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The dollar is regaining traction against yen on Thursday and probing above two day congestion tops at 112.45.

Fresh bulls emerge after long-tailed Doji on Tuesday when dips were contained by strong support, formed by 100SMA and daily cloud top.

Repeated close above 112.24 (Fibo 61.8% of 114.36/108.80 was strong bullish signal for fresh upside which now eyes targets at 113.05 (Fibo 76.4%) and 113.35 (weekly Kijun-sen).

Corrective dips are expected to hold above daily cloud and keep bulls intact.

Extension below the cloud would weaken near-term structure and shift bias lower.

Res: 113.05, 113.35, 113.78, 114.00
Sup: 112.13, 111.80, 111.50, 111.46

Cable extends strong rally of past two days on Thursday, to fully retrace 1.2977/1.2588 bear-leg (08 June pre-UK election high / 21 June low) and looking for retest of psychological 1.3000 barrier.

The pound was additionally boosted on Wednesday after BoE’s Governor Carney said that interest rate raise is more likely as British economy comes closer to operating at full capacity.

Thick daily cloud underpins the action, following Tuesday’s break above the cloud after the pair stayed within the cloud in past two weeks.

Break through 1.3000 barrier would open multi-month high and recovery rejection at 1.3050 zone, break of which is needed to signal continuation of recovery phase from 1.2000 zone.

Strong bullish acceleration may show signs of hesitation at 1.3000/50 resistance zone, as overbought daily studies suggest correction.

Daily cloud top / session low offer solid support at 1.2920, which should ideally contain, however stronger pullback may extend towards 1.2840/00 support zone.

Res: 1.3000, 1.3047, 1.3109, 1.3120
Sup: 1.2920, 1.2900, 1.2861, 1.2840

The Euro remains firm in early Thursday's trading and consolidating around 1.1400 handle after posting new one-year high at 1.1420 in Asia.

Strong rally extends into third day and dented targets at 1.1414/28, firm break of which would open way towards next target at 1.1614 (02 May 2016 peak).

Strong bullish sentiment was boosted by comments from ECB President Mario Draghi on Tuesday who hinted that the ECB could trim its stimulus towards the end of the year. Markets interpreted Draghi's message as signal of the beginning of tighter monetary policy in the Eurozone that sparked strong rally of the single currency.

Sustained break above 1.1428 (24 June 2016 high) could trigger fresh extension towards Fibo projections at 1.1448 (200%) and 1.1511 (238.2%).

On the other side, slow stochastic is deeply in overbought territory on daily chart but continues to head north, while daily RSI is at the border of overbought zone, suggesting corrective action in the near-term.

Initial support lies at 1.1374 (session low), ahead of more significant former pivotal barrier, now support at 1.1300 and ascending converged daily Tenkan-sen/Kijun-sen at 1.1270, above which extended corrective dips are expected to find support.

Res: 1.1428, 1.1448, 1.1511, 1.1550
Sup: 1.1374, 1.1300, 1.1270, 1.1230

Central Banks were again the focus as latest comments from the Bank of England sparked a risk-on tone that helped lift GBP and US Equities.

GBPUSD climbed the most since April on comments made by Bank of England Governor Carney stating that 'the Monetary Policy Committee may need to begin removing stimulus'. This was a major change from Governor Carney's comments last week that 'now was not the time to start the tightening process'.

Because of this about-change GBP against USD was the recipient of a 1.2% gain on the day trading as high as 1.29717 – the biggest one day move since the snap election was called on April 18th. Overnight GBP has remained bullish reaching a high of 1.29942 in early trading this morning trading currently at 1.2985.

EURUSD was also the recipient of some 'whip-saw' action on Wednesday as the previous hawkish tone of ECB President Draghi Tuesday comments were, per Central Bank officials, misinterpreted as Draghi commented that 'deflationary forces have been replaced by reflationary ones'. Three Eurosystem officials stated 'what was perceived as hawkish was really meant to strike a balance between recognizing the bloc's economic strength and warning that monetary support is still needed'. Following Draghi's comments EURUSD saw a dramatic sell off from around 1.1380 down to 1.1291 before retracing back to reach a new daily high of 1.1390 – not seen since June 2016. EURUSD has now broken the psychological 1.14 area trading as high as 1.14322 this morning.

Following the latest EIA Crude Oil Inventories report on Wednesday, that showed an increase of 0.118M compared to the consensus forecast of a decrease of 2.585M, WTI advanced higher to trade up to $44.91pb a 1.3% increase on the day. Brent was only slightly lagging gaining 1.1% on the day to trade up to $47.56pb. The price increase is moving away from the $40pb area thought to be a major psychological support. WTI and Brent are currently trading at $45.30 and $48.00 respectively in early trading.

CAD remains strong against USD gaining 0.63% yesterday to trade as low as 1.3047 as the Bank of Canada Governor Poloz's recent comments has resulted in the Canadian OIS showing the possibility of a July rate increase climbing to nearly 70%. USDCAD has continued lower overnight with it currently trading at 1.3012 slightly above the low set this morning at 1.30065.

Gold climbed for a second day rising to trade as high as $1,254.65 before retracing back to currently trade at $1,250.

At 13:30 BST today will see the release of US Initial Jobless Claims and Annualized Gross Domestic Product – more data to determine if the US economy is on a strong trajectory. Note that Federal Reserve Member Bullard is scheduled to speak at 18:00 BST so we may get even more rhetoric on the state of the US economy.

EUR/JPY - 128.55

Recent wave: wave v of (C) ended at 94.12 and major correction in wave A has ended at 149.79

Trend: Near term up

Original strategy:

Buy at 126.00, Target: 128.00, Stop: 125.40

Position: -
Target: -
Stop: -

New strategy :

Buy at 127.45, Target: 129.45, Stop: 126.85

Position: -
Target:  -
Stop:-

Although euro retreated briefly to 126.49, renewed buying interest quickly emerged and the single currency has surged again, adding credence to our bullish count that recent upmove is still in progress and upside bias remains for medium term rise to extend further gain to 129.00-10, however, near term overbought condition should prevent sharp move beyond 129.50-60 and reckon psychological level 130.00 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 127.40-50 should limit downside. Below 126.90-00 would defer and risk test of said support at 126.49 but only break there would signal a temporary top is formed instead, bring correction to 126.00 and later towards 125.40-50.

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).

AUD/USD – 0.7668

Recent wave: Wave 5 ended at 1.1081 and major correction has commenced for fall to 0.7000 and then towards 0.6500-10

Trend: Near term up

Original strategy :

Bought at 0.7595, Target: 0.7745, Stop: 0.7555

Position: - Long at 0.7595
Target:  - 0.7745
Stop: - 0.7555

New strategy :

Hold long entered at 0.7595, Target: 0.7745, Stop: 0.7615

Position: - Long at 0.7595
Target:  - 0.7745
Stop:- 0.7615

As aussie has finally surged and broke above previous resistance at 0.7636, adding credence to our bullish view for resumption of recent upmove and upside bias remains for the rise from 0.7329 to extend gain to 0.7700 but loss of momentum should limit upside to chart resistance at 0.7750 and price should falter below 0.7785-90.

In view of this, we are holding on to our long position entered at 0.7595. Below previous resistance at 0.7625 (now support) would defer and risk weakness to 0.7600 but only break of support at 0.7577 would signal top is formed instead, bring correction towards support at 0.7535 which is likely to hold from here. 

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.

EUR/USD

The American dollar was the worst performer for a second consecutive day, followed this time by its Japanese counterpart, while the Pound led the way higher. The EUR/USD pair settled at a fresh high for this 2017, not far from an intraday high of 1.1389, reversing a sudden decline to 1.1290, proving market is now buying the dips. The main market motor continued to be the ECB's Forum on Central Banking taking place in Portugal. Ahead of Wall Street's opening, officers from the European Central Bank said that markets "misjudged" Draghi's Tuesday speech, trying to cold down enthusiasm over upcoming possible tapering. Draghi did the same in his speech later on the day, but failed. The pair fell down to 1.1290 on the initial headline, but quickly recovered ground, surging further after the Pound soared on BOE's Carney sudden flip in its stance towards rate hikes.

The ECB Form ends this Wednesday, with attention shifting towards the macroeconomic calendar from now, and investors hoping data back the ongoing rallies. This Thursday, Germany will release its preliminary June inflation figures, the EU business sentiment indicators, while the US will offer the last revision of Q1 GDP.

In the meantime, the 4 hours chart for the pair shows that technical indicators resumed their advances after a period of consolidation within extreme overbought levels, whilst the 20 SMA advanced further above the larger ones, but below the current level. The pair seems poised to extend its advance up to the critical 1.1460 region, a strong area that rejected advances pretty much since January 2015. There's a good chance that an approach to it will trigger profit taking, forcing the pair to retreat, at least partially.

Support levels: 1.1330 1.1290 1.1260

Resistance levels: 1.1390 1.1425 1.1460

USD/JPY

The USD/JPY pair consolidated at the higher end of its weekly range this Wednesday, holding on to gains, despite broad dollar's weakness amid resurging US Treasury yields. Bond's sell-off was triggered on Tuesday by ECB's Draghi, whose optimism on the local recovery spurred speculation for a soon-to-came end of QE in the Euro area. Yields continued advancing, despite the ECB's President tried to cold down market's speculation, with the US 10-year note benchmark trading as high as 2.26% intraday, up from previous 2.20% and its highest in over a month. The Japanese macroeconomic calendar will remain empty once again, with more interesting data coming early Friday. Technically, the pair presents a positive short term tone, as a short-lived dip below the 112.00 Fibonacci support was quickly reverted, while the price holds above its 100 and 200 SMAs, as technical indicators are trying to regain the upside after a modest downward corrective movement from near oversold readings.

Support levels: 112.00 111.60 111.20

Resistance levels: 112.45 112.80 113.20

GBP/USD

The Sterling soared to as high as 1.2971 against the greenback, its highest since June 8th, as BOE's Carney surprised market players with a 180 degree turn on monetary policy. Carney said that an interest rate hike will be "necessary" if the global recovery continues, leading to stronger wage growth. Additionally, he said that the global recovery was becoming "broad-based" and that "some removal of monetary stimulus is likely to become necessary if the trade-off facing the MPC continues to lessen and the policy decision accordingly becomes more conventional." The pair retreated from the mentioned high but stabilized above the 1.2900 level. Brexit headlines have been out of focus for nearly a week, but can return to hit Pound any time, although now that PM May got support from the DUP, negative news are not expected short term. In the meantime, the 4 hours chart shows that the 20 SMA has extended its advance below the current level, now nearing the 200 EMA and with technical indicators having turned flat within extreme overbought levels, supporting some consolidation ahead, before the next directional move. Early June high of 1.2977 is the immediate resistance, with a stronger one in the 1.3050 price zone, from where the pair retreated late May.

Support levels: 1.2760 1.2720 1.2670

Resistance levels: 1.2820 1.2855 1.2900

GOLD

Spot gold advanced intraday up to $1,254.67 a troy ounce, but was unable to hold on to gains, ending the day pretty much flat around 1,249.00. Dollar's fragile tone gave support to the commodity, despite hawkish central bankers should end up sending the safe-haven asset lower, as confident policymakers usually boost high-yielding assets. Falling bonds' prices also weighed on gold. From a technical point of view, the daily chart shows that the price remains below its 20 and 100 SMAs, with the shortest still aiming lower above the current level, whilst technical indicators continue lacking clear directional strength, but within bearish territory. In the 4 hours chart, the commodity settled below its 20 SMA, while the 100 SMA is crossing below the 200 SMA, both around 1,260.00, leaning the scale towards the downside. Technical indicators in this last time frame are now neutral, hovering around their mid-lines and with no signs of directional strength.

Support levels: 12,245.50 1,236.45 1,229.35

Resistance levels: 1,258.00 1,265.10 1,273.80

WTI CRUDE OIL

Crude oil prices advanced this Wednesday, with West Texas Intermediate crude futures ending the day at $44.73 a barrel. The EIA report released during the last American session showed that oil stockpiles increased by 0.118 million barrels in the week ended June 23rd, worst that the 3.25 million barrels' decline expected. But the EIA also informed that gasoline stockpiles fell by 900,000 barrels, while distillates shed 200,000, as the total domestic crude production fell by 100,000 bares a day in the same period. Reducing output brought some relief, but the recovery remains corrective, given that in the daily chart, the advance stalled right at a strongly bearish 20 DMA, whilst technical indicators have corrected higher, but remain within negative territory. In the 4 hours chart, the Momentum indicator keeps heading north well above its mid-line, whilst the RSI indicator turned flat around 66, as the price is being contained by a bearish 100 SMA also around the current level, supporting some additional gains ahead on a break through 44.90, the immediate resistance.

Support levels: 44.30 43.80 43.20

Resistance levels: 44.90 45.60 46.10

DJIA

US equities rallied strongly, helped by a bounce in technology and energy-related equities, and hawkish central bankers fueling risk appetite. The Dow Jones Industrial Average added 143 points or 0.68%, to close at 21,454.61, while the S&P gained 21 points, to 2,440.69. The Nasdaq Composite jumped 1.43% higher, to end at 6,234.51. Higher bond yields, added to the positive tone in equities, backing banking shares. Within the Dow, Caterpillar was the best performer, up 2.42%, followed by JPMorgan Chase that added 2.01%. Only six members closed in the red, with Johnson & Johnson leading decliners with a 0.88% lost. The Dow daily chart shows that the benchmark bounced from a bullish 20 SMA, whilst technical indicators found support around their mid-lines, gaining upward traction but still below recent highs, favoring anyway another leg higher for this Thursday. In the 4 hours chart, the index is above all of its moving averages, although the 20 and the 100 SMAs lack directional strength, whilst technical indicators post modest advances within positive territory, enough at least to limit chances of a steeper decline.

Support levels: 21,432 21,389 21,351

Resistance levels: 21,495 21,542 21,590

FTSE100

The FTSE 100 closed the day down 12 points, at 7,434.36, with retailers leading the decline, after a profit warning from Debenhams, a local department store that said its full-year profit could come at the lower end of expectations. A sharp advance in the mining sector, however, limited the decline. The Pound jumped higher after London's close, leading the index further lower in electronic trading, now around 7,403. Glencore led advancers, up 3.73%, followed by Rio Tinto, Anglo American and Antofagasta, all up by over 3.0% GKN was the worst performer, down 4.31%, followed by Admiral Group that shed 2.25%. From a technical point of view, the daily chart shows that the index remained well below a bearish 20 DMA, whilst technical indicators turned south within negative territory, favoring a downward extension for this Wednesday. Shorter term, the 4 hours chart shows that a bearish 20 SMA contained advances, whilst technical indicators also turned lower within bearish territory, with the RSI currently at 38, in line with the longer term perspective.

Support levels: 7,376 7,347 7,298

Resistance levels: 7,442 7,497 7,541

DAX

The German DAX closed the day at 12,671.02, down 99 points or 0.78%, as European equities edged lower following Draghi's hawkish speech that sent the EUR higher against all of its major rivals. Adding to the negative tone of regional equities were concerns over profits, with the automotive sector undermined by General Motors, as the company lowered its outlook for new sales in 2017. Within the DAX, only three members closed with gains, with Commerzbank that advanced 4.02% and Deutsche Bank, which gained 2.55% topping winners list amid Italian's banks rescue earlier in the week bringing confidence to the sector. Continental was the worst performer, down 3.70%, followed by E.ON that shed 3.68%. The German index fell further in after-hours trading, following the lead of Wall Street, heading into Wednesday opening right below 12,600, its lowest for this month. The daily chart shows that the index fell and stands well below its 20 DMA, whilst technical indicators are gaining bearish traction, the Momentum around its mid-line but the RSI around 44, this last favoring additional slides ahead. In the 4 hours chart, the index is now below its 200 SMA, having broken below the 20 and 100 SMA earlier on the week and with technical indicators heading sharply lower within bearish territory, maintaining their bearish slopes near oversold territory.

Support levels: 12,587 12,529 12,461

Resistance levels: 12,646 12,707 12,763

Weekly
    •    Last Candlesticks pattern: N/A
    •    ime of formation: N/A
    •    Trend bias: Near term up

Daily
    •    Last Candlesticks pattern: Hammer
    •    Time of formation: 3 Feb 2016
    •    Trend bias: Up

EURGBP – 0.8802

Although the single currency edged higher to 0.8882 yesterday, lack of follow through buying on break of previous resistance at 0.8866 and the subsequent retreat suggest several days of consolidation below this level would be seen and pullback to 0.8723 support cannot be ruled out, however, reckon previous support at 0.8652 would contain downside and bring another upmove later, above said resistance at 0.8882 would extend recent upmove to 0.8900 but overbought condition should prevent sharp move beyond 0.8940-50 (50% Fibonacci retracement of 0.9576-0.8304) and reckon psychological resistance at 0.9000 would hold from here, price should falter well below 0.9090 (61.8% Fibonacci retracement), bring retreat later. 

On the downside, whilst initial pullback to 0.8723 support is likely, reckon support at 0.8652 would attract renewed buying interest and bring another upmove later. Only a break below support at 0.8603 would suggest top is formed instead, bring retracement of recent upmove to 0.8550 but reckon previous support at 0.8524 would contain downside and price should stay well above 0.8450-60, bring a strong rebound later next month. 

Recommendation: Buy again at 0.8660 for 0.8880 with stop below 0.8560.

On the weekly chart, despite rising marginally to 0.8882, the quick retreat from there looks set to form a shooting star, hence consolidation below this level would be seen with initial downside bias for pullback to 0.8720-25, then 0.6890-00, however, reckon support at 0.8652 would limit downside and bring another rise later. Above said resistance at 0.8882 would signal the rise from 0.8304 low is still in progress for headway to 0.8900-10, then 0.8950, however, reckon upside would be limited to 0.9000 and 0.9045-50 should hold from here, price should falter well below 0.9090 (61.8% Fibonacci retracement).

On the downside, although pullback to 0.8720-25 cannot be ruled out, reckon support at 0.8652 would hold and bring another rise to aforesaid upside targets. A weekly close below the Kijun-Sen (now at 0.8597) would defer and suggest top is possibly formed, risk weakness to 0.8550 but a drop below previous resistance at 0.8531 is needed to add credence to this view, bring further fall to 0.8490-00, then towards support at 0.8457 which is likely to hold from here.

Weekly

    •    Last Candlesticks pattern: Doji
    •    Time of formation: 20 Feb 2017
    •    Trend bias: Up

Daily

    •    Last Candlesticks pattern: Doji
    •    Time of formation: 1 Sep 2016
    •    Trend bias: Near term down

EUR/CHF – 1.0923

As the single currency has staged a strong rebound after finding good support at 1.0833 and broke above indicated resistance at 1.0910, retaining our bullishness and signaling low has been formed at 1.0833, hence further gain to resistance at 1.0949, break there would confirm the pullback from 1.0988 has ended, bring test of 1.0960, break there would suggest upmove has resumed for retest of 1.0988, then towards previous resistance at 1.1001. Looking ahead, only a break there would retain bullishness and encourage for headway to 1.1050-60, then 1.1100, having said that, price should falter below another previous resistance at 1.1201.

On the downside, expect pullback to be limited to 1.0875-80 and support at 1.0833 should remain intact, bring another rebound. Below 1.0833 support would risk test of previous support at 1.0792 but only a daily close below there would signal top is formed at 1.0988 instead, bring subsequent fall to 1.0750 and then towards 1.0700-10, having said that, support at 1.0671 should remain intact, the single currency shall stage another rebound from there later.

Recommendation: Hold long entered at 1.0865 for 1.1065 with stop below 1.0835.

On the weekly chart, this week’s rebound looks set to form a long white candlestick and gain to 1.0949 resistance would be seen, break there would signal the pullback from 1.0988 has ended, bring retest of this level, above there would extend recent upmove from 1.0631 to previous resistance at 1.1001, a sustained breach above this level would signal the fall from 1.1201 has ended, bring further gain to 1.1100 and possibly test of resistance at 1.1129 but price should falter below said recent high at 1.1201. 

On the downside, whilst pullback to the Tenkan-Sen (now at 1.0890) cannot be ruled out, said support at 1.0833 should remain intact, bring another rebound later. A break of said support at 1.0833 would risk test of the Kijun-Sen (now at 1.0810) but only break of previous support at 1.0780 would abort and signal top has been formed at 1.0988 instead, bring further weakness to 1.0720, however, still reckon support at 1.0656 would remain intact, bring another rebound later.

EUR/USD

Current level - 1.1405

The brief consolidation dip tested precisely 1.1295 support area and the uptrend was renewed, currently struggling below 1.1430 dynamic hurdle. The bias is positive, for a break through the latter, towards 1.1550 and 1.1615 area.

USD/JPY

Current level - 112.25

USD/JPY Current level - 112.25

The uptrend is intact, heading towards 113.10 resistance area. A break through the latter should be expected, for another leg upwards, to 114.30 area. Crucial support lies at 111.30.

GBP/USD

Current level - 1.2962

The uptrend is intact, currently testing 1.2980 resistance area. I favor a break through the latter, for a rise towards 1.3050. Initial intraday support lies at 1.2910, followed by the major one at 1.2830.