Sample Category Title

GBP/CHF – 1.2960

  






 

Sterling found decent demand at 1.2343 earlier this month and has rallied very strongly, price even penetrated previous resistance at 1.3069, signaling early erratic rise from 1.1475 has resumed and upside bias is seen for this move to extend further gain to 1.3100, then previous resistance at 1.3208 but near term overbought condition should prevent sharp move beyond 1.3300 and reckon 1.3526 (previous support) would remain intact, bring retreat later. 



To recap the larger degree count, the selloff from 2.4965 (July 2007) is the beginning of wave V with circle and is labeled as 1: 2.3760, 2: 2.4425, wave 3 extension ended at 1.1470, followed by wave 4 at 1.5547, the quick rebound from 0.9106 suggests wave 5 as well as entire circle wave V could have ended there, hence consolidation with mild upside bias is seen for major correction to take place, bring initial test of 1.5547 (previous 4th of a lesser degree).



On the downside, as price has retreated after rising to 1.3078, suggesting consolidation below this level would be seen with initial downside bias for pullback to 1.2900, however, reckon 1.2800-10 would limit downside and bring another rise later. Only below support at 1.2716 would defer and suggest a temporary top is formed instead, bring correction to 1.2650-60 and later towards 1.2600 before prospect of another upmove.  


Recommendation: Buy at 1.2800 for 1.3100 with stop below 1.2700.


On the Monthly chart, the longer-term count is that major downtrend is under way with circle wave I at 2.8645 (Sep 1.978), then wave II with circle at 4.6175 (Feb 1981), the wave III with circle ended at 1.7425 (Nov 1995) and followed by wave IV with circle at 2.4965 (July 2007 with a short wave C) and wave V with circle has possibly ended at 0.9106. A monthly close above 1.5547 would add credence to this view, bring major correction to 1.7000, then towards psychological level at 2.0000.

The pair remains bid on Tuesday and probes above key barriers at 111.61/75 (daily cloud top / Fibo 61.8% of 114.49/107.31 descend), in extension of strong rally in past two days.

Sustained break here is needed to generate strong bullish signal for further advance and test of 200SMA at 112.23.

Another bullish signal came from yesterday's close above weekly cloud top (111.21) which underpins today's action.

However, bulls may show hesitation before firm break above 111.61/75 pivots, as strongly overbought slow stochastic on daily chart warns, but so far without clearer bearish signal.

Downticks should ideally stay above 111.00 support zone (Monday's low / broken 100SMA) to keep immediate bulls intact.

Otherwise, deeper pullback could be anticipated. Key support lies at 110.75 )daily cloud base / 55SMA) and sustained break here would generate stronger reversal signal.

Res: 111.75, 111.87, 112.23, 112.80
Sup: 111.36, 111.21, 111.00, 110.75

Cable is holding within triangular consolidation under fresh 15-month high at 1.3618, with downside pressure growing after Monday's close in red, triggered by profit-taking and comments from BoE governor Carney, who disappointed markets by not specifying when the central bank might raise interest rates.

Yesterday's easing found footstep at 1.3464, but overbought daily studies weigh on near-term action, which was so far limited by hourly cloud top (1.3551) that keeps the downside vulnerable.

Violation of Monday's low would generate stronger bearish signal, while extension below pivot at 1.3439 (Fibo 38.2% of 1.3148/1.3618 upleg) is needed to confirm correction.

Alternatively, sustained break above very thick hourly cloud (spanned between 1.3551 and 1.3383) will be bullish signal.

However, the pair may remain within extended consolidation while pivotal boundaries stay intact

Res: 1.3551, 1.3582, 1.3618, 1.3646
Sup: 1.3487, 1.3465, 1.3439, 1.3383

The Euro retested 1.2000 barrier in early European trading on Tuesday, hitting one-week high, as fresh acceleration higher eventually broke above Tenkan-sen barrier which limited upside attempts in past four days.

Fresh bulls also dented 1.1995 barrier (Fibo 61.8% of 1.2092/1.1837 pullback) and generated another bullish signal, with sustained break higher needed for confirmation.

Further upside action may result in retest of recent trend high at 1.2092 (the highest since Dec 2014), with stretch towards 1.2166 (Fibo 50% of larger 1.3992/1.0340 descend), seen on break higher.

Broken daily Tenkan-sen now acts as solid support at 1.1964, followed by top of hourly cloud at 1.1942 (cloud is spanned between 1.1942/12 and underpins near-term action).

ZEW data are key releases from the European session today. German economic sentiment is expected to rise in September, according to the forecast at 12.5 vs 10.0 in Aug, with Eurozone economic sentiment expected at 32.4 vs 29.3 in Aug, which could lend further support to the single currency on positive release.

Res: 1.2006, 1.2029, 1.2070, 1.2092
Sup: 1.1964, 1.1942, 1.1912, 1.1877

GBP/USD – 1.3478





Original strategy :

Buy at 1.3450, Target:1.3650, Stop: 1.3390

Position: -

Target:  -

Stop: - 




New strategy :

Buy at 1.3400, Target:1.3600, Stop: 1.3340

Position: -

Target:  -

Stop:- 



Although cable bounced to 1.3552, renewed selling emerged there and has slipped again, suggesting consolidation below yesterday’s high of 1.3619 would be seen and retracement to 1.3440-50 is likely, however, reckon 1.3380-85 would limit downside and bring another rise later, above said resistance at 1.3552 would signal the retreat from 1.3619 has ended, bring retest of this level first. Looking ahead, a break of 1.3619 would extend recent upmove to 1.3650-60, then towards 1.3700. We have re-labeled our preferred count (pls see the attached chart) that 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, near term overbought condition should limit upside to 1.3770-75 and reckon 1.3800-10 would hold from here, bring retreat later.

In view of this, would not chase this rise here and would be prudent to buy sterling on subsequent pullback as 1.3380-85 should limit downside. Only below previous resistance at 1.3329 (now support) would abort and signal a temporary top is formed instead, bring deeper correction to 1.3290-00 and possibly towards 1.3250-60.

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. 


GBPUSD has stalled its recent rally that took the pair to a high of 1.3618 yesterday. This is the highest level since June 2016. After reaching this level, the market became overextended as is indicated in the momentum oscillators. RSI is overbought above 70 and the stochastic is above 80.

The underlying market structure is bullish – it can be seen that the MACD is bullish and still rising and there is limited downside at this stage. GBPUSD is making a corrective move lower following the strong surge in the past few sessions.

Any further weakness in the market below Friday’s low of 1.3381 would target the key level at 1.3200. Failure at this support would signal more near-term downside especially if there is a move below last week’s low of 1.3149. From here the focus turns to the next key level at 1.3000. A drop back below this psychological level would start to weaken the bullish phase and see the start of a stronger move down towards the August low of 1.2773.

The medium-term outlook should stay bullish if support at 1.2773 holds. The crossover of the 50-day above the 200-day moving average in mid-May gave a bullish signal. In the near term, the bias may turn neutral since resistance at 1.3616 is expected to be strong and likely to keep the market capped below. Clearing the 1.3616 peak would see a resumption of the bullish trend.

On Tuesday, the dollar hit a fresh eight-week high against the yen in Asia with investors widely expecting the Fed policymakers to announce the start of monetary tightening later this year in their two-day meeting that concludes on Wednesday. Its British counterpart was in an uptrend as well following a deep fall on Monday after the BOE Governor, Mark Carney, talked down the country’s post-Brexit trade prospects and argued that rates should rise moderately, giving no clues on when the central bank will deliver higher rates.

While the US President is expected to deliver his first speech in front of the UN leaders who aim to find a solution to North Korea’s aggressive nuclear programs, the dollar peaked at a fresh eight-week high of 111.87 early in Asia, gaining mainly from stronger US treasury yields. The move came due to expectations that the Fed will announce its plans for balance sheet reduction later this year at the end of its two-day policy meeting on Thursday, while markets are also pricing a potential third-rate hike in December.

Meanwhile, the pound pared yesterday’s losses made after the BOE Governor, Mark Carney, said on Monday at the IMF headquarters that interest rates should rise but “gradually” and to a “limited extent”, giving no clues on the timeframe of this process. Moreover, he claimed that Britain’s exit from the EU will hurt growth prospects in the near-term and push up inflation, saying that new trade relations with non- EU members are less likely to offset drawbacks arising from weaker trade agreements with EU members. The pound retreated by almost 1% on Monday to $1.3463 before it surged to $1.3550 early on Tuesday.

Euro/dollar posted gains during the session, reaching a one-week high of 1.2005 before it fell to 1.1994.

The aussie was moving upwards most of the time during the Asian session after the RBA minutes released today maintained an upbeat view on the economic outlook, while the Australian house price growth came in higher than expected, giving some support to the currency. The minutes mentioned that employment growth is expected to continue improving with a limited impact on the already subdued wages. In addition, minutes revealed risks from household debt rising faster than household income and from a stronger local currency. Aussie/dollar slipped to a session low of $0.7960 following the report but then jumped to $0.7983, finding some support from the House price index which grew by 1.9% q/q, above the 1.1% forecasted in the second quarter.

The loonie weakened against the dollar after the BOC’s Deputy Governor, Timothy Lane, said that the central bank will keep a close eye on the currency, which has recently strengthened to a two-year high versus its US counterpart, before taking any policy decision. Moreover, he added that households are now more indebted compared to the period when rates were close to neutral. However, he claimed that a strengthening economy will help consumers to deal with debt costs. Dollar/loonie drifted higher on late Monday to a two-week high of 1.2336, falling to 1.2286 during the Asian session.

Looking at commodities, WTI crude was up by 0.46% on the day at $50.14 per barrel and Brent rose by 0.31% to $55.65.

Gold was trading flat at $1,307.10 per ounce.

GBP/JPY - 150.55

Original strategy:

Buy at 149.50, Target: 151.50, Stop: 148.90

Position: -
Target: -
Stop: -

New strategy :

Sell at 151.00, Target: 149.00, Stop: 151.60

Position: -
Target:  -
Stop:-

Although sterling rose to 151.55 again today, failure to penetrate this level and current retreat suggest consolidation would be seen and as long as said resistance holds, mild downside bias is for test of 150.00, break there would suggest a temporary top is possibly formed, bring retracement of recent rise to 149.50, then 149.00, however, reckon previous resistance at 148.35 (now support) would hold and bring rebound later.

In view of this, we are looking to turn short on recovery as 151.15-20 should limit upside and bring another retreat. Above said resistance at 151.55 would abort and extend recent rise to 152.00, then 153.00, however, near term overbought condition should limit upside to 154.00-10 and price should falter below 155.00. Our latest preferred count is that triangle wave B correction ended at 139.35 (the final e leg of triangle), hence wave C has commenced and may extend further gain to 153.00 and later 154.00.

Our preferred count is that larger degree wave V with circle is unfolding from 251.12 with wave (I) 219.34, (II): 241.38 and wave (III) is subdivided into 1: 192.60, 2: 215.89 (23 Jul 2008) and wave 3 ended at 118.87 earlier in 2009. The correction from there to 162.60 is wave 4 which itself is a double three and is labeled as first a-b-c ended at 151.53, followed by wave x at 139.03, 2nd a ended at 162.60, 2nd b at 146.75 and 2nd c leg of wave 4 ended at 163.00. Therefore, the decline from 163.00 to 116.85 is now treated as wave 5 which also marked the end of larger degree wave (III), hence wave (IV) major correction has commenced for retracement of the wave (III) from 241.38 and upside target at 183.95-00 (50% Fibonacci retracement of the wave (II) from 241.38) had been met, a drop below 160.00 would suggest wave (IV) has ended at 195.85, bring decline in wave (V) for initial weakness to 130 (already met) and 120.


Key Highlights

• The Aussie Dollar corrected from the 0.8142 level against the US Dollar towards 0.7950.
• A crucial bullish trend line with current support at 0.7945 on the 4-hours chart of AUD/USD prevented further declines.
• The Reserve Bank of Australia (RBA) minutes from the 5th Sep 2017 meeting pointed concerns over the rise in the Australian Dollar.
• Australia’s House Price Index in the June 2017 quarter rose 1.9% (QoQ), less than the last +2.2%.

AUDUSD Technical Analysis

The Aussie Dollar gained heavy bids earlier this month and moved above 0.8100 against the US Dollar before correcting lower. The AUD/USD pair is currently above 0.7950 and eyeing further upsides.

The last drop from the 0.8124 high in AUD/USD found support near 0.7940 and the 200 simple moving average (H4). Moreover, a major bullish trend line with current support at 0.7945 on the 4-hours chart acted as a barrier for further declines.

The pair is currently recovering and testing the 23.6% Fib retracement level of the last decline from the 0.8142 high to 0.7939 low near 0.7990.

A break and close of 0.8000 would open the doors for a run towards a bearish trend line on the same chart. Above 0.8030, the pair could even head towards 0.8080. On the downside, the 0.7950 level remains a crucial support zone.

RBA Meeting Minutes and House Price Index

Today in Australia, the Reserve Bank of Australia (RBA) minutes from the 5th Sep 2017 meeting were published. The main point to note was about the Australian Dollar, as minutes pointed out concerns over the recent rise in AUD.

The minutes mentioned:

The appreciation of the Australian dollar over the course of 2017 had, in large part, reflected a broadly based depreciation of the US dollar. Forward indicators suggested that the improvement in labour market conditions was likely to continue.

Furthermore, the House Price Index for the June 2017 quarter was released by the Australian Bureau of Statistics. The forecast was slated for a rise of around 2% compared with the previous quarter.

The actual result was neutral, as the House Price Index increased 1.9%, less than the last +2.2%. In terms of the yearly change, there was a rise of 10.2%, similar to the last +10.2%.

To sum up, the AUD/USD pair might trade higher towards 0.8040-50 as long as the trend line support at 0.7950 and the 200 SMA (H4) are intact.

On Monday, at a speech at the International Monetary Fund in Washington DC, Bank of England Governor Mark Carney stated that any increases in UK interest rates in the future will be both “gradual” and “limited”. He commented that “some withdrawal of monetary stimulus is likely to be appropriate over the coming months” to help return inflation to its 2% target. Recent comments from members of the Bank of England’s Monetary Policy committee appear to suggest the possibility of a hike in rates following their next meeting in November and another hike in early Q2 of next year. Markets are suggesting that each hike will be 0.25% which would see UK interest rates potentially climbing to 0.75% in early 2018.

Focus shifts to the start of the Fed’s 2-day meeting today. The expectation is that rates will hold steady, with many awaiting clues as to the timing of further tightening later this year. Per the recent CME Fedwatch tool, there is a better than 50% probability that the Fed will hike rates in December. The markets will be eager to see what steps the Fed plans towards policy normalization and when it will start unwinding its massive $4.2 Trillion portfolio of Treasuries.

Geopolitical tensions may be heightened, as President Trump is scheduled to address the United Nations General Assembly today in New York. According to a Senior White House official President Trump is expected to warn member states that they risk being “bystanders in history” if they do not mobilize to confront threats from North Korea and Iran. The same official commented that his speech will focus on “world regimes that threaten security” and “Obviously one of the chief regimes that will be singled out in this regard is the regime of North Korea and all of its destabilizing hostile and dangerous behavior, as well as of course the regime of Iran”. Markets will be cautious as to how Pyongyang may respond both vocally and physically.

EURUSD climbed 0.4% to briefly touch 1.2000. Currently, EURUSD is trading around 1.1995.

USDJPY has maintained upward momentum overnight currently trading around 111.75.

GBPUSD remains firm following recent comments from Governor Carney. Currently, GBPUSD is trading around 1.3530.

Gold has given back most of its recent gains as risk-off sentiment has declined. Currently, Gold is trading around $1,307.

WTI is little changed overnight and currently trades around $50.42pb.

Major economic data releases for today:

At 13:30 BST, the US Census Bureau at the Department of Commerce will release Housing Starts (MoM) for August along with Building Permits. The markets are expecting to see an improvement from the 3-month low set in July. The poor data in July has been attributed to builders starting fewer apartment buildings due to a lack of both labor and available building plots. A strong jobs market, jobless claims near 4-year lows and the rebuilding following the recent storms mean the markets are expecting to see an improvement.