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EUR/JPY Sideways price action.

EUR/JPY's bullish run has stalled below range resistance at 124.59 (07/05/2017 high), Hourly support is given at 122.93 (05/05/2017 low). Major support is given at 114.90 (18/04/2017low). Expected to see further renewed buying pressures towards 125.00.

In the longer term, the technical structure validates a medium-term succession of lower highs and lower lows. As a result, the resistance at 149.78 (08/12/2014 high) has likely marked the end of the rise that started in July 2012. Strong support at 94.12 (24/07/2012 low) looks nonetheless far away.

EUR/GBP Weakening.

EUR/GBP is trading lower. The technical structure remains negative as long as the resistance at 0.8530 (25/04/2017 low) holds. Expected to show continued weakness until support given at 0.8304 (05/12/2017 low).

In the long-term, the pair has largely recovered from recent lows in 2015. The technical structure suggests a growing upside momentum. The pair is trading above from its 200 DMA. Strong resistance can be found at 0.9500 psychological level.

EUR/CHF Fading below 1.1000.

EUR/CHF's volatility is getting stronger. Resistance given is given at 1.0978 (09/05/2017 high). Despite the sharp increase and the recent bullish breakout which is very likely psychological, we believe that the medium-term pattern suggests us to see at some point renewed bearish pressures towards key support that can be found at 1.0623 (24/06/2016 low).

In the longer term, the technical structure is mixed. Resistance can be found at 1.1200 (04/02/2015 high). Yet,the ECB's QE programme is likely to cause persistent selling pressures on the euro, which should weigh on EUR/CHF. Supports can be found at 1.0184 (28/01/2015 low) and 1.0082 (27/01/2015 low).

Spot Gold is holding positive tone on Friday, following Thursday's bullish close and regained former strong support now reverted to resistance at $1229 (broken Fibo 38.2% of $1122/$1295 ascend).

The yellow metal was boosted by political turmoil in the US that pressured the dollar and increased demand for safe haven gold.

Additional support was provided by daily slow stochastic and RSI which reversed from oversold territory and show room for further upside on break above $1229 pivot.

However, recovery may be limited as overall structure is bearish and a cluster of resistances en-route is expected to cap rallies.

Falling 10SMA offers immediate resistance at $1232, followed by south-heading daily Tenkan-sen (currently at $1236) and daily cloud top at $1239 which is expected to cap extended upticks.

Gold is awaiting release of US data today for fresh signals. Better than expected US CPI and Retail Sales numbers would boost the dollar and push gold towards its near-term target at $1210.

On the other side, downbeat results would risk bullish acceleration above daily cloud top which would generated stronger signal for extended correction and expose next pivot at $1245 (Fibo 38.2% of $1295/$1214 fall).

Res: 1229, 1232, 1236, 1239
Sup: 1225, 1216, 1214, 1210

On the 4h chart of USDJPY we can see a strong recovery taking place from around the 108.12 level where a bigger three wave A)-B)-C) pattern was completed. That said current reversal is viewed as wave 1, the first wave of a possible bigger five wave development that may take weeks to unfold. As such, more upside will be expected after a pullback down in wave 2 that may show up, once wave 1 finds a top. Support for the upcoming wave 2 may be found around the region of support at 111.58/112.22. That said, once the lower channel line gets breached that is when wave 1 will be regarded as completed and wave 2 will be in play.

USDJPY 4H

EUR/JPY - 123.58




EUR/JPY: Wave v as well as larger degree wave (C) ended at 94.11 and first leg of larger degree wave C upmove has possibly ended at 149.79 and wave 2 correction has possibly ended at 109.49.




Last week’s breach of previous resistance at 124.10 confirms our bullish view that early erratic rise from 109.49 low has resumed and upside bias remains for this move to extend further gain to 124.65, then 125.25-30 (50% Fibonacci retracement of 141.06-109.49) but near term overbought condition should prevent sharp move beyond resistance at 126.47 and price should falter below 127.50-60, risk from there has increased for a retreat to take place later.

The daily chart is labeled as attached, early selloff from 169.97 (July 2008) to 112.08 is wave (A) of B instead of end of entire wave B and then the rebound from there to 139.26 is wave (B), hence, wave (C) has possibly ended at 94.12 with a diagonal triangle as labeled in the daily chart, hence upside bias is seen for further gain. Recent rally above indicated retracement level at 116.69 (50% Fibonacci retracement of the intermediate fall from 139.26-94.12) adds credence to this view and signal major reversal has commenced but first leg of this wave C has possibly ended at 149.79, hence wave 2 has commenced with wave A ended at 126.09, followed by wave B at 141.06, wave C commenced and could have ended at 109.49, above 125.00 would add credence to this view. 



On the downside, whilst initial pullback to 123.00-10 cannot be ruled out, reckon downside would be limited to 122.00-10 and bring another rise to aforesaid upside targets. Only below indicated support at 120.60 would defer and risk deeper pullback to 120.00 but downside should be limited to 119.40-50 and support at 118.90-95 should remain intact, bring another rise later. 



Recommendation: Buy at 122.00 for 124.50 with stop below 121.00.

To re-cap the corrective upmove from the record low of 88.93 (18 Oct 2000), the wave A from there is subdivided as: 1:88.93-113.72, 2:99.88 (1 Jun 2001), 3:140.91 (30 May 2003), 4:124.17 (10 Nov 2003) and 5 ended at record high of 169.97 (21 Jul 2008). The brief but sharp selloff to 112.08 is viewed as a-b-c x a-b-c wave (A) of B. The subsequent rebound to 139.26 is (B) of B and (C) of (B) has possibly ended at 94.12 and in any case price should stay well above previous chart support at 88.93, bring rally in larger degree wave C towards 150.00.

USD/CHF Monitoring resistance at 1.0107.

USD/CHF has paused after sharp reversal off 0.9864 low. The technical structure has invalidated the short-term negative momentum. Hourly resistance is given at 1.0107 (10/04/2017 high). Support can be located at 1.0049 (10/05/2017 low).

In the long-term, the pair is still trading in range since 2011 despite some turmoil when the SNB unpegged the CHF. Key support can be found 0.8986 (30/01/2015 low). The technical structure favours nonetheless a long term bullish bias since the unpeg in January 2015.

USD/CAD Range bound.

USD/CAD has declined after failing to reach 1.3800 before bouncing back. Hourly support can be found at 1.3411 (24/04/2017 high) then 1.3353 (20/01/2017 high). Expected to show renewed bullish pressures as long as the pair remains above 1.3530 (27/04/2017 low).

In the longer term, there is a golden cross with the 50 dma crossing the 200 dma indicating further upside pressures. Strong resistance is given at 1.4690 (22/01/2016 high). Long-term support can be found at 1.2461 (16/03/2015 low).

AUD/USD Continued pause.

AUD/USD has paused above key support at 0.7339 (intraday low). As long as prices remain below the resistance at 0.7608 (17/04/2017 high), the short-term technical structure is negative. Key resistance stands at 0.7681 (30/03/2017 high). Expected to show further weakness.

In the long-term, we are waiting for further signs that the current downtrend is ending. Key supports stand at 0.6009 (31/10/2008 low) . A break of the key resistance at 0.8295 (15/01/2015 high) is needed to invalidate our long-term bearish view.

EUR/USD Short-term weakness.

EUR/USD is trading lower. Hourly support given at 1.0852 (27/04/2017 low) has been broken. Stronger support is now given at 1.0682 (21/04/2017 base) and key support can be found at 1.0494 (22/02/2017 low). The road is wideopen for further decline.

In the longer term, the death cross late October indicated a further bearish bias. The pair has broken key support given at 1.0458 (16/03/2015 low). Key resistance holds at 1.1714 (24/08/2015 high). Expected to head towards parity.

GBP/USD Weakening.

GBP/USD is trading lower. Hourly resistance is given at 1.2989 (07/05/2017 high). Hourly support can be found at 1.2757 (21/04/2017 low). An unlikely break of this support would indicate further weakness. Expected to push higher.

The long-term technical pattern is even more negative since the Brexit vote has paved the way for further decline. Long-term support given at 1.0520 (01/03/85) represents a decent target. Long-term resistance is given at 1.5018 (24/06/2015) and would indicate a long-term reversal in the negative trend. Yet, it is very unlikely at the moment.

USD/JPY Ready to bounce back higher.

USD/JPY is pushing higher since the pair broke resistance given at 112.20 (31/03/2017 high). Hourly support can be found at 113.86 (11/05/2017 low). Stronger support is located at 108.13 (17/04/2017 low). Other key supports lie at a distant 106.04 (11/11/2016 low). Expected to show continued bullish pressures.

We favor a long-term bearish bias. Support is now given at 96.57 (10/08/2013 low). A gradual rise towards the major resistance at 135.15 (01/02/2002 high) seems absolutely unlikely. Expected to decline further support at 93.79 (13/06/2013 low).

USD/CHF –  1.0072

 
USD/CHF – Wave IV ended at 1.1730 and wave V has possibly ended at 0.7068

 
Although the greenback fell to as low as 0.9589 late last week, dollar found decent demand there and has staged a strong rebound in line with our bullish expectations, retaining our upside bias and bullishness remains for a test of resistance at 1.0108, however, break there is needed to signal the rise from 0.9813 low has resumed and extend gain to previous resistance at 1.0171. Looking ahead, once this level is penetrated, this would signal the retreat from 1.0344 has ended, bring further gain to 1.0200-10, then test of resistance at 1.0248 resistance, only above there would add credence to this view and bring resumption of early upmove for an eventual retest of 1.0344.

Our preferred count on the daily chart is that early selloff to 0.9630 is an end of the larger degree wave III and major correction is unfolding from there with a leg ended at 1.2298 (Nov 2008 with (a): 1.0625, (b):1.0011 and (c):1.2298), wave b ended at 0.9910 with (a): 1.0370, (b): 1.1967, (c): 0.9910. The rise from there to 1.1730 is the wave c which also marked the end of wave IV and wave V has possibly ended at 0.7068.


On the downside, whilst pullback to 1.0050 cannot be ruled out, reckon 1.0000 would hold and bring another rise later. Only below 0.9903 (previous resistance) would abort and prolong choppy trading, risk weakness towards said support at 0.9859 but price should stay well above previous support at 0.9813. Only below said support at 0.9813 would abort and confirm another leg of major fall from 1.0344 top is underway for further fall to 0.9735-40, however, oversold condition should prevent sharp fall below 0.9675-80 and price should stay well above 0.9600, bring rebound later.
 
Recommendation: Hold long entered at 0.9905 for 1.0105 with stop now at break-even

Dollar's long-term downtrend started from 2.9343 (Feb 1995) and it was unfolding as a (A)-(B)-(C) with (A): 1.1100, (B): 1.8310 (26 Oct 2000), then followed by another impulsive wave (C) with wave III ended at 0.9630 (Mar 2008). Under this count, correction in wave IV has possibly ended at 1.1730 and wave V already broke below support at 0.9630 and met indicated downside target at 0.7500 and 0.7400. The reversal from 0.7068 suggests the wave V has possibly ended and the breach of resistance at 0.9595 add credence to this view and indicated upside target at 1.0000 had been met, however, the sharp retreat from 1.0296 to 0.7401 suggests choppy trading would be seen but price should stay above said record low at 0.7068.

GBP/USD – 1.2859

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 up

Original strategy :

Sold at 1.2955, Target: 1.2775, Stop: 1.3000

Position: - Short at 1.2955
Target:  - 1.2775
Stop: - 1.3000

New strategy :

Hold short entered at 1.2955, Target: 1.2775, Stop: 1.2910

Position: - Short at 1.2955
Target:  - 1.2775
Stop:- 1.3000

Cable finally dropped below previous support at 1.2900-03 and has remained under pressure, adding credence to our view that top has been formed at 1.2991 last week and bearishness remains weakness to 1.2831 support, however, a break below this level is needed to add credence to this view, bring retracement of recent rise to 1.2770-75 but previous support at 1.2757 should hold from here. We are keeping our view that the wave c as well as larger degree wave B has ended at 1.2109, hence impulsive wave C has commenced from there with wave i of C ended at 1.2616, follow by a correction to 1.2365 (end of wave ii) and wave iii rally is unfolding.

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, expect recovery to be limited and previous support at 1.2903 (now resistance) should hold, bring another retreat later. Above 1.2950 would risk test of said resistance at 1.2991 but break there is needed to extend recent upmove to 1.3040-50 but overbought condition should limit upside to 1.3075-80 and price should falter below 1.3100. 

GBP/JPY - 146.15

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 up

Original strategy:

Buy at 145.75, Target: 148.75, Stop: 145.15

Position: -
Target: -
Stop: -

New strategy :

Buy at 144.50, Target: 146.70, Stop: 143.90

Position: -
Target:  -
Stop:-

As sterling has retreated after rising to 148.10 earlier this week, retaining our view that consolidation below this level would be seen and pullback to support at 145.65-70 is likely, however, reckon downside would be limited to 144.80 and renewed buying interest should emerge around 144.40-50, bring another rise later, above 146.90-00 would signal the pullback from 148.10 has ended, bring retest of this level, break there would extend recent upmove from 135.60 to previous chart resistance at 148.45, then towards 148.90-00 but overbought condition should prevent sharp move beyond 149.50, bring retreat later.

In view of this, would not chase this rise here and would be prudent to buy sterling on further subsequent pullback as 144.50-60 should limit downside, bring another rise later. Below said support at 144.00-10 would abort and suggest a temporary top is formed instead, bring correction to 143.50-60 but reckon 143.10-15 would hold from here, bring another rise later.

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.


The euro is almost unchanged in the Friday session, as EUR/USD trades at 1.0870. On the release front, German Preliminary GDP gained 0.6%, matching the forecast. German Final CPI came in at a flat 0.0%, also matching the estimate. Eurozone Industrial Production contracted 0.1%, marking its third decline in four months. The weak reading missed the estimate of +0.3%. It's a busy day in the US, with CPI and Retail Sales reports for April. We'll also get a look at UoM Consumer Sentiment. Given the host of key events, traders should be prepared for some volatility from EUR/USD in the North American session.

A solid German economy has been the primary driver of an stronger euro area economy, which has posted improved numbers in the first quarter of 2017. Germany's economy expanded 0.6% in the first quarter, compared to a 0.4 gain in Q4 of 2016. The upswing was broadly based, with strong consumer and state spending, and an upsurge in the construction and manufacturing sectors. Stronger global demand has boosted German exports. However, inflation continues to recede, as Final CPI dropped to 0.0%. This trend has also characterized inflation in the eurozone, which showed rose earlier in the year but has since retracted.

The eurozone economy received a passing grade on Thursday, as the European Commission released its Spring 2017 Economic Forecast. The report noted that the European economy is in its fifth year of recovery, and forecast eurozone GDP growth of 1.7% in 2017 and 1.8% in 2018. On the inflation front, the report stated that inflation had risen in recent months, but this was mainly due to an increase in oil prices. Still, inflation was expected to reach 1.6% in 2017 and 1.3% in 2018, compared to just 0.2% in 2016. Stronger growth has led to lower unemployment, and the report projected that eurozone unemployment rate would drop to 9.4% in 2017 and 8.9% in 2018. The report also sounded a cautionary note, warning that risks to the eurozone economy remain tilted to the downside. These risks include a protectionist economic and trade policy in the US under President Trump, the banking sector in Europe and the UK's exit from the EU. This forecast is considerably more optimistic than the Winter 2017 forecast, as is apparent from the captions in the press releases for these two reports: The Winter forecast was entitled “Navigating through choppy waters”, while the caption for the Spring forecast reads “Steady growth ahead”.

President Donald Trump's firing of FBI director James Comey was perfectly legal, but the move has set off a political firestorm in Washington. Trump has been accused of triggering a constitutional crisis and undermining the rule of law. Comey had been conducting an investigation into possible collusion between Trump and Russia during the presidential campaign, so predictably, Comey's dismissal has raised suspicions that Trump is trying to impede the investigation by firing Comey. The crisis could heat up further, with calls in Congress to appoint an independent investigator into Trump's connections with Russia. This latest political storm has yet to shake up the markets, but a prolonged crisis could paralyze Washington and delay Trump's agenda of tax reform and increased fiscal spending.