Sample Category Title

EUR/GBP - 0.8814

 
Recent wave: Major double three (A)-(B)-(C)-(X)-(A)-(B)-(C) is unfolding and 2nd (A) has possibly ended at 0.6936.

Trend: Near term up

Original strategy  :

Buy at 0.8660, Target: 0.8860, Stop: 0.8620

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 0.8660, Target: 0.8860, Stop: 0.8620

Position : -

Target :  -

Stop : -

 
Although the single currency rebounded to 0.8846 yesterday, the subsequent retreat has retained our view that further consolidation below recent high at 0.8866 would be seen and another corrective fall to 0.8740-50 cannot be ruled out, however, downside should be limited to support at 0.8652, bring another rise later. Above said resistance at 0.8846 would signal the retreat from 0.8866 has ended, bring retest of this last week’s high but break there is needed to confirm recent erratic upmove from 0.8304 low has resumed and extend further gain to 0.8880, then 0.8900, having said that, as broad outlook remains consolidative, reckon current c leg of larger degree wave b should be limited to 0.8950 and price should falter well below 0.9000 psychological level.

In view of this, we are looking to buy euro on subsequent pullback but one should exit on such rise. Below 0.8650 would defer and risk test of 0.8620, a break below there would signal top is formed instead, bring further fall to 0.8620, then 0.8600 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.

Highlights:

• Nominal retail sales rose 0.8% despite a 1.0% drop in motor vehicle and parts sales.
• Sales volumes rose but by a more modest 0.3% as higher prices accounted for much of the nominal increase.
• 'E-commerce' sales, not all of which are included in the headline retail sales numbers, surged 42% from a year ago in April and are up 40% year-to-date.

Our Take:

The Canadian economy appears to have continued to improve in April, building on a strong run that has left growth well above its 'trend' rate over the last three quarters. The rise in April retail sale volumes - the ninth increase in the last ten months - followed earlier reported gains in wholesale and manufacturing sale volumes. On balance, the data is suggesting April GDP rose 0.2% to build on a 0.5% jump in March even with the fire-related shutdown of a major oil sands producer in April. Strength in household spending is not new with both consumer spending and residential investment at a record share of GDP last year. More encouraging recently have been signs that business investment is also starting to pick up again. Equipment investment rose sharply in Q1 2017 and April machinery import volumes and domestic manufacturer machinery sale volumes are pointing to another, albeit smaller, increase in Q2.

USDCAD is falling strongly away 1.3350 region, where higher degree wave four correction was labeled. As such we now see drop as a suggestion that bears are taking over and that a five wave move is unfolding for the final blue wave v.

USDCAD, 1H

Daily Pivots: (S1) 1.1141; (P) 1.1154 (R1) 1.1182; More....

Intraday bias in EUR/USD remains neutral as it's still bounded in range of 1.1109/1295. On the upside, decisive break of 1.1298 key resistance will carry larger bullish implication and target 1.1615 resistance next. On the downside, break of 1.1109 support will indicate short term topping and rejection from 1.1298. In such case, intraday bias will be turned to the downside for 1.0838 support.

In the bigger picture, the case for medium term reversal continues to build up with EUR/USD staying far above 55 week EMA (now at 1.0932). Also, bullish convergence condition is seen in weekly MACD. Focus will now be on 1.1298 key resistance. Rejection from there will maintain medium term bearishness and would extend the whole down trend from 1.6039 (2008 high). However, firm break of 1.1298 will indicate reversal. In such case, further rally would be seen back to 1.2042 support turned resistance next.

USD/CAD - 1.3251

 
Recent wave: Only wave v of c has ended at 0.9407 and wave C of major A-B-C correction is underway for headway to 1.4700

Trend:  Near term down

 
Original strategy       :

Sell at 1.3365, Target: 1.3130, Stop: 1.3425

Position: -

Target:  -

Stop: -

 
New strategy             :

Sell at 1.3295, Target: 1.3130, Stop: 1.3355

Position: -

Target:  -

Stop:-

As the greenback has retreated after running into resistance at 1.3348, suggesting top has possibly been formed there and consolidation with downside bias is seen for weakness to 1.3191 support, however, break there is needed to signal the rebound from 1.3165 low has ended, bring retest of this support later. Looking ahead, a break below there is needed to confirm recent decline from 1.3794 top has resumed and extend fall to 1.3100-10 and later towards previous support at 1.3078.

In view of this, we are looking to sell on minor recovery as 1.3300 should limit upside. Only break of said resistance at 1.3348 would defer and risk a stronger rebound to previous support at 1.3387 (now resistance), however, still reckon upside would be limited to 1.3420-25 and price should falter well below resistance at 1.3471, bring another decline later.

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) 1.2603; (P) 1.2656; (R1) 1.2723; More...

Intraday bias in GBP/USD remains neutral and outlook stays bearish with 1.2813 resistance intact. At this point, we're still favoring the bearish case that consolidation pattern from 1.1946 has completed at 1.3047 already. Sustained break of 1.2614 resistance turned support should confirm our bearish view and target a test on 1.1946 low next. However, break of 1.2813 resistance will dampen our view and turn bias back to the upside for 1.3047 and above.

In the bigger picture, fall from 1.7190 is seen as part of the down trend from 2.1161. Price actions from 1.1946 medium term low are seen as a consolidation pattern, which could have completed after hitting 55 week EMA. Break of 1.1946 low will target 61.8% projection of 1.5016 to 1.1946 from 1.3047 at 1.1150 next. In case the consolidation from 1.1946 extends, outlook will stay remain bearish as long as 1.3444 resistance holds.

Daily Pivots: (S1) 0.9712; (P) 0.9732; (R1) 0.9743; More.....

USD/CHF is still staying in consolidation from 0.9613 and intraday bias remains neutral. With 0.9087 resistance intact, near term outlook stays bearish. Break of 0.9613 will extend the whole decline from 1.0342 to 0.9548 support and below. We'd start to look for bottoming signal again as it approaches 0.9443 key support level. However, considering bullish convergence condition in 4 hour MACD, break of 0.9807 will indicate near term reversal and turn outlook bullish for 1.0099 resistance next.

In the bigger picture, USD/CHF is still bounded in medium term range of 0.9443/1.0342 for the moment. Consolidative trading would likely continue and medium term outlook remains neutral. Break of 1.0342 key resistance is needed to confirm underlying bullish momentum in the pair. Meanwhile, downside attempts should be contained by 0.9443 key support level. However, sustained break of 0.9443 will carry larger bearish implication and target 0.9 handle.

Daily Pivots: (S1) 111.03; (P) 111.39; (R1) 111.71; More...

Intraday bias in USD/JPY stays neutral for consolidation below 111.78 temporary top. With 110.63 minor support intact, further rise is still expected. Break of 111.78 will target near term channel resistance (now at 113.02). Sustained break there will suggest that whole pull back from 118.65 has completed at 108.12 already. In such case, further rise should be seen to 114.36 resistance for confirmation. However, break of 110.63 will turn bias back to the downside for 108.81 instead.

In the bigger picture, price actions from 125.85 high are seen as a corrective pattern. It's uncertain whether it's completed yet. But in case of another fall, downside should be contained by 61.8% retracement of 75.56 to 125.85 at 94.77 to bring rebound. Overall, rise from 75.56 is still expected to resume later after the correction from 125.85 completes.

Strong momentum from the first quarter carried into April, with retail sales rising 0.8% during the month. In volumes terms, sales were up by a healthy 0.3%.

April's gains were fairly widespread, led by building material and garden equipment (+3.5%, m/m), clothing and accessories (+3.1%), electronics and appliances (+2.1%) and general merchandise stores (+2.1%). On the flipside, sales at motor vehicle and parts dealers (-1%) and furniture and home furnishing stores (-0.3%) declined.

Regionally, retail sales were up in seven provinces during the month, with Ontario (+1.1%) and Quebec (+1.6%) accounting for the bulk of the increase. Saskatchewan (-4.1%), Nova Scotia (-0.2%) and Newfoundland and Labrador (-0.1%) provided some offset.

Key Implications

April's healthy gain, combined with the robust performance in March, provides a solid handoff for retail sales in the second quarter. While a repeat of the remarkable growth seen in the first quarter is unlikely, retail sales should still hold up relatively well in the coming months.

Indeed, wealth effects from past home price gains in key regions - particularly Ontario and B.C. - along with a widespread rise in economic momentum in other regions should be supportive of overall household spending in the near term. However, the recent slowdown in Ontario's housing market, and rising interest rates later this year could take some steam out of consumer spending towards the end of 2017 and into 2018.

The evolution of economic data so far this year has prompted a more hawkish tone from the Bank of Canada. Barring a significant reversal in momentum or persistantly soft inflation, we expect the Bank to hike rates in October of this year.

Daily Pivots: (S1) 1.3278; (P) 1.3312; (R1) 1.3364; More....

USD/CAD drops sharply in early US session but it's staying above 1.3164. Intraday bias remains neutral first. Consolidation from 1.3164 might extend but upside should be limited by 1.3387 support turned resistance and bring fall resumption. We're holding on to the view that corrective rise from 1.2460 has completed at 1.3793 already. Below 1.3164 will target 1.2968 cluster support, 61.8% retracement of 1.2460 to 1.3793 at 1.2969. However, firm break of 1.3387 will dampen our view and turn focus back to 1.3537 resistance next.

In the bigger picture, price actions from 1.4689 medium term top are seen as a correction pattern. The first leg has completed at 1.2460. Rise from 1.2460 is seen as the second leg and has completed at 1.3793, ahead of 61.8% retracement of 1.4689 to 1.2460 at 1.3838. Break of 1.3222 should now indicate the start of the third leg while further break of 1.2968 should confirm. In that case, USD/CAD should decline through 1.2460 support to 50% retracement of 0.9406 to 1.4869 at 1.2048.