Sample Category Title

EUR/CHF has posted significant gains in the morning and tries to stay higher after the failure to reach and retest the 1.1536 previous high. I’ve drawn a minor descending pitchfork hoping that I’ll catch a potential downside movement. A retest of the upper median line (uml) of the minor descending pitchfork followed by a minor decrease will confirm a significant drop.

Price has rallied after the retest of the lower median line (lml) of the minor ascending pitchfork. Technically, the perspective remains bullish as long as is trapped within the minor ascending pitchfork's body.

I've drawn a minor descending pitchfork, a retest of the upper median line (uml) could signal a potential reversal. It could develop a Rising Wedge pattern, which could signal a reversal, a major drop will be confirmed after a valid breakdown below the median line (ML).

EUR/JPY - 132.80

Original strategy:

Buy at 132.20, Target: 134.20, Stop: 131.60

Position: -
Target: -
Stop: -

New strategy :

Buy at 132.00, Target: 134.00, Stop: 131.40

Position: -
Target:  -
Stop:-

Although the single currency rose briefly above last week’s high of 133.09, lack of follow through buying and current retreat from 133.12 suggest consolidation below this level would be seen and initial downside risk is for pullback to 132.40-50, however, reckon downside would be limited to 132.01 (previous resistance turned support) and bring another rise later, above 133.12 would extend recent upmove to 133.50-60 but near term overbought condition should prevent sharp move beyond 134.00-10 and reckon 134.50-60 would hold from here, risk from there has increased for a retreat later. 

In view of this, we are looking to reinstate long on pullback as previous resistance at 132.01 (should turn into support) and bring another rise later. Below 131.60-70 would defer and risk retreat to 131.00-10 but said support at 130.62 should remain intact, bring another rise later. 

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 Gold price has dropped further on the short term and could resume the minor retreat if the USDX will have enough energy to climb higher in the upcoming period. Price is trading right below the $1320 per ounce, but is almost to reach an important confluence. The minor corrective phase was expected, but this could end up soon if the USD will slide further versus its rivals.

Right now is very important to see what will happen on the USDX, which has managed to breakout above a dynamic resistance. The dollar index has come down to retest it and now is somehow expected to climb much higher.

Gold dropped in the morning, even if the NZD/USD and the AUD/USD have rallied aggressively. Personally, I’m expecting the Aussie and Kiwi to drop again versus the greenback because the pairs are located right below some important resistance levels.

Price has dropped further and is almost to reach the warning line (WL1) of the descending pitchfork, most likely will be attracted by the confluence area formed at the intersection between the uptrend line with the warning line (WL1). Remains to see how will react when will touch the mentioned confluence, a breakdown will accelerate the sell-off.

However, a rejection from this confluence will signal an increase at least till will reach the $1348 per ounce (horizontal resistance) and the lower median line (LML).

AUD/USD – 0.8003

Original strategy:

Sell at 0.8090, Target: 0.7900, Stop: 0.8150

Position: -
Target:  -
Stop:-

New strategy :

Sell at 0.8080, Target: 0.7900, Stop: 0.8140

Position: -
Target:  -
Stop:-

Although aussie found support at 0.7956 last week and rebounded, if our view that temporary top has been formed at 0.8125 is correct, upside would be limited to 0.8080-90 and bring another decline, below , below said support at 0.7956 would add credence to this view, bring retracement of recent rise to 0.7920-25 and later 0.7890-00 but support at 0.7867-71 should remain intact.

In view of this, we are looking to sell aussie on recovery as 0.8090-00 should limit upside. Above said resistance at 0.8125 would (this month’s high) would extend recent upmove in wave v of (iii) to 0.8150, then towards 0.8200, however, loss of upward momentum should prevent sharp move beyond 0.8225-30 and price should falter below 0.8250-60, risk from there is seen for a retreat later.

On the 4-hour chart, the move from 0.8066 is the wave 5 with i: 0.8860, ii: 0.8315, wave iii is an extended move ended at 1.0183, iv: 0.9706 and wave v has ended at 1.1081 (also the top of entire wave 5). The subsequent selloff is the major correction which is unfolding as ABC-X-ABC and 2nd A leg has ended at 0.8848, followed by a-b-c wave B which ended at 0.9758, hence, 2nd C wave is now in progress and indicated downside target at 0.7000 and 0.6950 had been met, so further fall to 0.6710-20 cannot be ruled out.

Dollar Firmer vs Yen, Trades Near Friday's 7-Week High. The dollar held firm near a seven-week high versus the yen on Monday, supported by recent rises in U.S. Treasury yields. The greenback edged up 0.3 percent to 111.17 yen, trading within sight of Friday's peak at 111.33 yen, its highest level since late July.

Sterling Steady, Takes Breather After Last Week's Rally. Sterling was firm after having rallied sharply on Friday, sterling rose past the $1.36 level for the first time since the Brexit vote, after comments from BoE policymaker Gertjan Vlieghe echoed the central bank's signal that the first rate increase in a decade could happen in 'coming months'.

Potential Demand Surge Pushes Oil Prices Up. Crude oil prices rising sharply in anticipation of a rise in global demand with Brent prices hitting a five month high.

Watch Out Today For:

09:00 am GMT: EUR Consumer Price Index

Weekly

    •    Last Candlesticks pattern: Shooting star 
    •    Time of formation: 31 Jul 2017
    •    Trend bias: Near term up

Daily

    •    Last Candlesticks pattern: Shooting star
    •    Time of formation: 2 Aug 2017
    •    Trend bias: Up

EUR/USD – 1.1923

Although the single currency resumed recent upmove and rose to as high as 1.2093, lack of follow throng buying on break of previous resistance at 1.2070 and the subsequent retreat has retained our view that further consolidation would be seen and pullback to 1.1835-40 cannot be ruled out, however, reckon down side would be limited to 1.1790-00 and bring another rise later, above 1.2030-35 would signal the pullback from 1.2093 but break there is needed to confirm recent upmove has resumed and extend gain to dynamic resistance at 1.2165-70 (50% Fibonacci retracement of 1.3993-1.0340) and later towards 1.2200-10 but loss of upward momentum should prevent sharp move beyond 1.2250-60 and reckon 1.2300-10 would hold from here.

On the downside, whilst initial pullback to 1.1835-40 and then 1.1800 cannot be ruled out, reckon 1.1730-40 would contain downside and bring another rise. Below 1.1700 would risk test of support at 1.1662 but a daily close below latter level is needed to signal a temporary top has been formed, bring retracement of recent upmove to 1.1610-15 and possibly towards 1.1550-60, however, reckon the lower Kumo (now at 1.1515) would contain downside. 

Recommendation: Buy euro at 1.1800 for 1.2000 with stop below 1.1700.

On the weekly chart, euro’s retreat after marginal rise to 1.2093 suggests consolidation below this level would be seen and pullback to 1.1835-40, then 1.1800 cannot be ruled out, however, reckon downside would be limited to 1.1730-35 and bring another rise later, above said resistance at 1.2093 would extend recent upmove from 1.0340 low to 1.2160-70 (50% Fibonacci retracement of 1.3993-1.0340) but loss of upward momentum should limit upside to 1.2220-30 and reckon 1.2300-10 would hold from here, price should falter well below 1.2390-00, bring another retreat later.

On the downside, whilst initial pullback to 1.1800 is likely, reckon downside would be limited to 1.1730-35 and bring another rise later. Only below support at 1.1662 would abort and suggest a temporary top is possibly formed, bring retracement of recent rise to 1.1545-50 and possibly towards 1.1500, however, reckon downside would be limited to 1.1430-40 and price should stay well above the Kijun-Sen (now at 1.1332), bring another upmove later this month or in Q4.

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Sterling surged above $1.36 last week,remindinginvestors that central banks remain the strongest drivers of currency markets. GBPUSD has risen 3% in two days to trade at a 15-month high, after the Bank of England signaled to lift rates from record lows. Investors had to adjust their positions aggressively, after realizing that their views were clearly misaligned with the BoE on monetary policy. Rate hike expectations for November shot from below 20% to 65%, sending yields on U.K. 2-year notes 150% higher throughout last week, while 10-year bond yields, considered a less sensitive benchmark to rate hikes, also gained 30%. U.K. equity investors have also felt the pain, with the FTSE 100 falling more than 2.2% to close Friday at 7,215;with increasedsterling appreciation,the index is likely to test a significant support level around 7,100.

More sterling appreciation is still possible in the short run, as investors continue to adjust their FX positions.However, without political stability, most of the gains may be wiped out. Let’s not forget that Brexit negotiations have yet made much headway; many firms are still looking to relocate their headquarters from the U.K., real wages are in negative territory, and the economy may face lot of stress in the months and years to come.

This week, investor attention will shift back to politics, with Theresa May’s Brexit speech scheduled for Friday, in Florence. Pound traders will move based on the tone of her statements; whether she will soften or harden the approach to Brexit talks remains the key to Sterling’s next move.

The main event of the week, is the Federal Reserve’s monetary policy announcement on Wednesday. Upbeat U.S. inflation data wasnot enough to move markets’ expectations of an interest rate hike in December. The odds foran interest rate hike by the end of year stands at 56%, according to CME’s FedWatch; whether this is about to change on Wednesday, relies on the Fed dot plot and Chair Janet Yellen's speech.

Details on the balance sheet normalization are also expected to be announced on Wednesday. Thisprobably won’t have a significant impact on the dollar, as the Fed has been preparing markets for many months. However, we still don’t know the long-term implication of thisprocess. Normalizing the balance sheet will likely put U.S. long-term treasury at risk when the supply begins to increase. This will not only impact yields on bonds, but will also have a negative influence on U.S. equities.

EURUSD - With the pair still holds on to its broader uptrend despite lower close the past week. Resistance comes in at 1.2000 level with a cut through here opening the door for more upside towards the 1.2050 level. Further up, resistance lies at the 1.2100 level where a break will expose the 1.2150 level. Conversely, support lies at the 1.1800 level where a violation will aim at the 1.1750 level. A break of here will aim at the 1.1700 level. Below here will open the door for more weakness towards the 1.1650. All in all, EURUSD faces further upside pressure though with caution.

GBPJPY (151.15): Having posted strong gains last week, the GBPJPY has broken out from the ascending triangle pattern on a weekly timeframe. This puts the minimum upside to 159.75. However, ahead of a further rally in the currency pair, the support level at 147.15 needs to be tested having previously served as resistance. Any declines are likely to be stalled at this level as GBPJPY could prepare for another leg to the upside. Failure to reverse the correction at 147.15 could, however, signal an impending decline in the currency pair that could reverse the risk to the downside.