Sample Category Title

Weekly 


  
•    Last Candlesticks pattern: Shooting star 
   
  
•    Time of formation: 13 Mar 2017 
   
  
•    Trend bias: Down


 
Daily



  
•    Last Candlesticks pattern: Bearish engulfing pattern 
   
  
•    Time of formation: 16 Feb 2017 
   
  
•    Trend bias: Near term down






The Australian dollar rallied this month after holding above previous support at 81.50, suggesting the erratic rise from this recent low is still in progress and bullishness is seen for this move to extend further gain to 85.75 resistance, break there would suggest recent fall from 88.15 (this year’s high formed made in Feb) has ended at 81.50 and consolidation with upside bias is seen for further gain to 86.00, then towards 86.40-50 but near term overbought condition should limit upside to 87.00, risk from there has increased for a retreat later.

On the downside, expect pullback to be limited to the upper Kumo (now at 84.50) and the Tenkan-Sen (now at 84.20) should hold, bring another rise later. A daily close below support at 83.75 would abort and suggest top is formed instead, risk test of the Kijun-Sen (now at 83.56), break there would confirm and extend further weakness 83.00-10 which is likely to hold on first testing. Below this level would suggest the erratic rise from 81.50 has ended and bring further subsequent decline to 82.50-55 first. 


Recommendation: Buy at 84.50 for 86.50 with stop below 83.50.


On the weekly chart, aussie continued finding good support at 81.80 and has staged a strong rebound this month, suggesting the erratic rise from 81.50 is still in progress and further gain to 85.75-80, then 86.40-50 would be seen, however, break of 87.50 resistance is needed to confirm the pullback from 88.15 (this year’s high) has ended, bring retest of this level later. Looking head, only above 88.15 would indicate early uptrend has resumed and encourage for headway to 88.50, then 89.00-10 but price should falter well below psychological resistance at 90.00.

On the downside, whilst initial pullback to 84.40-50 cannot be ruled out, reckon support at 83.75 would hold and bring another rise later. Only a weekly close below the Tenkan-Sen (now at 83.55) would abort and risk weakness to 83.00 and possibly towards 82.55-60 but said strong support at 81.80 should remain intact. Looking ahead, only break of support at 81.80 support would revive bearishness and signal recovery from 81.50 has ended, bring retest of this level, below there would extend the retreat from 88.15 top for a stronger retracement of early upmove to support at 81.10-15, a weekly close below there would retain bearishness and suggest the rise from 72.50 has ended, then further fall to 80.50 and possibly psychological support at 80.00 would follow.

Weekly
    •    Last Candlesticks pattern: Shooting doji
    •    Time of formation: 20 Feb 2017
    •    Trend bias: Sideways

Daily
    •    Last Candlesticks pattern: Bearish engulfing pattern
    •    Time of formation: 21 Mar 2017
    •    Trend bias: Near term down



Although aussie found support at 0.7535 last week and rebounded, a break of recent high at 0.7636 is needed to confirm the erratic upmove from 0.7329 low has resumed and extend further gain to previous resistance at 0.7680, having said that, aussie needs to break this level to signal the fall from 0.7750 top has ended at 0.7329 and bring subsequent retest of said chart resistance at 0.7750 which is likely to hold on first testing.

On the downside, if said resistance at 0.7636 continues to hold, then further consolidation would take place and another test of 0.7535 support cannot be ruled out, however, reckon the Kijun-Sen (now at 0.7510) would limit downside and bring another rise later. Below 0.7455-60 would defer and risk weakness towards 0.7400-10 but support at 0.7372 should remain intact. Looking ahead, only below 0.7372 would revive bearishness and suggest the rebound from 0.7329 has ended, bring retest of this level, break there would extend recent fall from 0.7750 top to 0.7300 and possibly 0.7250-60 but reckon downside would be limited to 0.7200-10 and price should stay well above indicated previous chart support at 0.7158.



Recommendation: Buy at 0.7510 for 0.7710 with stop below 0.7410.



On the weekly chart, aussie traded with a firm undertone after staging a strong rebound from 0.7329, adding credence to our view that the retreat from 0.7750 has ended at 0.7329 and consolidation with upside bias remains for further gain to 0.7680, however, break there is needed to add credence to this view and bring retest of this level later. Looking ahead, only a break above 0.7750 would another leg of the major rise from 0.6827 low is underway for retest of 0.7778, then towards last year’s high at 0.7835.

On the downside, expect pullback to be limited to 0.7500-10 and bring another rise. Below the Kijun-Sen (now at 0.7458) would prolong consolidation and risk weakness to 0.7410-15 but break of support at 0.7372 is needed to signal the rebound from 0.7329 has ended, bring retest of this level first. A break below there would extend recent decline from 0.7750 to 0.7290-00 and possibly towards 0.7230, however, downside should be limited to 0.7200 and price should stay well above previous support at 0.7158, risk from there is seen for a rebound to take place later. 

Daily Pivots: (S1) 1.4767; (P) 1.4863; (R1) 1.5045; More...

Intraday bias in EUR/AUD remains on the upside as rebound from 1.4625 continues. Pull back from 1.5226 should have completed at 1.4625, ahead of 38.2% retracement of 1.3624 to 1.5226 at 1.4614. Further rally should be seen to retest 1.5226 next. On the downside, though, below 1.4813 resistance turned support will turn bias to the downside for 1.4625 again.

In the bigger picture, price actions from 1.6587 medium term top are viewed as a corrective pattern. Such correction should be completed at 1.3624 after defending 1.3671 key support. Rise from 1.3642 would extend to 61.8% retracement of 1.6587 to 1.3624 at 1.5455. Sustained break there will pave the way to retest 1.6587. However, sustained break of 1.4669 support will dampen this bullish view. We'll assess the outlook later after looking at the structure and depth of the pull back.

Daily Pivots: (S1) 0.8800; (P) 0.8831; (R1) 0.8879; More...

At this point, intraday bias in EUR/GBP remains neutral as it's bounded in range below 0.8865. On the upside, decisive break of 0.8851/65 resistance zone will pave the way to retest 0.9304 high. In case of another fall, downside should be contained by 0.8639 support to bring rebound. However, break of 0.8639 support will now indicate near term topping and bring deeper pull back 0.8529 resistance turned support and below.

In the bigger picture, price actions from 0.9304 are viewed as a medium term corrective pattern. The leg from 0.9304 should have completed after testing 0.8332 structural support. But it's too early to say that larger rise from 0.6935 is resuming. Rejection from 0.9304 will extend the consolidation with another falling leg. Meanwhile, firm break of 0.9304 will target 0.9799 (2008 high). In case of another decline, we'd expect strong support from 0.8116 cluster support (50% retracement of 0.6935 to 0.9304 at 0.8120) to contain downside and bring rebound.

Daily Pivots: (S1) 1.0868; (P) 1.0882; (R1) 1.0901; More...

EUR/CHF's recovery from 1.0830 continues today but it's staying below 1.0908 resistance. Intraday bias remains neutral for the moment. On the upside, break of 1.0908 will indicate that the correction from 1.0986 has completed. In such case, intraday bias is turned back to the upside for retesting 1.0986/0999 resistance zone. In case of another fall, downside should be contained by 1.0791/0872 support zone to bring rebound.

In the bigger picture, the price actions from 1.1198 are seen as a corrective move. Such correction could have completed after defending 38.2% retracement of 0.9771 to 1.1198 at 1.0653. Decisive break of 1.0999 resistance will target a test on 1.1198 high. For now, this will be the preferred case as long as 1.0791 support holds.

Daily Pivots: (S1) 142.53; (P) 143.36; (R1) 144.78; More....

GBP/JPY's rally and break of 142.75 resistance indicates completion of fall from 148.09. Intraday bias is turned back to the upside for 148.09/42 resistance zone. Decisive break there will resume whole rebound from 122.36. On the downside, below 141.95 minor support will turn intraday bias back to the downside for 138.65 support instead.

In the bigger picture, while the fall from 148.09 is deeper than expected, we're not bearish in the cross yet. Price action from 148.42 is possibly developing into a sideway pattern with fall from 148.09 as the third leg. Deeper decline could be seen but we're looking for strong support from 135.58 and 50% retracement of 122.36 to 148.42 at 135.39 to contain downside. Rise from 122.36 is still mildly in favor to resume at a later stage. Decisive break of 38.2% retracement of 196.85 to 122.36 at 150.43 will pave the way to 61.8% retracement at 167.78.

Daily Pivots: (S1) 125.58; (P) 126.52; (R1) 128.32; More...

EUR/JPY soared sharply to as high as 127.47 so far and remains firm. The break of 126.09 key resistance carries larger bullish implications. Intraday bias remains on the upside and current rally would target 61.8% projection of 114.84 to 125.80 from 122.39 at 129.16 first. That's also close to medium term projection level at 129.89. On the downside, below 126.47 minor support will turn bias neutral and bring retreat first, before staging another rally.

In the bigger picture, the break of 126.09 support turned resistance should have confirmed completion of down trend form 149.76 (2014 high), at 109.03 (2016 low). Current rise from 109.03 should target 100% projection of 109.03 to 124.08 from 114.84 at 129.89 first. Break there will pave the way to 61.8% retracement of 149.76 to 109.03 at 134.20 and above. Medium term outlook will now remain bullish as long as 122.39 support holds.

Euro soared overnight as propelled by comments from ECB President Mario Draghi, taking out key resistance levels against Dollar and Yen. The common currency remains firm in Asian session. On the other hand, Dollar and Yen are trading among the weakest ones. The greenback is additional pressured, together with US stocks, as delay in healthcare vote in Senate again raised questions on US President Donald Trump's ability to push through economic agenda. Draghi's comment also pushed German bond yields higher, which was then followed in US bond markets. Yen suffered deeply with the rebound in bond yields. Meanwhile, Canadian Dollar is helped by the rebound in oil prices, partly thanks to the decline in Dollar. WTI crude oil is back above 44 even though there is no clear momentum to regain 45 handle yet. Gold is back above 1250, also as a reaction to Dollar selloff.

Stocks tumbled as Senate postponed healthcare vote

US Senate Republicans postponed the vote on the healthcare bill that overhauls Obamacare. Senate Majority Leader Mitch McConnell is pushing to vote ahead of July 4 and pledged to "press on". US President Donald Trump warned that it's crucial to reach an agreement because Obamacare was "melting down". However, there is so far still no consensus among Republicans on the form of the bill and thus, not enough votes are secured. And the markets perceive the development as another sign that Trump continues to lose political support. And it would continue to be hard for him to push through economic policies and tax reforms. That's seen as a key reason for the selloff in US stocks.

DOW closed down -98.89 pts, or -0.46%, at 21310.66. S&P 500 lost -19.69 pts, or -0.81%, to 2419.38. NASDAQ dropped -100.53 pts, or -1.61%, to close at 6146.62. NASDAQ's rebound in the past two weeks failed below 6341.70 high. Yesterday's sharp fall suggests that the correction from 6341.70 is now extending with another falling leg. Focus is back on 55 day EMA (now at 6114.40), which is close to medium term channel support. A firm break there will open up the case for deeper fall to 38.2% retracement of 5034.31 to 6341.70 at 5842.31. That could drag down other major indices and be a negative factor for Dollar.

Diverging views from Fed officials, market shrugged

Fed chair Janet Yellen maintained that "it will be appropriate to the attainment of our goals to raise interest rates very gradually to levels that are likely to remain quite low, although there is uncertainty about this, to remain low by historical standards for a long time." Philadelphia Fed President Patrick Harker said that he's "sticking to my outlook that we're on the right path". And, "in the case of inflation, I've seen the factors exerting downward pressure as temporary." He still see "another rate hike as appropriate for 2017". Minneapolis Fed President Neel Kashkari questioned "what's the rush" for another rate hike in his speech. Kashkari is a known dove who dissented both of Fed's hikes this year. And he said that "we're not seeing wages climb very fast, and we're not seeing inflation. That tells me the economy is not on the verge of overheating." Overall, the markets had little reactions to the Fedspeaks.

Optimistic Draghi propelled Euro higher

ECB President Mario Draghi's comment pushed Euro sharply higher overnight. German bond yield was also lifted with 10 year yield jumping to 1 month high at 0.35%. 2 year yield hit -0.56%, highest in a year. The key takeaways from Draghi are that firstly, he isn't concerned with recent slowdown in Eurozone inflation. He noted that the slowdowns "are on the whole temporary and should not cause inflation to deviate from its trend over the medium term, so long as monetary policy continues to maintain the solid anchoring of inflation expectations." Secondly, he is optimistic on growth as "all the signs now point to a strengthening and broadening recovery in the euro area". And, "political winds are becoming tailwinds." He noted there is "newfound confidence in the reform process, and newfound support for European cohesion, which could help unleash pent-up demand and investment."

And most importantly, Draghi opened up the ways to stop of even reverser the massive quantitative easing program. He said that "as the economy continues to recover, a constant policy stance will become more accommodative, and the central bank can accompany the recovery by adjusting the parameters of its policy instruments - not in order to tighten the policy stance, but to keep it broadly unchanged." That is, Draghi is hinting that monetary policy in 2018 will be less accommodative. And he's paving the way to tweaking policies ahead. It's affirming the view that ECB will announce scaling back of asset purchase, at least, in September.

France and Germany to drive an impetus in EU

Frans Timmermans, deputy head of the EU's executive European Commission, expressed his optimism on EU's development and said that integration is a "foregone conclusion". He acknowledged that "over the last years, rightly or wrongly, the impression was created that Germany is too dominant." But now, France is taking "steps in a more assertive way" and that's good for Europe, France and especially Germany. He noted there will be an "impetus" driven by France and Germany ahead and other member states are getting organized.

Hammond and Davis at odds on Brexit transition

In UK, it's reported that Chancellor of Exchequer Philip Hammond and Brexit Minister David Davis are at odds over the Brexit deal. Hammond warned in a speech that negotiations would be jeopardized if parties allowed "petty politics to interfere with economic logic". And he reiterated the warnings about a "cliff edge" of tariffs". He urged the government to work out a transitional arrangement that "allows the complex supply chains and business relationships that crisscross our continent to continue to deliver value". On the other hand, Davis said that UK would be straight out of the customs union and any transition period will likely end in 2022. He commented that Hammond's time lines were "not quite consistent with one another".

On the data front

German import price, Eurozone M3 and Swiss UBS consumption indicator will be released in European session. US will release trade balance, wholesales inventories and pending home sales.

EUR/JPY Daily Outlook

Daily Pivots: (S1) 125.58; (P) 126.52; (R1) 128.32; More...

EUR/JPY soared sharply to as high as 127.47 so far and remains firm. The break of 126.09 key resistance carries larger bullish implications. Intraday bias remains on the upside and current rally would target 61.8% projection of 114.84 to 125.80 from 122.39 at 129.16 first. That's also close to medium term projection level at 129.89. On the downside, below 126.47 minor support will turn bias neutral and bring retreat first, before staging another rally.

In the bigger picture, the break of 126.09 support turned resistance should have confirmed completion of down trend form 149.76 (2014 high), at 109.03 (2016 low). Current rise from 109.03 should target 100% projection of 109.03 to 124.08 from 114.84 at 129.89 first. Break there will pave the way to 61.8% retracement of 149.76 to 109.03 at 134.20 and above. Medium term outlook will now remain bullish as long as 122.39 support holds.

Economic Indicators Update

STOCKS

Dow (21310.66, -0.46%) has come off from important long term resistance near 21500 and while that holds, we could possibly see a fall towards 21100 before bouncing back afresh.

Dax (12671.02, -0.78%) is trapped within the near term resistance and support levels of 13000 and 12600. In case the falling momentum continues, we could possibly see a dip below 12600 in the near term; else a rise back towards 13000 is possible.

Shanghai (3176.73, -0.45%) has come off slightly as expected and could continue to fall towards 3160-3150 levels while the resistance near 3200 holds.

Nikkei (20166.21, -0.29%) looks bullish just now and has the potential to move up towards 20500 while supports near 20000 and 20200 hold. Although the movements in the last few sessions have been very narrow, this could act as a good base building to rise up sharply in the near term.

Nifty (9511.40, -0.66%) could have possibly ended the immediate correction and could bounce back towards 9550 today. A break below 9480, if seen could turn the index more bearish towards 9400-9390 levels. But preference is for an immediate bounce from 9480 back towards 9600.

COMMODITIES

While Dollar Index (96.06)had failed to hold it’s gain above 97 levels, Bullion has strengthened again against Dollar yesterday. Gold (1252) and Silver (16.74) are trading well above their crucial support at 1233 and 16.50 respectively. A break below 1245 is necessary for gold to turn bearish towards 1231 for the near term else a bounce back could take it higher towards 1262. Silver is trading within the range of 16.50-17.05 and a close above 17.05 could open up 17.50 levels as well.

Copper (2.65) moved higher in line with our expectation and trading within a range of 2.60-65. Only above 2.65 higher resistances of 2.69 and 2.80 can come into consideration. In the medium term 2.55-57 are going to be a strong support and we will remain bullish while it is trading above those levels.

Both Brent (46.87) and WTI (44.09) closed higher in line with our expectation. Market is waiting for today’s U.S weekly crude inventory data (8:00 pm IST) with an expectation of a shortage (-2.1 MB) in inventory and prices could move according to the outcome. If the anticipation of -2.1 M Barrel of shortage will match the actual outcome then that could be beneficial for both Brent and WTI. Otherwise a surplus or a less than expected shortage could bring further bearish possibilities into consideration. The immediate trading range for Brent and WTI are 46-48 and 43-46 respectively.

FOREX

Dollar Index (96.06) moved lower contrary to our expectation and now trading within the range of 96-97 regions.We think it could consolidate for a while at current levels due to short term oversold condition.We will remain bearish on dollar index while it is trading below 97 levels.

Finally Euro (1.1349) had breached the crucial resistance of 1.1210-30 and closed at day's high. Immediate trading range could be 1.1207-1.1426 and the bulls need to trade above 1.1207 levels to keep the bullish momentum intact. We might see range trading for next few days as Eur/Usd is overbought in near term time frame.

Dollar-Yen (112.09) may test 112.50 over today and tomorrow followed by a dip towards 111.50. Note 112.50 is a decent resistance and could possibly hold the price lower.

Pound (1.2816) is trading at the upside limit of the 1.2540-1.2820 region mentioned yesterday. A rise towards 1.29 is possible if it breaks above 1.2820; else a fall to 1.27 is possible in the near term.

Aussie (0.7588) has been testing immediate upside resistance zone of 0.7625-0.7635 since mid-June but has nt been able to break on the upside yet. While below 0.7625, the currency pair could move down to 0.7550 or remain stable. Only on a break above 0.7635, shall we focus on higher levels.

Dollar-Rupee (64.52) was almost stable yesterday and we may expect the 64.40-64.70 region to hold for some more sessions.

INTEREST RATES

The German-US 2Yr (-1.92%) is headed towards -1.90% along with the sharp rise in Euro yesterday. Immediate trend looks bullish. We could possibly see a test of -1.90% before falling off from there.

The US yields are trading higher but is likely to remain sideways for the rest of the week. The 5Yr, 10YR and the 30Yr are trading at 1.81%, 2.20% and 2.75% respectively.

The US 10-5Yr (0.39%) has bounced from channel support and could move up towards 0.40% and higher in the coming sessions.

Caught Flat Footed

An emphatically hawkish Mario Draghi suggests the ECB policy is on track while all but declaring victory over the Eurozone inflation conundrum.Apparently, the ECB has taken a giant leap towards ending the European Central Bank’s ultra-loose monetary policy, sending the euro and German yields higher as investors piled into the Euro as the ECB hints that the end of crisis-era stimulus measures is upon us.The markets vigorously repriced Eurozone assets sending EURUSD rocketing higher led by EURJPY which traded at the highest point in over a year.

The voracity of the move suggest traders were caught flat-footed given the ensuing scrum for topside EUR exposure.And while we should expect some profit taking, the next logical destination for EUR JPY is likely a test 128 as the market continues repricing EUR assets.

Competing for headline space, Dr Yellen did not rock the boat, but the dollar looks increasingly vulnerable and could topple at the slightest wobble in US economic data. Dollar Bulls could l be in for a reality check when PCE comes into focus at week’s end more so if the soft inflation narrative plays on.