Sample Category Title

EUR/USD

Current level - 1.1891

The intraday spike to 1.1960 could be a finale of the rise since 1.1710 low and my outlook here is bearish, for a violation of 1.1870 support, towards 1.1770.

USD/JPY

Current level - 111.18

The downtrend is still intact and crucial on the upside is 111.70 high. A violation of the latter will signal, that a rebound is on the run, for 112.70.

GBP/USD

Current level - 1.3319

A reversal pattern is underway after the recent peak at 1.3380 and my outlook is bearish, for a break through 1.3280 support, towards 1.3220.

Lots of chatter from the US but little actions

The potential new head of the Fed confirmation hearing start today. Ahead of the Senate hearing on Tuesday Jerome Powell provided a clear statements indicted that his views were incline with current FOMC strategy. The statement indicated that Yellen’s policy path will be continue under Powell. He went on to stress that the Fed current institutional structured was positive and preserved its “independent and nonpartisan status”. Finally, he provided support for core banking rules such as minimum levels of liquid and capital, living will and stress testing.

Elsewhere, Fed speak was rampant on Monday. New York Fed President William Dudley indicated that he felt that inflation was below target. On the ultra-dovish side, Minneapolis Federal Reserve Bank President Neel Kashkari indicated that he was not comfortable hiking interest rate until inflation trend was on a clear path towards 2%. The USD was weaker on news that the Senate vote on the tax reform, which was scheduled to take place on Thursday, is falling short of support. Republicans occupies 52 seat however, two senators have indicated they will vote against the bill. In order to win support from the deficit hawks there is speculation that an automatic mechanism for higher taxes should revenue come up short. Passage of tax reforms should be marginally USD bullish as higher growth should pressure inflation.

Bitcoin: Ready for new highs.

Bitcoin despite being declared dead hundreds of times since its creation in 2009 has now almost reached 10’000 dollars. It represents definitely a lot of money but there are only going to 21 million bitcoins after all the Bitcoin will have been mined after 2020.

We believe the Bitcoin will continue to go up. There are less than a few hundred thousand millionaires in the world. This means that not everyone will own a Bitcoin.
On top of that Bitcoin is the entry door for accessing a lot of other crypto projects. Investing in ICO for example always requests to own Bitcoin and many exchanges do not allow fiat currencies but Bitcoin.

Last but not least it is true that Bitcoin allow people to store and transfer value. Almost anyone now can create its own blockchain but what really matters is the acceptance rate and Bitcoin acceptance rate is very strong and will keep growing.

Bitcoin will remain and we believe the price may reach very high levels in 2018. For example the Bitcoin market capitalization has recently exceeded the McDonald’s market capitalization with $165 billion versus $134 billion.

Views of the new Fed chairman in focus
BOE releases its stress test results, Carney weighs
Brexit Deal depend on Ireland, May still clueless

Investors over in Europe have shrugged off their concerns about the lower energy and mining stocks which pulled the Asian markets lower. The Bank of England released its stress test results and the news was encouraging for most of the banks except Barclays and RBS. Both banks arose as the weakest lenders in the UK under the unfavourable stress test scenarios. This is going to make matters tough for these banks to reinstate the dividend which they were eager to do so for some time.

The BOE applied a lot more stringent measures this year in its test (given the massive loss of currency value, consumer credit losses and the departure of the UK from the EU). The bank of England does reason that none of the UK banks would need to take any remedial actions. The banking system is robust enough to face the loss of £350 billion loss and it can still provide lending to consumers. The other five major UK banks (HSBC, Standard Charted, Nationwide, Lloyds banking group and Santander UK) have a lot to sing about the results because their capital levels remained above the minimum required limit during the stress test.

The governor of the Bank of England thinks that the Fintech innovation opens the UK banking system to risk. Basically, with Brexit on the table, technological innovation could see a massive downturn in the UK and the banks which are leaving the UK would use whatever they could to sustain their business. Therefore, the UK government should keep London as the hub of technological advancement. The government should also make the Brexit transition process smoother and provide clear and concise information for the banks to sustain their business.

Sterling needs to break out if it's consolidation which is between the level of 1.29-1.34 against the dollar. Irish border issue is testing Theresa May and her abilities to think outside the box. However, for the time being, she has decided to dodge the bullet. It appears she doesn't have abilities to persuade her coalition partner to postpone and hasn't made any progress in making a coalition

For the US dollar, the affair which matters the most is the view of the upcoming Federal Reserve's chairperson on inflation. Jerome Powell would have a Senate confirmation during the US trading hours and traders are going to gauge the amount of interest rate hikes for the next year based on his view of the economy and inflation. The dollar index has been on a downtrend throughout this year while the Fed has tightened the screws around its monetary policy- a trade which many didn't see coming this way. The biggest question for investors would be if this trend is going to continue next year?

The heavyweight champions of OPEC are going to decide about extending the production cut during their meeting this week. It is widely anticipated that they are going to extend the production cut despite the fact that currently, Russia doesn't appear to be on the same page as other. The message that they need give to the market is that they are firmly behind their commitment and if the situation demands, they would be willing to extend the production cut beyond 2018. This kind of united front and the strong message would have the ability to push the crude price beyond $60 mark.

Cable stands at the back foot in early Tuesday's trading and attacks 1.3300 support broken bear-trendline connecting former 1.3337/20 highs.

Monday's action ended in Doji candle with long upper shadow, signaling possible stall, as repeated upside rejection (at 1.3357) happened today.

Initial negative signal could be expected on firm break below 1.3300 which would expose next strong support at 1.3276 (daily cloud top).

Slow stochastic is heading south on daily chart after reversing from overbought territory and shows more room at the downside.

Extended dips would find another support at 1.3260 (converged 10/55 SMA's forming bull cross) where corrective action is expected to reverse.

Stronger bearish pressure could be expected on break below daily cloud ( cloud base lies at 1.3214, reinforced by daily Kijun-sen).

Res: 1.3357, 1.3382, 1.3401, 1.3415
Sup: 1.3276, 1.3260, 1.3214, 1.3203

A mixture of economic data and monetary policy will drive the financial markets on Tuesday, giving investors plenty of factors to consider in implementing their daily portfolios.

The day begins at 07:00 GMT with a report on German consumer confidence courtesy of GfK. The consumer confidence index is expected to register 10.8 in December after hitting 10.7 the previous month.

Developments out of the United Kingdom will also make headlines Tuesday, beginning with the Bank of England’s Bank Street Stress Test results. At the same time, the BOE will unveil its latest Financial Stability Report, which provides an outlook on the banking sector’s stability and resilience in the face of adverse risks.

At 07:30 GMT, BOE Governor Mark Carney will deliver a speech that will be closely scrutinized by the financial markets. The Bank’s Monetary Policy Committee (MPC) voted to raise interest rates at its most recent meeting in an effort to keep inflation under control.

Shifting gears to North America, reports on the US goods trade balance and home values will make headlines through the early morning session. The Federal Reserve Bank of Richmond will also unveil its latest manufacturing index for the month of November.

The US policy wire will be highly active on Tuesday, with central bank members William Dudley, Patrick Harker and Jerome Powell scheduled to give remarks. Powell was recently chosen by President Donald Trump to head the all-powerful Fed once Janet Yellen’s term expires in February.

North of the border, the Bank of Canada (BOC) will release its Financial System Review, which provides a detailed breakdown of financial sector developments. Central bank governor Stephen Poloz will deliver a speech at 16:15 GMT.

The US dollar index posted modest gains at the start of the week, and was last seen trading steady at 92.91. The dollar index is weighed against a basket of six currencies, including the euro, pound, franc, yen, Swedish krona and Canadian dollar.

EUR/USD

The euro pivoted sharply lower on Monday, with prices falling back toward 1.1900 US. The EUR/USD remains well supported, although gains north of 1.2000 are proving difficult. The 1.1875 level continues to offer strong support.

GBP/USD

Cable touched a session high of 1.3377 before giving back most of its gains later in the day. GBP/USD remains well supported north of 1.3300, with the bulls eyeing a sustained rally north of 1.3350 for confirmation of further upside.

USD/CAD

The US dollar shot up against its northern rival on Monday as oil prices struggled to resume their upward pace. The USD/CAD exchange rate was last seen trading at 1.2761 following an 80-pip rally at the start of the week. The gain pushed the pair outside of a fairly established trading range, leaving room for further upside in the short run

USD/JPY - 111.27

USD/JPY – Wave V of larger degree circle V has possibly ended at 75.31 and major correction has commenced and already met indicated target at 125.00.

Dollar’s stronger-than-expected retreat from 114.74 signals top has been formed there, this also indicate at least the first leg of correction from 107.32 has ended there, hence consolidation with mild downside bias is seen for weakness to 110.50, then 110.00, however, near term oversold condition should prevent sharp fall below support at 109.55 and reckon 109.00 would hold from here, risk from there is seen for another rebound to take place later next month.

Our preferred count is that, triangle wave IV (with circle) ended at 101.45 and the circle wave V brought dollar down to the record low of 75.31 in 2011 and the subsequent rebound signal major correction has commenced with A leg ended at 84.19, followed by wave B at 77.14 and impulsive wave C is now unfolding (indicated upside target at 125.00 had been met) for gain towards 127.00 level. In the event dollar drops below support at 99.01, this would confirm medium term decline from 125.86 top (2015 high) has resumed for subsequent weakness to 98.00 and possibly 97.00.

Under this count, this wave C is unfolding as impulsive waves with (1) (2), 1 2 ended at 80.67, 79.07, 82.84 and 81.69 respectively, hence the extended wave 3 has ended at 103.74 and wave 4 correction of recent upmove should bring weakness to 92.57, then towards 90.88 but psychological support at 90.00 should limit downside and bring another rally later in wave 5, indicated target at 125.00 had been met and gain to 127.00 cannot be ruled out but reckon price would falter below 130.00.

On the upside, whilst initial recovery to 111.65-70, then 112.10-20 cannot be ruled out, reckon 112.65-70 would limit upside and bring another decline later. Only a daily close above previous support at 113.09 (now resistance) would abort and signal the retreat from 114.74 has ended instead, bring further gain to 113.50-60 and then 113.91 resistance. A daily close above this level is needed to retain bullishness and signal the pullback from 114.74 has ended, bring further gain to 114.05-10, then retest of 114.74 which is likely to hold from here. Looking ahead, above said resistance at 114.74 would extend recent upmove to 115.00, break there would signal the correction from 118.66 top has ended earlier at 107.32 and the rise from there may bring further gain to previous resistance at 115.51.

Recommendation: Sell at 112.50 for 110.50 with stop above 113.50

On the monthly chart, we have changed our preferred count that an impulsive wave is unfolding with major wave III with circle ended at 79.75, then followed by wave IV with circle and is labeled as a triangle with A: 147.64 (11 August, 1998), B: 101.25, C: 135.20, D: 101.67 and E leg ended at 124.14 to end the wave IV with circle. Hence, wave V with circle commenced from there and hit a record low of 75.31, however, the subsequent strong rebound signals this circle wave V has possibly ended there, hence gain to (indicated upside target at 122.00 and 125.00 had been met), the retreat from 125.86 suggests wave A of major correction has ended there and wave B correction back to 99.00, then 95.00 would be seen, however, reckon downside would be limited to 90.00, bring another rebound in wave C next year.

EUR/JPY - 132.37

New strategy :

Stand aside

Position: -
Target:  -
Stop:-

Despite staging a strong rebound to 133.24 late last week, lack of follow through buying and the subsequent retreat suggest further choppy consolidation would be seen and pullback to 131.90-00 cannot be ruled out, however, support at 131.17 (last week’s low) should remain intact, bring another rebound later. In case euro drops below 131.17 support, this would signal the fall from 134.50 top has resumed, then this erratic decline may extend weakness to 130.60-65 and possibly towards psychological level at 130.00 which is likely to hold from here.

On the upside, expect recovery to be limited to 132.75-80 and said resistance at 133.24 should remain intact, bring another retreat later. Only break of resistance at 132.47 would abort and signal a temporary low has been formed at 131.17, bring further gain to 133.15-20 but break there is needed to signal the entire correction from 134.50 top has ended, bring further gain to 133.50, then towards resistance at 133.89 (last week’s high) which is expected to cap euro’s upside. As near term outlook is mixed, would be prudent to stand aside for now.

Our latest preferred count is that wave (ii) is ABC-X-ABC which ended at 123.33 and wave (iii) is unfolding with wave iii ended at 100.77, followed by wave iv at 111.57 and wave v as well as the wave (iii) has ended at 97.04, followed by wave (iv) at 111.43 and wave (v) has ended at 94.12 which is also the end of the larger degree v, this also implied the major wave (C) has also ended there, hence major correction has commenced from there with (A) leg unfolding in its lower degree wave c which has possibly ended at 145.69. Under this count, A-B-C wave (B) has commenced with A leg ended at 136.23, wave B at 143.79 and wave C has possibly ended at 149.79.

Our larger degree count is that the decline from 139.26 is wave (C) and is sub-divided into a diagonal triangle i-ii-iii-iv-v with wave i - 105.44, wave ii- 123.33, wave iii - 97.03, wave iv - 111.43, followed by the final wave v as well as the end of wave (C) at 94.12, this also mark the bottom of larger degree wave B. Under this count, major rise in wave C has commenced as an impulsive wave with minor wave III ended at 145.69, wave V is still in progress for further gain to 150.00. Having said that, this so-called wave V could well be the first leg of larger degree 5-waver wave C and this wave C should bring at least a retest of wave A top at 169.97 (July 2008).

The Euro extended easing from Monday's high at 1.1961 where bulls stalled, shy of initial Fibo 76.4% target at 1.1965.

Corrective easing could be seen as buying opportunity for eventual attack at psychological 1.2000 barrier, as overall structure is firmly bullish and shows scope for full retracement of 1.2092 / 1.1553 descend.

Correction on overbought daily studies faces solid support at 1.1877 (daily cloud top) with deeper dips to be contained at 1.1830 zone (cloud base / rising 10SMA) before broader bulls resume.

Conversely, deeper correction towards daily Kijun-sen (1.1757), could be expected on close below daily cloud.

Res: 1.1920, 1.1965, 1.2000, 1.2033
Sup: 1.1885, 1.1877, 1.1830, 1.1776

AUD/USD – 0.7594

Original strategy:

Exit short entered at 0.7620

Position: - Short at 0.7620
Target:  -
Stop:-

New strategy :

Stand aside

Position: -
Target:  -
Stop:-

As aussie has retreated after meeting resistance at 0.7645, suggesting consolidation with mild downside bias would be seen and pullback to 0.7550-55 cannot be ruled out, however, break there is needed to signal the rebound from 0.7532 (last week’s low) has ended, bring retest of this level later, break there would extend recent decline from 0.8125 top for further weakness to 0.7500, then 0.7470.

On the upside, expect recovery to be limited to 0.7620-25 and said resistance at 0.7645 should remain intact, bring retreat later. A break of said resistance at 0.7645 would extend the corrective bounce from 0.7532 (last week’s low) for retracement of recent decline to 0.7670, then towards resistance at 0.7701 which is likely to hold from here. As near term outlook is mixed, would be prudent to stand aside for now.

On the 4-hour chart, recent upmove from 0.7329 is unfolding as an impulsive rise with wave 3 as well as smaller degree wave (iii) extending, only minor wave v of (iii) has ended at 0.8125, hence bullishness remains for this move to extend headway to 0.8200, then towards 0.8300, however, reckon upside would be limited to 0.8400 and the final wave 5 should falter below 0.8500, bring correction later.

After breaching a seven-month channel on November 14, the common European currency began trading in a flat channel up. The pair tested its upper boundary circa 1.57 early on Monday, but has nevertheless failed to move lower, as the significant support formed by the monthly R2, the weekly PP and the 55-, 100– and 200-hour SMAs is restricting the pair in the 1.5630/1.5565 area. From technical point of view, the pair should initiate a new wave down, especially if the one-week channel up drawn with dashed lines is breached within the upcoming hours. However, given the strength of the nearest support cluster, the pair might fail to breach it at once and thus continue its consolidation phase. The pair, however, should eventually edge lower.