Sample Category Title

The Euro remains within tight range in early European trading and consolidating above Tuesday’s fresh three-week low at 1.1118.

Near-term outlook is bearish after strong fall in past two days and marginal close below former higher base at 1.1135, as bears dented next strong support at 1.1121(Fibo 38.2% of 1.0839/1.1295 upleg).

Profit-taking on larger uptrend and stronger dollar are seen as pair’s main drivers, with increased risk of deeper correction towards 1.1067/13 (Fibo 50% and 61.8% retracement of 1.0839/1.1295 upleg) seen on sustained break below of 1.1121/09 pivots.

Bear-cross of 10/20SMA’s maintains near-term bearish pressure, with falling 10SMA offering solid resistance at 1.1179 and guarding upper pivot at 1.1202, provided by 20SMA.

Res: 1.1138, 1.1165, 1.1179, 1.1202
Sup: 1.1121, 1.1109, 1.1067, 1.1013

AUD/USD     –  0.7555




AUD/USD – Wave 5 of C and (B) has possibly ended at 1.1081




As aussie has eased after surging to 0.7636 last week, suggesting minor consolidation below this level would be seen and pullback to 0.7510-15 cannot be ruled out, however, reckon 0.7455-60 would contain downside and bring another rise later, above said resistance at 0.7636 would signal the rise from 0.7329 is still in progress, this would also reinforce our view that the fall from 0.7750 has ended at 0.7329, then further gain to previous resistance at 0.7680 would be seen but said resistance at 0.7750 would hold on first testing.


We are keeping our count that top has been formed at 1.1081 (wave 5 of V) and major correction (A-B-C-X-A-B-C) has commenced, indicated downside targets at 0.7945 (61.8% Fibonacci retracement of entire rise from 0.6007-1.1081) and 0.7750 had been met and downside bias is seen for further weakness to 0.6800, then 0.6700 but reckon 0.6500 would hold from here.


Our preferred count is that the rally from 0.6007 to 0.7270 (7 Jan 2009) is marked as wave A, the retreat to 0.6248 (2 Feb 2009) is wave B and the subsequent upmove is labeled as wave C with wave (iii) and wave (iv) ended at 0.8265 and 0.7700 respectively and wave (v) as well as 3 ended at 0.9407, then wave 4 ended at 0.8066 (instead of 0.8578). The wave 5 has met our indicated projection target of 1.1060 and could ended at 1.1081, this level is now treated as the peak of wave (C) as well as larger degree wave B, hence major fall in wave C has commenced, our initial downside target at psychological support at 0.7000 has just been met and further weakness to 0.6500 would be seen later.



On the downside, whilst pullback to 0.7500-10 cannot be ruled out, reckon downside would be limited to 0.7455-60 and bring another rise later. Only below support at 0.7415 would abort and suggest top is possibly formed, bring weakness towards said strong support at 0.7372 which is likely to hold from here. Looking ahead, a break below this support is needed to signal the rebound from 0.7329 has ended and revive bearishness for retest of this level later.   



Recommendation: Turn long at 0.7470 for 0.7670 with stop below 0.7370.



Our alternate count on the daily chart treated the top formed in 2008 at 0.9851 could be a larger degree wave I and was followed by a deep and sharp correction in wave II to 0.6007 and wave III is unfolding from there.

The long-term uptrend started from 0.4775 (2 Apr 2001) with an impulsive structure. Wave I is labeled as 0.4775 to 0.9851 (15 Jul 2008), wave II has ended at 0.6007 (Oct 2008) and wave III is still in progress which may extend further gain to 1.1265.

EUR/USD

Current level - 1.1130

The bias is bearish below 1.1140, for a break through 1.1108 low, towards 1.1020. Crucial on the lower frames is 1.1164.

Profit-taking affects gold curbing silver and platinum

USD/JPY

Current level - 111.25

The slide from 111.80 is still intact despite its corrective nature and the outlook is bearish below 111.40, for a slide towards 110.90 and even 110.30.

GBP/USD

Current level - 1.2629

My outlook remains bearish below 1.2640 minor resistance, for a slide towards 1.2480 area. Crucial on the upside is 1.2700 area.

GBP/USD – 1.2591

Recent wave: Wave V of larger degree wave (III) has ended at 1.1986 and major correction has commenced from there for gain to 1.3000 and 1.3140-50

Trend: Near term down

Original strategy :

Sell at 1.2750, Target: 1.2600, Stop: 1.2810

Position: -
Target:  -
Stop: -

New strategy :

Sell at 1.2675, Target: 1.2525, Stop: 1.2735

Position: -
Target:  -
Stop:-

Yesterday’s selloff together with the breach of previous support at 1.2635 add credence to our view that recent decline from 1.3048 top has resumed and bearishness remains for this move to bring retracement of early upmove to 1.2550, then towards previous support at 1.2515, however, loss of near term downward momentum should prevent sharp fall below 1.2490-00 and reckon 1.2450-60 would hold.

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.

On the upside, whilst recovery to 1.2640-50 cannot be ruled out, reckon 1.2675-80 would limit upside an bring another decline. Above previous support at 1.2723 would defer and risk a stronger rebound to 1.2758 but break of this resistance is needed to signal a temporary low is formed instead, risk test of 1.2818 resistance later.

GBP/JPY - 139.95

Recent wave: Medium term low formed at 120.50 and (A)-(B)-(C) major correction has commenced with (A) leg ended at 148.45, hence wave (B) is unfolding for retreat to 131.00-10.

Trend: Near term down

Original strategy:

Exit long entered at 141.50,

Position: - Long at 141.50
Target: -
Stop: -

New strategy :

Stand aside

Position: -
Target:  -
Stop:-

Sterling’s selloff after meeting strong resistance at 142.50 dampened our bullishness and suggests the rebound from 138.70 has ended there and downside risk remains for weakness towards support at 139.15, however, break there is needed to add credence to this view and signal recent decline has resumed for retest of 138.70, then towards 138.00-10 later which is likely to hold from here due to near term oversold condition.

On the upside, whilst recovery to 139.65-70 cannot be ruled out, reckon upside would be limited to 141.15-20 and bring another decline later. Only above 141.80 would revive bullishness and suggest the retreat from 142.50 has ended, bring another test of this level first. Once this resistance is penetrated, this would signal the erratic rise from 138.70 is still in progress or test of indicated previous resistance at 142.75, above there would signal recent decline has ended and encourage for at least a strong retracement of recent selloff to 143.05-10.

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.


As Asian markets are completing their trading day, the dollar index has eased from yesterday's one-month high but is still close to that level. In the meantime, WTI and Brent crude didn't manage to post a rebound after yesterday's sizable losses.

The dollar index, a broader gauge of the greenback's strength, remains close but below yesterday's one-month high of 97.87. The greenback was recently supported by key Fed officials communicating that rate normalization should remain on track. Dollar/yen didn't manage to maintain momentum after yesterday's more than three-week high and finished the day lower. The pair continues declining today and was last down two-tenths of a percent at 111.25. Euro/dollar was flat at 1.1132 and close to yesterday's three-week low. Pound/dollar which posted significant losses following dovish remarks by Bank of England Governor Mark Carney yesterday, which pushed the pair to two-month lows, was last down marginally below the 1.26 handle.

The oil-linked Canadian dollar continues retreating versus its US counterpart. Dollar/loonie yesterday finished the day four-tenths of a percent higher. With the close of Asian markets, the pair is slightly up at 1.3275.

It is noteworthy that the greenback was also partially negatively affected by lower oil prices as those weaken inflationary pressures, translating into lower US Treasury yields. Lower yields render dollar investments less attractive.

Other commodity-currencies and specifically the Australian and New Zealand dollar were also down on the day versus the greenback. Aussie/dollar last traded at 0.7563, after recording a one-week low of 0.7554 earlier in the day. Kiwi/dollar last traded at 0.7227 after commencing the day at 0.7238. The kiwi was hurt by the outcome of yesterday's bi-weekly dairy auction which showed prices declining by 0.8%, contrasting the 0.6% rise from two-weeks ago. New Zealand relies heavily on milk product exports. On a different note, the Reserve Bank of New Zealand is expected to announce that it will maintain its key cash rate at the record low of 1.75% as it completes its meeting tomorrow.

Transitioning from forex markets to commodities, gold was last up two-tenths of a percent, trading around $1245 an ounce after declining for five days in a row and falling to a one-month low in yesterday's trading. WTI and Brent crude were both close to yesterday's seven month lows, below $44 and $46 a barrel respectively. The two benchmarks fell yesterday on reports of increased supply by Libya and Nigeria. The Energy Information Administration's (EIA) weekly report on US crude oil inventories will be released later in the day. The report will attract even more interest than usual given WTI's massive declines recently.

As it was expected the common European currency continued its decline against the US Dollar in the previous 24 hours. However, on Wednesday morning a short lived climb of the Euro against the Greenback was expected. Due to the fact that the pair found support and rebounded against the combined support of the weekly S1 at 1.1120 and monthly PP at 1.1117 the rate began to surge. It is highly likely that the pair will reach for the upper trend line of the short term descending channel pattern. The trend line is strengthened by the resistance of the 55 and 100-hour SMAs. Although, the exact level, where the trend line could be reached is unclear. Afterwards it can be expected that the surge of the Buck will continue.

Severe bearish momentum on Tuesday caused the GBP/USD currency pair to pierce the ascending channel's support line, with the support around 1.2624 limiting the losses. Due to the strong demand at this area, the Sterling has the opportunity to erase some of yesterday's losses, despite technical indicators in the shorter timeframes suggesting otherwise. The RSI specifically both in short and medium terms approached its bottom turnaround point, which implies a recovery could be due. Intraday gains should then be capped around 1.2720, where a relatively tough resistance on the hourly chart rests. On the other hand, in case more bearish momentum persists and the monthly S2 fails to hold the pair, the 1.2560 mark is the area to consider as another potential support.

EUR/JPY - 123.72

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:

Bought art 123.80, Target: 125.30, Stop: 123.20

Position: - Long at 123.80
Target: - 125.30
Stop: - 123.20

New strategy :

Hold long entered at 123.80, Target: 125.30, Stop: 123.20

Position: - Long at 123.80
Target:  - 125.30
Stop:- 123.20

As the single currency has retreated sharply after meeting resistance at 124.65 yesterday, suggesting consolidation below this level would be seen, however, as long as 123.20-25 holds, prospect of another rise remains, above said resistance at 124.65 would signal recent upmove from 122.40 (last week’s low) is still in progress and may extend further gain to 125.00 but break of resistance at 125.31 is needed to retain upside bias and signal correction from 125.82 has ended at 122.40, bring subsequent rise towards this level which is likely to hold on first testing.

In view of this, we are holding on to our long position entered at 123.80. Below 123.20-25 would defer and suggest first leg of rebound from 122.40 has ended instead, risk further weakness to 122.90-00 but price should stay well above said support at 122.40, bring another rebound later. 

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).

The resistance encountered at 111.80, namely the monthly PP, was too tough for the USD/JPY pair to bare, resulting in the breach of the recently-acquired up-trend. Being that the pair kept trading between the monthly S1 and the monthly PP, the exchange rate should now keep falling towards the 109.22 area. Technical indicators somewhat support this possibility. No significant developments are expected this week, meaning that with the given rate of decline the most likely weekly close could be 110.00 major level. Moreover, there are no market movers present on the calendar, with the closest potential one scheduled only for June 26. Meanwhile, traders' sentiment also remains relatively neutral, as 55% of all open positions are long.