. Euro Stoxx 50 futures were 0.1% down. Dow, S&P 500 and Nasdaq 100 futures were not much changed; all three gauges closed at record highs the preceding day on growing optimism for the delivery of tax cuts.

COMMODITIES: WTI traded higher by 0.35% at $57.35 a barrel and Brent crude was up by 0.2% at $63.64. Gold was higher by 0.2% at $1,263.84 per ounce.

Major movers: US tax story remains at center of attention as trading activity gets thinner; aussie trades around six-week high levels

The dollar’s index against a basket of currencies was slightly down at 93.63 after retreating by 0.25% the preceding day. There is optimism among proponents of tax reform that the relevant bill would pass into law. However, there are also doubts by analysts on whether it would have a long-term positive effect on economic growth.

The House of Representatives is expected to vote in favor of the tax bill today, with a Senate vote likely to follow either later today, or on Wednesday. It should also be mentioned that trading activity is getting lighter as we’re getting closer to Christmas holidays.

Dollar/yen and pound/dollar were little changed at 112.54 and 1.3387 respectively. Euro/dollar moved higher by 0.1% to eye the 1.18 handle.

The kiwi, which added 2.2% versus the greenback in the week that preceded, was 0.2% higher relative to the US currency at 0.7005. Aussie/dollar was up by 0.1% at 0.7667, trading around six-week high levels as minutes from the RBA’s latest meeting showed the central bank being more confident about the economy’s prospects, though it still expressed concerns on consumer spending.

Day ahead: US Congress votes on tax bill; Ifo business climate index could hit fresh record highs

The US tax bill will go through the House of Representatives on Tuesday around 1830 GMT for a crucial vote aiming – according to its proponents – to benefit individuals and businesses with massive tax cuts. Then, Senate lawmakers are also anticipated to vote on the bill either later on Tuesday or Wednesday. Expectations are for the tax reforms to turn into law, with positive sentiment on the tax code strengthening on Monday after two Senate Republicans agreed to back the legislation.

Meanwhile, the US Department of Commerce and the Bureau of Economic Analysis are scheduled to publish housing data and readings on the current account at 1330 GMT. Analysts expect the current account to improve from -$123.1 billion to -$116.8 billion in the third quarter, while they also forecast a slowdown in November’s building permits and housing starts. The number of building permits and new constructions are said to decline by 0.04 million to 1.27 million (-3.1% m/m) and by 1.25 million respectively (-3.2% m/m).

In Germany, the Ifo business climate index, which rates current business conditions and measures expectations for the next six months will be available at 0900 GMT. Particularly, higher assessments on the current business environment are expected to drive the index to a fresh record high at 117.5.

At 2145 GMT, New Zealand will release figures on current account and trade activities. Year-on-year, the current account is forecasted to rise by NZ$0.59 billion to -NZ$6.90 billion in the third quarter, whereas on a quarterly basis the deficit is anticipated to widen to -NZ$4.290 billion (six times larger than in the previous quarter).

Moreover, global dairy auction data are due today (the release however is tentative without a specific time of release), bringing some volatility to the kiwi.

In energy markets, investors will be waiting for the API weekly report to indicate the change in US crude oil stocks for the week ending December 15.

Technical Analysis: NZDUSD distances itself from 6 ½-month lows; enters Ichimoku cloud

NZDUSD broke above 0.70 for the first time in two months after consolidating not far above multi-month low levels in preceding weeks. The RSI is heading higher, moving above the 50 neutral-perceived level though its ascent has eased somewhat in recent days, suggesting that bullish movements are more likely to emerge in the near-term but ones that are softer in nature.

Yet, the pair might post a strong rally if New Zealand’s trade data appear better than expected. In this case, immediate resistance could be met at the 38.2% Fibonacci at 0.7029 of the downleg from 0.7433 to 0.6779. The 200-day exponential moving average of 0.7076 and the 50% Fibonacci at 0.7106 could also act as barriers to upside movements.

On the other hand, disappointing trade figures could push prices down to the 50-day EMA of 0.6990 and the 23.6% Fibonacci mark at 0.6933.

Trading activity is currently taking place inside the Ichimoku cloud.

EUR/USD - 1.1807

Most recent candlesticks pattern   : N/A

Trend                      : Near term down

Tenkan-Sen level              : 1.1798

Kijun-Sen level                  : 1.1805

Ichimoku cloud top             : 1.1800

Ichimoku cloud bottom      : 1.1768

New strategy  :

Stand aside

Position : -

Target :  -

Stop : -

As the single currency found support at 1.1775 yesterday and has rebounded again, suggesting another test of indicated resistance at 1.1834 cannot be ruled out, above there would extend the rebound from 1.1737 to 1.1850-55, however, as broad outlook remains consolidative, reckon last week’s high at 1.1863 would hold from here, bring further choppy trading later. Only a break above this level would signal the rebound from 1.1717 is still in progress for further subsequent gain to 1.1880, then 1.1900 but price should falter well below resistance at 1.1940

On the downside, expect pullback to be limited to 1.1775-80 and bring another rebound. Below indicated support at 1.1737 would bring retest of last week’s low at 1.1717 but break there is needed to confirm recent decline from 1.1961 top has resumed for weakness to 1.1695-00, then 1.1670-75. As near term outlook is mixed, would be prudent to stand aside for now.

Cable remains bid in early Tuesday's trading but with limited upside action seen so far. Near-term structure is underpinned by rising 30SMA and thickening daily cloud, with today's action being held at 1.3360 support (broken Fibo 23.6% of 1.3549/1.3301 downleg).

Probes through 1.3395 pivot (Fibo 38.2%) were so far brief, with sustained break needed to generate bullish signal for extension towards 1.3426 (4-hr cloud top) and 1.3454 (Fibo 61.8% of 1.3549/1.3301).

Alternatively, loss of initial support at 1.3360 would shift near-term bias lower and risk test of key supports at 1.3318 (30SMA) and near-term base at 1.3300 zone.

Res: 1.3402, 1.3426, 1.3447, 1.3454
Sup: 1.3360, 1.3318, 1.3300, 1.3280

USD is 'treading water' ahead of the expected enactment of President Trump's tax bill. The initial euphoria of lower corporation tax, that many believed would see a repatriation of USD back into the US has begun to come into doubt. With the bill likely to be passed into law before the end of the year, many believe there will be no rush for Corporations to move funds back to the US as the repatriation of foreign profits is a permanent measure that companies will avail themselves of over a period of time. Additionally, whilst many US policymakers expect the economy to get a boost from the bill, analysts are suggesting that growth will be 2% by 2020, significantly lower than the Trump Administration's predictions of growth around 3%. USD is little changed overnight.

Eurostat released Eurozone CPI on Monday that showed inflation inched higher in November but was still below the ECB target rate. CPI rose, in November, at an annualized rate of 1.5%, a slight increase on October's 1.4%. Core inflation, the more closely watched by policymakers, remained unchanged at an annualized rate of 0.9%. EUR climbed steadily both before and after the release before retracing lower.

The Reserve Bank of Australia (RBA) released the minutes from its latest policy meeting earlier on Tuesday. The RBA has adopted a pessimistic outlook for consumer spending as household debt levels remain high and the economy experiences sluggish wage growth. The minutes stated; 'However, growth in consumption was expected to have slowed in the September quarter and the outlook for household consumption continued to be a significant risk, given that household incomes were growing slowly and debt levels were high,' However, the RBA has a more optimistic outlook on the economy, as the global conditions have improved throughout 2017 and employment in Australia is growing at its fastest pace in more than 10 years. AUD is little changed in early Tuesday trading.

EURUSD is little changed overnight, trading around 1.1790.

USDJPY is unchanged, trading around 112.62.

GBPUSD is unchanged overnight, trading around 1.3383.

Gold is trading around $1,262.50.

WTI is 0.1% higher in early Tuesday trading at around $57.32.

Major data releases for today:

At 08:00 GMT: the CESifo Group will release IFO Expectations, Business Climate and Current Assessment for Germany for December. Expectations are forecast to come in at 110.5, a slight reduction from the previous release of 111.0. Business Climate is forecast to come in unchanged at 117.5, and the Current Assessment is forecast to come in at an improved 124.7 from the previous 124.4. Any significant deviation from forecasts will see EUR volatility in the markets.

At 13:30 GMT: the US Census Bureau, at the Department of Commerce, will release Housing Starts, Housing Starts Change, Building Permits & Building Permits Change month-on-month for November. Building Permits are forecast to come in slightly lower at 1.275M from the previous reading of 1.297M, and Housing Starts are forecast to come in at 1.23M lower than the previous reading of 1.29M. Any significant deviation from forecasts will see USD volatility in the markets.

The Euro remains firm and probes above 1.1800 mark on Tuesday after Monday's action formed outside day pattern, suggesting further advance.

Bulls tested initial barrier at 1.1810 (Fibo 38.2% of 1.1961/1.1717) and look for another attack at daily cloud top/20SMA (1.1823) which was cracked on Monday's spike to 1.1834, but subsequent pullback signaled strong upside rejection on first attempt through cloud top.

Fresh bullish acceleration on Tuesday improves techs on daily chart but sustained break above daily cloud is required to neutralize downside risk signaled by repeated strong upside rejections in past three days.

Lift above daily cloud would look for next pivotal barriers at 1.1862/67 (14 Dec spike high/Fibo 61.8% of 1.1961/1.1717 descend). Expected increased downside risk on repeated failure to clear cloud top, with return below 10SMA (1.1779) which holds today's action, to shift near-term focus lower.

German Ifo Business Climate data is the key event from the EU today, while US housing data will be in focus in American session.

Res: 1.1823, 1.1834, 1.1862, 1.1878
Sup: 1.1779, 1.1760, 1.1737, 1.1717

USD/JPY - 112.57

Most recent candlesticks pattern   : N/A

Trend                      : Near term down

Tenkan-Sen level              : 112.59

Kijun-Sen level                  : 112.53

Ichimoku cloud top             : 112.54

Ichimoku cloud bottom      : 112.46

New strategy  :

Stand aside

Position :  -

Target :  -

Stop : -

As the greenback found good support at 112.03 late last week and rebounded, retaining our view that further consolidation above previous support at 111.99 would be seen and gain to resistance at 112.88 cannot be ruled out, however, reckon upside would be limited to 113.12 (previous support) and price should falter below 113.45-50, bring another decline later.

On the downside, expect pullback to be limited to 112.30 and bring another rebound later. A drop below 112.15-20 would bring another test of said support at 111.99-03 but break there is needed to retain bearishness and signal the rebound from 110.84 low has ended at 113.75, then the fall from there may extend weakness to 111.65-70 but reckon previous support at 111.41 would hold from here. As near term outlook is still mixed, would be prudent to stand aside for now.

NZDUSD (0.6999): The New Zealand dollar continues to trade flat after price action breached past the resistance level 0.6981. This level is now expected to act as support and any declines are expected to be testing this level in the short term. To the upside, the bullish momentum is expected to push the kiwi dollar towards the 0.7062 level of resistance. However, further gains can be expected if the consolidation breaks out to the upside. Price action will need to close above the previous highs formed at 0.7022.

USDJPY (112.61): The USDJPY continues to consolidate following the strong declines from last week's FOMC meeting. In the long term, USDJPY remains biased to the downside as price action is expected to eventually decline to 110.70. On the 4-hour chart, USDJPY managed to post a retracement. However, the lower high formed here could potentially signal further downside in price. Support at 112.04 which was briefly tested is expected to be retested once again. A break down below this level could see the USDJPY extending further declines. To the upside, resistance at 113.00 region remains likely to keep a lid on gains.