Sample Category Title

In line with expectations, the Dollar continued to advance against the Yen in a junior ascending channel, successfully crossing the upper boundary of a formed dominant formation. However, an effect from release of data on the US PPI was not as strong, as with other currency pairs. Namely, the pair made two attempts to climb above the 110.68 level but failed. Due to pressure from the 55-hour SMA, which is moving along the pattern, the pair is likely to make one more attempt to reach the weekly R2 at 110.98. At the moment, the only factor that could push the pair through this resistance, which is additionally strengthened by the monthly R1 at 111.26, is a release of data on the US CPI and Core Retail Sale. Otherwise, these technical indicators will force the rate to make a rebound.

A release of update on the US PPI led to 0.97% appreciation of the buck against the yellow metal. Fortunately, this time an effect from the above fundamental event matched with the technical analysis, which also pointed out on the further downfall of the rate. However, after reaching the lower trend-line of a long-term ascending channel the pair made a rebound. From a larger perspective, this turn around means that the gold once again has to start gaining value and try to soar towards the monthly R2, which is located at the 1,374.50 level. From a short-term perspective, the surge is likely to be neutralized by a combination of the 100- and 200-hour SMAs. In addition to that, there is a need to take into account an effect from release of data on the US CPI, which can alter the above scenario.

EUR/USD

Current level - 1.1881

Despite the negative bias, my outlook is counter-trend against 1.1830 support, for a reversal and another bounce towards 1.2070.

USD/JPY

Current level - 110.42

The bias is still positive as the pair is heading for a tight test of 111.00 resistance area. My outlook is rather counter-trend against 111.00, for a corrective pattern below the mentioned hurdle, before advancing higher. Initial intraday support lies at 110.30 and trigger on the downside is 109.90.

GBP/USD

Current level - 1.3211

The test of 1.3340 resistance has failed and the sell-off broke through 1.3220 support, so the pair is heading for a test of 1.3157 area. Initial intraday resistance lies at 1.3250.

Daily Pivots: (S1) 145.49; (P) 146.08; (R1) 146.51; More

With 143.52 minor support intact, intraday bias in GBP/JPY remains on the upside for 147.76/148.42 resistance zone. Decisive break there will confirm resumption of medium term rebound from 122.36. On the downside, below 145.32 minor support will turn intraday bias neutral first. Overall, for the moment, GBP/JPY is still bounded in sideway consolidation pattern from 148.42.

In the bigger picture, the sideway pattern from 148.42 is still unfolding. In case of deeper fall, we'd expect strong support from 135.58 and 50% retracement of 122.36 to 148.42 at 135.39 to contain downside. Medium term rise from 122.36 is expected to resume later. And break of 38.2% retracement of 196.85 to 122.36 at 150.43 will carry long term bullish implications. However, firm break of 135.58/39 will dampen the bullish view and turn focus back to 122.36 low.

GBP/USD – 1.3212





Original strategy :

Buy at 1.3170, Target:1.3370, Stop: 1.3110

Position: -

Target:  -

Stop: - 




New strategy :

Buy at 1.3140, Target:1.3340, Stop: 1.3080

Position: -

Target:  -

Stop:- 



As cable has retreated after rising to 1.3329 yesterday, retaining our view that minor consolidation below this level would be seen and pullback towards support at 1.3161 is likely, however, reckon downside would be limited to 1.3130-40 and bring another upmove later, above 1.3290-00 would bring retest of said resistance at 1.3329, break there would extend recent upmove to 1.3350-55 (50% projection of 1.2109-1.3269 measuring from 1.2774) but overbought condition should limit upside to 1.3390-00 and price should falter below 1.3440-50, bring retreat later.

In view of this, would not chase this rise here and would be prudent to buy sterling on subsequent pullback as said support at 1.3130-40 should limit downside, bring another rise later. Only below previous resistance at 1.3080-85 would defer and risk test of 1.3030-33 support, break there would suggest a temporary top is formed instead, risk correction to 1.2990-00 first.

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. 


USDJPY maintains its neutral picture in the medium term after it bounced sharply last week from near the key 108-area which acted as the lower end of the range that was established over the past 6 months.

After a strong rally from 107.31 last Friday, prices hit 110.72 today. USDJPY is now being capped by the 50-day moving average near this level. The market’s upward trajectory has slowed down as can been seen in the flat RSI and MACD, warning that there is risk of a pullback. Failure to record a daily close above the 50-day MA would add to near-term corrective risks and would shift the focus back to the downside.

Immediate support lies at 109.91, which was yesterday’s low. It is also the 50% Fibonacci retracement level of the rise from 101.18 to 118.66 (November to December 2016 upleg). A move below this would target the bottom of the 6-month range near the key 108 level. Further weakness would push the market out of the range and shift the medium-term trend to bearish from neutral.

A sustained move from current levels towards the 38.2% Fibonacci level at 111.94 would help improve short-term prospects for USDJPY for further gains towards 114.49 (July 11 high and 23.6% Fibonacci). This is the top of the range and so breaking above this level would shift the trend to bullish.

Bearish trend indicators and flat momentum signals on the daily chart are pointing to more range trading ahead. The 200-day MA is horizontal while the RSI and MACD are lacking direction, suggesting little impetus for a break out of the range at the moment.

GBP/JPY - 145.85

Original strategy:

Buy at 145.00, Target: 147.00, Stop: 144.40 

Position: -
Target: -
Stop: -

New strategy :

Buy at 144.75, Target: 146.75, Stop: 144.15

Position: -
Target:  -
Stop:-

As sterling has retreated after rising to 146.65 yesterday, suggesting consolidation below this level would be seen and initial downside risk is for pullback to 145.00-10, however, this week’s rally signals early fall from 147.75 has ended at 139.35 (tentatively the final e leg of larger degree wave B), downside should be limited to 144.70 and bullishness remains for another test of resistance at 146.80, break there would add credence to this view and encourage for headway to 147.30-40, then retest of previous resistance at 147.75 which is likely to hold from here due to overbought condition,

In view of this, we are looking to buy sterling on pullback as 144.70-75 should limit downside. Only below said previous resistance at 143.00 (tentatively wave i top) would abort and signal top is formed instead, bring weakness to 142.50, then 142.20-25, however, reckon support at 141.30-35 would remain intact, bring another rebound later. 

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.


On Thursday, the dollar index was moving sideways above the 92 key-level in Asia, as investors ignored another aggressive warning from North Korea and instead were cautious whether US inflation data released later today would change the chances of the Fed raising interest rates again this year. Meanwhile, the pound was flat at yesterday's lows ahead of the Bank of England's policy meeting later today.

Early in Asia, the North Korean regime threatened to use its nuclear weapons to “sink” Japan and turn the US into “ashes” for their supportive stance on the recent UN decision to approve additional but softer sanctions on its latest nuclear test. However, forex markets reacted little to the renewed North Korean warnings, keeping their eyes mostly on the US consumer price index which is expected to accelerate slightly from 1.7% growth in July to 1.8% in August on a yearly basis. If this expectation is realized or exceeded, it could raise the odds for a third rate hike this year.

Besides that, developments around US fiscal policy seem to support the dollar as congressional committees are expected to create an outline regarding tax reforms in the upcoming weeks starting on September 25. Moreover, the Speaker of the House of Representatives, Paul Ryan, argued on Wednesday that potential tax cuts would be reimbursed by faster economic expansion.

The dollar index was trading flat during Asian hours around 92.40 after a strong rally yesterday which led the index to a 10-day high of 92.48. Dollar/yen edged down from a one-month high of 110.72 early today to 110.45, while dollar/swissie retreated to 0.9648 after it touched a one-month high of 0.9659 yesterday.

Gold continued its downtrend, falling to a two-week low of $1,319.07 per ounce before it climbed to $1,321.34.

The euro weakened to a two-week low of $1.1865 during the Asian session after the ECB's chief economist Peter Praet reiterated that an accommodative monetary policy is needed for inflation to reach the central bank's target of 2%, saying that a “steady hand” should be maintained in policy as inflation still has room to rise.

Meanwhile, in the UK, BOE policymakers are preparing to launch their policy meeting at 1100GMT today, with markets anticipating rates to remain steady with a vote of 7-2. However, July's disappointing figures on wage growth will likely put the BOE members in a dilemma on how to cope with rising inflation which fluctuates near 3%, above the central bank's target of 2%.

In terms of data, Australia published upbeat labor data for the month of August, while Chinese numbers on retail sales and industrial production came in lower than expected.

The aussie partially reversed yesterday's losses touching a session high of $0.8015 in the wake of better-than-expected labor readings. However, a few hours later, weaker Chinese data pushed the currency down to $0.7997.

The kiwi dipped into losses, touching a one-week low of $0.7208 after polls for September 23 elections showed on Thursday that the opposition Labour Party moved to the front position, obtaining the support of 44%, while the governing National Party, which has led the polls so far, attracted a backing of 40%.

Looking at oil prices, WTI crude and Brent were down at $49.27 per barrel and $55.01 respectively.

Daily Pivots: (S1) 131.02; (P) 131.46; (R1) 132.25; More...

EUR/JPY lost momentum after hitting 132.00 and intraday bias is turned neutral first. Further rise is expected as long as 129.36 support holds. Above 132.00 will target 134.20 fibonacci level next.

In the bigger picture, current rise from 109.03 is seen as at the same degree as the down trend from 149.76 (2014 high) to 109.03 (2016 low). as long as 124.08 resistance turned support holds, further rise is expected to 61.8% retracement of 149.76 to 109.03 at 134.20. Sustained break there will pave the way to key long term resistance zone at 141.04/149.76. However, firm break of 124.08 will argue that rise from 109.03 is completed and turn outlook bearish.

EUR/JPY - 131.35

Original strategy:

Bought at 131.35, Target: 133.35, Stop: 130.75

Position: - Long at 131.35
Target: - 133.35
Stop: - 130.75

New strategy :

Exit long entered at 131.35,

Position: - Long at 131.35
Target:  -
Stop:-

Despite rising to 132.01 earlier this week the subsequent retreat suggests consolidation below this level would be seen and near term downside risk has increased for correction to 130.91 support, break there would suggest a temporary top is possibly formed, bring further fall to 130.50-60 and later towards 130.25-30 but downside should be limited to this week’s low at 129.95, bring another rise later.

In view of this, would be prudent to exit long entered at 131.35 and stand aside for now. Above 131.60-65 would bring another rise to 132.01 but break there is needed to signal recent upmove has once again resumed and extend gain to 132.40-50, then towards 133.00-10, however, near term overbought condition should prevent sharp move beyond 133.50 and upside should be limited to 133.90-00.

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).