Sample Category Title

EUR/GBP - 0.9093

 
Original strategy  :

Buy at 0.9000, Target: 0.9130, Stop: 0.8960

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 0.9000, Target: 0.9130, Stop: 0.8960

Position : -

Target :  -

Stop : -

 
As the single currency has retreated after intra-day brief rise to 0.9143, suggesting minor consolidation below this level would be seen and pullback to 0.9050-55 cannot be ruled out, however, reckon downside would be limited to 0.9015-20 and renewed buying interest should emerge around 0.9000, bring another upmove later, break of said resistance would extend recent erratic rise to 0.9160, however, weakening of near term upward momentum should prevent sharp move beyond 0.9180-85 and price should falter below 0.9200.

In view of this, would not chase this rise here and would be prudent to buy euro on subsequent pullback as 0.9000-05 would limit downside. Below 0.8960-70 would defer and suggest a temporary top is possibly formed, bring correction to 0.8922 support which is likely to hold from here.

Our preferred count is that, after forming a major top at 0.9805 (wave V), (A)-(B)-(C) correction is unfolding with (A) leg ended at 0.8400 (A: 0.8637, B: 0.9491 and 5-waver C ended at 0.8400. Wave (B) has ended at 0.9413 and impulsive wave (C) has either ended at 0.8067 or may extend one more fall to 0.8000 before prospect of another rally. Current breach of indicated resistance at 0.9043 confirms our view that the (C) leg has ended and bring stronger rebound towards 0.9150/54, then towards 0.9240/50.

Spot Gold bounced to $1274 after repeated rejection at strong support at $1267 (Tuesday's low / Fibo 61.8% of $1251/$1292 upleg, reinforced), as strong fall in past two days entered consolidative mode. Fresh strength of dollar and reduced safe-haven demand put the yellow metal under pressure. Long bearish candles of past two days weigh for further weakness which could be triggered by firm break below $1267 pivot. Markets are awaiting release of FOMC last meeting minutes which could send interest rate sensitive gold further down on hawkish comments that mean clearer signals about reducing a massive portfolio as well as another rate hike in 2017. Such scenario could send gold price towards next supports at $1258 (Fibo 38.2% of $1204/$1292 rally) then $1254 (converged 55/100 SMA's) and $1251 (08 Aug trough). Alternatively, stronger upside action could be expected in case of more dovish minutes.

Res: 1274; 1276; 1282; 1285
Sup: 1270; 1267; 1261; 1258

Homebuilding slowed in July with builders breaking ground on 1155k units. This performance surprised to the downside with markets anticipating a 1220k print.

Both single-family and multi-family construction subsided, but the latter accounted for the bulk of the decrease. Single family decreased only 4k from an upwardly revised (+11k) June figure, while multifamily starts fell by 54k from a downwardly-revised (-13k) June reading.

Building permits also disappointed, coming in at 1223k while markets had expected a 1250k reading. Single family permits held steady at 811k in July while the volatile multifamily segment saw permits contract by 52k from an upwardly revised (+21k) June figure.

National housing starts were weighed down by decline in activity in the Midwest (-32k) and the Northeast (-24k). The West posted a very modest contraction in building activity (-5k) while the South saw homebuilding rise by 3k units.

Key Implications

While the headline disappointed, the report was mildly encouraging given the strength in single family starts related to positive revisions to June's figures. Continued strength in demand, evidenced by robust new home sales data, coupled with robust income gains from a tightening labor market should support further expansion going forward despite the tick-up in mortgage rates expected going forward. This trend will be further supported by homeownership rates, which appear to have found their trough, and may be on their way up.

The strong demand is helping shore up builder optimism, with the NAHB's Index rising by 4 points in August. However, a restrained pool of skilled labor has placed pressure on builders recently, with elevated lumber and land prices posing further obstacles to construction.

Today's report is overall positive given the strength in the single family housing market which is a better indication of broad economic trends. Single family starts are a larger contributor to economic activity than multifamily building and should help make residential investment a positive contributor to third quarter growth, which is currently tracking close to 3%.

EUR/USD is trading in the red on the short term and is expected to extend the sell-off. Is focused on correction right now, but remains how long this will be because the FOMC Meeting Minutes could force the rate to turn to the upside again.

Technically is expected to decrease further also because the US dollar index continues to stay above a broken dynamic resistance and above the 93.81 broken static resistance. We may have a minor decrease on the USDX these days, could come down to retest the broken resistance levels before will climb much higher.

The USD stays higher even if the United States data have disappointed earlier, the Building Permits dropped from 1.28M to 1.22M, while the Housing Starts have disappointed as well, have dropped from 1.21M to 1.16M, even if the traders have expected an increase to 1.22M.

The FOMC Meeting Minutes could bring a high volatility tonight, so you should be careful not to suffer a heavy loss.

Price is pressuring the 1.1711 major static support (resistance turned into support) and could drop towards the median line (ml) of the minor ascending pitchfork. A breakdown below the static support looks imminent after the failure to retest the upper median line (uml) of the minor ascending pitchfork. We'll see what impact the FOMC Minutes will have tonight, because a disappointment will boost the currency pair.

The next major downside target is at the median line (ML) of the major ascending pitchfork, only a valid breakdown below this obstacle will confirm a reversal.

EUR/JPY reached new highs in the morning at 130.38 level, but the sellers are still in game and have forced it to decrease in the last few hours. You can see that was almost to reach the confluence between the median line (ml) of the black ascending pitchfork with the upper median line (uml) of the minor descending pitchfork. The failure signals an exhaustion and a bearish pressure, a downside movement is favored after the retest of the red uptrend line.

Looks like that the rate is developing a Head and Shoulders pattern, this will be confirmed only after a valid breakdown below the 38.2% retracement level.

Price has come back to retest the uptrend line (red line) to confirm this resistance (support turned into resistance) and to validate a further drop in the upcoming weeks. GBP/JPY could climb even towards the upper median line (uml) of the minor descending pitchfork before will drop again. The next downside target will be at the WL1.

USD/CAD - 1.2725

Trend:  Down

 
Original strategy       :

Sell at 1.2825, Target: 1.2625, Stop: 1.2885

Position: -

Target:  -

Stop: -

 
New strategy             :

Sell at 1.2825, Target: 1.2625, Stop: 1.2885

Position: -

Target:  -

Stop:-

Although the greenback has retreated after rising to 1.2778 yesterday, reckon support at 1.2652 would limit downside and near term upside risk remains for the corrective rise from 1.2414 low to extend gain to 1.2800, however, as this move is still viewed as retracement of recent decline (tentatively wave iv), reckon upside would be limited to 1.2825-35 and bring retreat later, below 1.2650-55 would suggest top is possibly formed, bring weakness to 1.2600 but break of support at 1.2553 is needed to provide confirmation, bring further fall to 1.2500 first. We are keeping our count that wave v as well as wave (C) ended at 1.3794 and impulsive wave (i ii, i ii) is now unfolding with minor wave iii possibly ended at 1.2414, hence wave iv correction is underway.

In view of this, would be prudent to stand aside for now and look to sell on further subsequent rebound as 1.2825-30 should limit upside. Above 1.2880-85 (50% Fibonacci retracement of wave iii) would abort and signal a temporary low is formed, bring a stronger rebound to 1.2940-50 but price should falter below 1.2990-95 (61.8% Fibonacci retracement) and bring retreat later this week.

To recap, wave B from 1.3066 is unfolding as an a-b-c and is sub-divided as a: 1.2192, b: 1.2716 and wave c is a 5-waver with i: 1.1983, ii: 1.2506, extended wave iii with minor iii at 1.0206, wave iv ended at 1.0781 and wave v as well as wave iii has ended at 0.9931, hence the subsequent choppy trading is the wave iv which is unfolding as (a)-(b)-(c) with (a) leg of iv ended at 1.0854, followed by (b) leg at 1.0108 and (c) leg as well as the wave iv ended at 1.0674. The wave v is sub-divided by minor wave (i): 0.9980, (ii): 1.0374, (iii): 0.9446, (iv): 0.9913 and (v) as well as v has possibly ended at 0.9407, therefore, consolidation with upside bias is seen for major correction, indicated target at 1.3700 and 1.4000 had been met and further gain to 1.4700 would be seen later.

Daily Pivots: (S1) 109.90; (P) 110.37; (R1) 111.14; More...

Intraday bias in USD/JPY remains mildly on the upside for the moment. As noted before, fall from 114.49 could have completed at 108.72. Further rise would be seen back to 112.18 resistance first. Break there will target 114.49 key near term resistance again. On the downside, break of 108.79 minor support will turn focus back to 108.72 instead.

In the bigger picture, the corrective structure of the fall from 118.65 suggests that rise from 98.97 is not completed yet. Break of 118.65 will target a test on 125.85 high. At this point, it's uncertain whether rise from 98.97 is resuming the long term up trend from 75.56, or it's a leg in the consolidation from 125.85. Hence, we'll be cautious on topping as it approaches 125.85. If fall from 118.65 extends lower, downside should be contained by 61.8% retracement of 98.97 to 118.65 at 106.48 and bring rebound.

USD/CHF - 0.9745

Original strategy :

Buy at 0.9690, Target: 0.9790, Stop: 0.9655

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 0.9690, Target: 0.9790, Stop: 0.9655

Position : -

Target :  -

Stop : -

As the greenback has maintained a firm undertone after staging a strong rebound from 0.9583 (last week’s low), adding credence to our view that the retreat from 0.9773 has ended there, hence consolidation with upside bias remains for another test of said resistance, however, break there is needed to confirm early rise from 0.9438 low has resumed and extend gain to 0.9808 and possibly 0.9825 resistance, having said that, near term overbought condition should limit upside and price should falter below previous support at 0.9859.

In view of this, we are looking to reinstate long on pullback as 0.9690-95 should limit downside and bring another rise later. Below previous resistance at 0.9675 would defer and risk weakness towards 0.9640 but downside should be limited to 0.9615-20 and bring another rise later.

Daily Pivots: (S1) 0.9699; (P) 0.9728; (R1) 0.9755; More...

Intraday bias in USD/CHF remains on the upside for 0.9772 resistance. Decisive break there will revive the bullish case of reversal. That is, whole decline from 1.0342 has completed at 0.9437 after defending 0.9443 support. USD/CHF should then target channel resistance (now at 0.9862) next. On the downside, below 0.9675 minor support will turn intraday bias neutral first. Also, the pair is bounded inside medium term falling channel and limited below 38.2% retracement of 1.0342 to 0.9437 at 0.9783 for the moment. Break of 0.9582 will dampen our bullish view and turn bias back to the downside for 0.9437. This could also extend the fall from 1.0342 through 0.9437/43 key support level.

In the bigger picture, current development argues that USD/CHF has successfully defended 0.9443 key support level. And long term range trading in 0.9443/1.0342 is extending with another rise. At this point, there is no sign of an up trend yet. Hence, while further rise is expected in USD/CHF, we'll start to be cautious on loss of momentum above 61.8% retracement of 1.0342 to 0.9437 at 0.9996. However, firm break of 0.9443 will carry larger bearish implication and would target next key support at 0.9072.