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The EUR/GBP failed to stabilize above the 100% Fibonacci level and above the short uptrend line (dotted line) and now it seems motivated to drop much deeper in the upcoming days. The next downside target will be at the lower median line (LML) of the major ascending pitchfork.

Price failed to reach and retest the median line (ML) and the third warning line (wl3) of the descending pitchfork, signaling a further drop.

The currency pair has dropped sharply on Thursday, but now is fighting hard to recover and to stay higher on the daily chart. Is trading in the green and tries to retest some important resistance levels, a rejection will announce another minor decrease. GBP/USD is moving sideways on the short term, but remains to see if this will be an accumulation or a distribution movement.

I want to remind you that the perspective remains bullish despite a minor decrease, could come down only if the USDX will jump higher on the short term. The dollar index move in range on the short term as well, but a valid breakout above the 92.49 static resistance will open the door for more buyers.

Technically, the USDX is still trapped under some very important resistance levels, so is premature to say that we’ll have a reversal.

Price failed to stay above the 150% Fibonacci line (ascending dotted line) and could drop in the upcoming days. Has increased today and tries to retest the 150% line, actually, it could be attracted by the confluence area formed between the 150% Fibonacci line with the upper median line (uml) of the minor red descending pitchfork.

GBP/USD could come down to retest the warning line (wl1) of the ascending pitchfork. A rejection from the confluence area will bring more sellers in the game, while a valid breakout will accelerate the upside movement.

EUR/USD – 1.1894

EUR/USD:   Wave (c) of 2 ended at 1.3993 and wave 3 of III has commenced for weakness to 1.0411 (1.236 of wave 1), then 1.0000.

Although the single currency found support at 1.1838 earlier and rebounded last week to 1.2034, as renewed selling interest emerged there and euro has retreated again, suggesting recent upmove is not ready to resume yet and further consolidation below recent high at 1.2093 would take place and another corrective fall to said support at 1.1838 cannot be ruled out, however, a daily close below this level is needed to signal a temporary top has been formed, bring retracement of recent upmove to 1.1770-75, then 1.1700 but previous support at 1.1662 (previous 4th of a lesser degree) should hold from here, bring rebound later.

Our preferred count on the daily chart remains that a wave (II) from 1.2329 ended at 1.5145 with A-leg ended at 1.4720, followed by wave B at 1.2457, the wave C from there was also a 3 legged move and is labeled as (a): 1.3739, (b): 1.2885, the wave iii of the 5-waver (c) from 1.2885 has ended at 1.4339 and wave iv is a triangle ended at 1.3878 and wave v formed a top at 1.5145. The decline from there is a 5-waver (C) with minor wave (i) of I of (C) ended at 1.4218 with wave (ii) ended at 1.4580, wave (iii) ended at 1.3267 and wave (iv) ended at 1.3692 and wave (v) ended at 1.1876, this is also the low of wave I of (C) and wave II ended at 1.4940, hence wave III is now in progress with a diagonal wave 1 ended at 1.2042, the breach of previous support at 1.1876 (wave I trough) adds credence to our view that the wave 2 has ended at 1.3993, wave 3 has commenced for further weakness to 1.0411, then towards 1.0000.

On the upside, expect recovery to be limited to 1.1950-55 and reckon 1.2000-05 should hold, bring another retreat later. Only break of said resistance at 1.2034 would signal the pullback from 1.2093 has ended and recent upmove from 1.0340 low has resumed for retest of 1.2093, then towards 1.2150-55 (61.8% projection of 1.1119-1.1910 measuring from 1.1662), however, loss of upward momentum should prevent sharp move beyond 1.2200-10 and price should falter below 1.2255-60, risk from there remains for a much-needed correction to take place later. 
 

Recommendation: Stand aside for this week.

Euro's long-term uptrend started from 0.8228 (26 Oct 2000) with an impulsive structure. The rise from 0.8228 to 0.9593 (5 Jan 2001) is labeled as wave I, the retreat to 0.8352 (6 Jul 2001) is wave II and the rally to 1.3670 (31 Dec 2004) is wave III. Wave IV from there ended at 1.1640 (15 Nov 2005), the subsequent upmove to 1.6040 (July 15, 2008) is treated as wave V, the major selloff from the record high of 1.6040 to 1.2329 (October 27, 2008) signals a reversal has taken place with (I) leg ended at 1.2329 and once (II) ended at 1.5145, wave (III) itself is an extended move with I: 1.1876 and complex wave II ended at 1.4902, wave III has commenced with wave 1 and 2 ended at 1.2042 and 1.3993 respectively, wave 3 of III is now unfolding for weakness towards parity.

The AUDUSD pair is trading within narrow range in early Monday, holding in thick hourly cloud, with neutral near-term studies, showing no clear near-term direction. The bigger picture shows that bulls on daily chart might be running out of steam, following strong fall last Thursday and limited subsequent recovery attempts. Friday's bounce was capped by 20SMA and failed to sustain break above bull-trendline, drawn off 0.7807 (15 Aug trough). Similar action was seen in early Monday, with upside attempts stalling below 20SMA, with 10/20SMA bear-cross forming and raising downside pressure. This keeps the downside vulnerable for another probe below cracked 0.7929 support (Fibo 61.8% of 0.7807/0.8124 upleg) and 0.7907 pivot (last Friday's low/daily cloud top) break of which would risk test of 0.7870 higher base and possible extension towards key short-term support at 0.7807. Conversely, firm break above pivotal resistance zone at 0.7985/0.8000 (10/20SMA's/converged daily Kijun-sen/Tenkan-sen) would shift focus higher.

Res: 0.7985, 0.8000, 0.8028, 0.8035
Sup: 0.7946, 0.7929, 0.7907, 0.7865

The pair stands above 200SMA (112.13) in early Monday's trading and turning near-term focus higher, following Friday's close in red. Thickening daily cloud (111.54/110.43) continues to provide strong support (Friday's fall was contained just above cloud top) and underpin near-term action, as daily studies remain in firm bullish setup. Close above 200SMA will be bullish signal for retest of last week's high at 122.71 and attack at 112.80 target (Fibo 76.4% of 114.49/107.31 fall). Buying dips remains favored while daily cloud top holds. Alternative scenario sees risk of deeper pullback on firm break below daily cloud top and extension towards next support at 111.11 (rising daily Tenkan-sen/100SMA).

Res: 112.55, 112.80, 113.00, 113.55
Sup: 112.13, 111.65, 111.54, 111.11

Cable bounces back to 1.3550 zone in early Monday's trading, sidelining downside risk, signaled by Friday's strong fall that formed bearish Outside Day.

The price remains within one-week congestion between 1.3451 and 1.3655 and showing no clear direction while within the range.

Near-term action regained momentum on today's bullish acceleration, eyeing initial barriers at 1.3585/95 (last Thu/Fri tops) firm break of which would trigger final push towards 1.3655 pivot (20 Sep spike high).

Daily studies remain in firm bullish setup and supportive for further upside. Sustained break above 1.3655 would open way towards next target at 1.3837 (Fibo 61.8% of 1.5016/1.1930 descend).

Short-term action remains also underpinned by thick weekly cloud (spanned between 1.3473 and 1.2371).

Conversely, bearish action through 1.3450 pivot (congestion low/Fibo 23.6% of 1.2773/1.3655 rally/rising 10SMA) would signal deeper pullback.

Res: 1.3570, 1.3595, 1.3618, 1.3655
Sup: 1.3471, 1.3450, 1.3402, 1.3318

The Euro opened with gap lower on Monday as political uncertainty rises after German far-right AfD party won a surprise gain in votes and enters parliament for the first time. This put Angela Merkel, who won the election in difficult position as she now faces though work to form the coalition after the Social democrats said they are moving into opposition after gaining around 20% votes in Sunday's election. The EURUSD pair dipped to 1.1890 low (30SMA) after Monday's opening and recovered most of overnight's losses on recovery rally in Asian trading, but gap stayed unfilled after daily Tenkan-sen/10/20SMA bear-cross formation capped recovery action at 1.1935. Fresh weakness in early hours of the European session keeps near-term risk shifted lower. The notion is supported by Shooting star pattern which formed on daily chart after Friday's strong upside rejection and subsequent weakness on Monday, as well as bearish near-term techs. Violation of today's low would expose key near-term supports at 1.1861/50 (last week's lows/the neckline of H&S pattern on daily chart) and 1.1837/22 (lows of 14 Sep/31 Aug), break of which would trigger deeper fall. Selling upticks is seen as favored near-term scenario while the price stays under 4-hr cloud (1.1933/1.1965). Alternative scenario requires sustained break above 1.1965 (top of 4-hr cloud) to sideline near-term bears.

Res: 1.1935, 1.1950, 1.1967, 1.1994
Sup: 1.1890, 1.1861, 1.1850, 1.1822

USD/JPY - 112.07

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.

The greenback surged again after brief pullback to 111.11, adding credence to our view that low has indeed been formed at 107.32 earlier this month and consolidation with upside bias remains for this move from 107.32 to bring at least a retracement of recent entire fall from 118.66 (indicated upside target at 111.65 - 38.2% Fibonacci retracement of 118.66-107.32 and 112.20-25 had been met last week) and bullishness remains for further subsequent rise to 112.95-00 (50% Fibonacci retracement) and later towards 113.50-60, however, near term overbought condition should limit upside to 114.30-35 (61.8% Fibonacci retracement) and price should fatter below resistance at 114.50, bring retreat later.

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 downside, whilst pullback to 111.60-65 is likely, reckon said support at 111.11 would limit downside and bring another rise to aforesaid upside targets later. A daily close below 111.11 would defer and risk weakness to 110.50-60, then towards 110.00 but support at 109.55 should remain intact. Only a drop below strong support at 109.55 would abort and suggest the rebound from 107.32 has ended instead, risk weakness to 109.00 and possibly 108.50-60 but price should stay well above said support at 107.32 and bring another rebound later. 

Recommendation: Buy at 111.15 for 113.15 with stop below 110.15.

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.

Gold has been in a downtrend after reversing from the 1357.47 high on September 8. The market became overbought at this more than 1-year high, both on the 4-hour and daily charts. RSI rose above 70 in both time frames.

Focusing on the 4-hour chart, gold is entering a consolidation phase with prices capped at a key resistance of 1300. The technicals are painting a bearish picture, suggesting that risk is to the downside. The 20 and 50-period moving averages are negatively aligned and pointing down, while momentum indicators such as RSI and MACD are in bearish territory. But both are flat now and showing the likelihood of more range trading in the near term.

A move to the downside would target 1280 where support is expected at this 50% Fibonacci retracement of the uptrend from 1204.79 to 1357.47 (July 10 – September 8). An extension lower would shift the current neutral bias and the pause in the recent downtrend would resume to a stronger bearish bias. Further weakness below the 61.8% Fibonacci (1263.02) would target the August 8 low of 1251.49.

A sustained break above the key 1300 resistance level would help ease immediate downside pressure. A push higher from 1300 would open the way to 1321.27 and 1342.68 before seeing a re-test of 1357.47.

For now, the near-term risk is to the downside based on the technical indicators. Only a move back into the 1340 area would indicate the bearish phase has ended.

GBP/USD – 1.3529





Original strategy :

Sell at 1.3620, Target:1.3420, Stop: 1.3680

Position: -

Target:  -

Stop: - 




New strategy :

Sell at 1.3620, Target:1.3420, Stop: 1.3680

Position: -

Target:  -

Stop:- 



Although cable fell briefly below support at 1.3452, lack of follow through selling and current rebound suggest consolidation would be seen and recovery to 1.3595-00 cannot be ruled out, however,  price should falter well below last week’s high at 1.3659 and bring another retreat later, below said support at 1.3450 would signal a temporary top is formed, bring retracement of recent rally to 1.3380-85, then 1.3350 but reckon 1.3300-10 would hold from here.

In view of this, we are looking to turn short on further recovery as 1.3615-20 should limit upside. Above said resistance at 1.3658 (this week’s post-Fed high) would signal recent upmove is still in progress and may extend headway to 1.3700. Our preferred count is that (pls see the attached chart) the wave IV is unfolding as a complex double three (ABC-X-ABC) correction with 2nd wave B ended at 1.2774, hence 2nd wave C is unfolding and may extend further gain to 1.3650, then 1.3700, however, overbought condition should limit upside to 1.3770-75 and reckon 1.3800-10 would hold from here, bring retreat later.

Our preferred count on the daily chart is that cable's rebound from 1.3500 (wave (A) trough) is unfolding as a wave (B) with A ended at 1.7043, followed by triangle wave B and wave C as well as wave (B) has ended at 1.7192, the subsequent selloff is the larger degree wave (C) which is still unfolding with minor wave (III) of larger degree wave 3 ended at 1.1986, hence wave (IV) correction is in progress which could either be a triangle wave (IV) of a complex formation but upside should be limited to 1.3500 and price should falter well below 1.4000, bring another decline in wave (V) of 3 for weakness to 1.1500, then 1.1200.