Sample Category Title

USD/CHF - 1.0072

Original strategy :

Buy at 1.0000, Target: 1.0100, Stop: 0.9965

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 1.0000, Target: 1.0100, Stop: 0.9965

Position : -

Target :  -

Stop : -

Dollar’s retreat after rising to 1.0108 on Monday has retained our view that consolidation below this level would be seen and initial downside risk is for pullback to 1.0050, then towards support at 1.0026, however, reckon 0.9995 support would contain weakness and bring another rise later, above indicated resistance at 1.0108-09 would extend recent upmove from 0.9813 towards 1.0140-45 but loss of upward momentum should prevent sharp move beyond another previous resistance at 1.0171, risk from there has increased for a retreat to take place later. 

In view of this, would not chase this rise here and would be prudent to buy dollar on subsequent pullback as support at 0.9995 should limit downside. Below 0.9970 (50% Fibonacci retracement of 0.9831-1.0108) would abort and signal top is formed instead, bring correction to support at 0.9948. 

The latest inflation report continues to portray a subdued CPI, high PPI environment in China. Headline CPI improved to +0.9% y/y in March from +0.8% a month ago. The market has anticipated stronger pickup to +1%. Core inflation (excluding food and energy) rose +2% y/y, up from +1.8% in February. The decline in food prices deepened to -4.4% y/y from -4.3% in February. Nonfood inflation improved modestly to +2.3% y/y, up from +2.2% in February. PPI eased to +7.6% in March, from +7.8% in the prior month, compared with consensus of +7.5%. Both seasonal factors and moderation in the commodity price rally were key reasons for the slowdown. Lunar New Year in the first week of February pushed prices higher and absence of such factor was reflected in the March reading. Meanwhile, mining input prices gained +3.7% y/y in March, compared with a +36.1% y/y rally in the prior month. Oil and gas price, gaining +68.5% y/y in the month, was the biggest driver of PPI inflation last month. We expect PPI to stay high in coming months but growth would be more gradual due to strong base effect. Meanwhile, the rally in commodity prices over the past months is seen passing through to downstream CPI.

As we mentioned in previous reports, the Chinese government has adopted monetary tightening measured targeting the asset markets in order to prevent macro risks and sustain stable social and economic developments and prevention of macro risks. We believe the government's tightening policy would remain confined to interbank tightening. The probability of raising benchmark interest rates stays low, as headline inflation remains subdued. Rather, this might lead to more chances of liquidity injection into the market.

China's FX reserve stayed about US$ 3 trillion in March, as the government's strict capital control measures adopted since the beginning of this year helped curb the depreciation in renminbi. FX reserve increased +US$ 3.96M to US$3.01 trillion in March, marking a second consecutive monthly but decelerated growth in the series. Yet, FX reserve stays -24.6% below the peak made in June 2014. Renminbi has stabilized so far this year. USDCNY fell -0.86% in 1Q17, after gaining over the past three consecutive quarters (up +7.53% in total). Besides China's capital control effort, pullback in US dollar also helped stabilize renminbi. During the first quarter, USD index DXY was down -1.82%.Again, we suggest to wait for PBOC's FX position and SAFE flow data before judging capital flow situation in China.

China would release its March trade report on Thursday (April 13) with a surplus of US$ 12.5B, following a deficit of 9.1B in the prior month. In February, imports soared +44.7% y/y while exports gained +4.2% y/y, compared with growths of +15.9% and +25.2%, respectively, in January. The sharp rise in imports might indicate improvement in domestic demand

GBP/USD - 1.2491

New strategy  :

Stand aside

Position : -

Target :  -

Stop : -

As cable has maintained a firm undertone after yesterday’s rally, suggesting low has been formed at 1.2365 on Monday and near term upside risk remains for the rebound from there to extend gain to 1.2520-30, however, break there is needed to add credence to this view and bring further rise towards resistance at 1.2559 but near term overbought condition should prevent sharp move beyond there, bring retreat later.

In view of this, would not chase this rise here and would be prudent to stand aside for now. Below 1.2445-50 would suggest an intra-day top is possibly formed, bring weakness to 1.2420, break there would confirm and bring further fall to 1.12400-05 which is likely to hold on first testing.

EUR/USD - 1.0605

Original strategy  :

Sell at 1.0665, Target: 1.0565, Stop: 1.0700

Position : -

Target :  -

Stop : -

New strategy  :

Sell at 1.0665, Target: 1.0565, Stop: 1.0700

Position : -

Target :  -

Stop : -

As the single currency has recovered again after finding support at 1.0595 earlier today, retaining our view that further consolidation would be seen and initial upside risk remains for the rebound from 1.0570 low to extend gain to 1.0630, then 1.0650, however, reckon upside would be limited to 1.0667 resistance (Friday’s high) and bring another decline later, below said support at 1.0595 would bring retest of Monday’s low at 1.0570, break there would extend the decline from 1.0906 to 1.0550-55 (50% projection of 1.0906-1.0635 measuring from 1.0689), then 1.0525-30.

In view of this, would not chase this fall here and would be prudent to sell dollar on further recovery as 1.0667 resistance should limit upside. Only a firm break above said resistance at 1.0667 would abort and suggest low is formed instead, risk a stronger rebound to 1.0689, then 1.0702.

USD/JPY - 109.70

Original strategy  :

Sell at 110.30, Target: 109.30, Stop: 110.65

Position :  -

Target :  -

Stop : -

New strategy  :

Sell at 110.30, Target: 109.30, Stop: 110.65

Position :  -

Target :  -

Stop : -

Yesterday’s selloff below support at 110.11 on active cross-buying in yen in part due to risk aversion suggests recent entire decline 118.66 top is still in progress, hence downside bias remains for recent decline to extend weakness to 109.30-35, then towards 109.00-05 (123.6 times projection of 112.20-110.13 measuring from 111.58), however, near term oversold condition should prevent sharp fall below 108.85 (61.8% projection of 115.51-110.11 measuring from 112.20) and reckon 108.40-50 (100% projection of 118.66-111.55 measuring from 115.51) would hold, bring rebound later.

In view of this, would not chase this fall here and would be prudent to sell dollar on recovery as 110.30-40 should cap upside and bring another decline. Above 110.70-75 would defer and risk a stronger rebound to 111.00-05 but price should falter well below resistance at 111.58.

EUR/CHF Choppy trading.

EUR/CHF has paused near the key support at 1.0684 (see also the falling channel). However, the persistent succession of lower highs favours a bearish bias. Hourly resistances can be found at 1.0691 (07/04/2017 high). The medium-term pattern suggests us to see continued bearish pressures towards key support that can be found at 1.0623 (24/06/2016 low). Expected to see further decline.

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).

EUR/JPY Challenging the support at 115.95.

EUR/JPY recovery bounce off support was short lived and is not challenging the trendline support at 115.95. Next support is given at 113.73 (09/11/2016 low). Resistance stands at 117.43 then 122.88 (13/03/0217 high).

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 Break below rising trendline.

EUR/GBP remains weak as can be seen by the clear break of falling trendline support at 0.8536. Support stands at 0.8450 (03/01/2017 low). Hourly resistance is given at 0.8591 (05/04/2017 high). Strong resistance is given at 0.8787 (13/03/2017 high). Hourly support can be found at 0.8484 (31/03/2017 low). Expected to show continued weakness.

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 : 1.0686





 

EUR/CHF: Major wave 5 trough ended at 0.8426 and correction has commenced from there for subsequent gain towards 1.1400-1.1500.

 

The single currency met resistance at 1.0727 last week and has retreated again, retaining our bearishness and consolidation with downside bias remains for the retreat from 1.0825 (last month’s high) to extend weakness to 1.0650-60, however, break of support at 1.0622 is needed to confirm early erratic decline from 1.1201 (2016 high) has resumed, bring subsequent selloff to 1.0550 and possibly towards 1.0500 but oversold condition should prevent sharp fall below latter level and reckon 1.0390-00 would hold from here, risk from there has increased for a rebound later.
 
To recap our preferred count, the decline from 1.6828 (end wave (B)) is labeled as the beginning of wave (C) which should unfold as an impulsive move with 1: 1.5326, 2: 1.6377 and wave 3 is sub-divided into (i): 1.4300, (ii): 1.5880 and wave (iii) is still unfolding with (1): 1.4577, (2): 1.5448 and wave (3) is an extended 3rd with i: 1.5006, ii: 1.5383, wave iii: 1.3073, then wave iv ended at 1.3925 and wave v at 1.3073, wave (4) ended at 1.3925 and wave (5) has ended at 1.2765 which also marked the low of wave (iii) and wave (iv) has ended at 1.3835 and wave (v) as well as larger degree wave 3 has ended at 1.0075. The selloff from 1.2650 signals wave 4 has ended there and we are taking a view that the wave 5 could also have ended 0.8426, hence consolidation is seen with mild upside bias for rebound to 1.1000 first, then towards 1.1400.
 
On the upside, expect recovery to be limited to 1.0727 and bring another decline. Only above said resistance at 1.0825 would abort and signal low has been formed, bring a stronger rebound to 1.0850 and later towards resistance at 1.0898 which is likely to cap euro’s upside, the pair shall head back south again from there.

Recommendation: Hold short entered at 1.0750 for 1.0550 with stop lowered to break-even.

The long-term downtrend started from 1.9626 (Apr 1985) to 1.4166 (Sep 1995) is treated as wave (A) with A:1.6285 (Dec 1987), B: 1.9342 (May 1992) and C: 1.4166, then wave (B) ended at 1.6828 with A: 1.7147 (Feb 1997), B: 1.4398 (Sep 2001), C: 1.6828 (Nov 2007), therefore, wave (C) is now in progress with the breakdown indicated as above. This wave (C) already met indicated downside target at 1.1455/60 and 1.1300, it could have ended at 0.8426, consolidation with mild upside bias is seen for gain to 1.1000 and later towards 1.2000.

USD/CHF Remains weak.

USD/CHF is consolidating below new high at 1.0107. Hourly support is given at 1.0039 (07/04/2017 base low) then 0.9814 (27/03/2017 low). Key resistance can be found at a distance at 1.0171 (07/03/2017) then 1.0344 (15/12/2016 high). Expected to show another leg higher.

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 Weak recovery bounce.

USD/CAD is trying to bounce yet demand is thin. Short-term bullish technical pattern has quickly reversed, indicating further downside pressure. Key support is given at 1.3265 (21/03/2016 low) is in focus then 1.2969 (31/01/2017 low). Resistance can be located at 1.3427 (10/04/2017 high) then 1.3456 (04/04/2017 range high).

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 Remains weak.

AUD/USD weak bounce near the support has thus far unimpressive failed to find momentum, confirming persistent selling pressures. Next meaningful support is located at 0.7449 (13/01/2017 low). Resistance can be located at 0.7515 (intraday high and downtrend channel top). • 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.

AUD/USD     –  0.7574




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




Aussie has dropped sharply last week and finally broke below support at 0.7491, suggesting recent entire rise from 0.7158 has indeed ended at 0.775 last month, hence further choppy trading within early established range would be seen and downside risk remains for the decline from 0.7750 to bring at least a strong correction of the aforesaid rise, initial downside target is seen at 0.7450-55 (50% Fibonacci retracement of 0.7158-0.7750), then towards 0.7380-85 (61.8% Fibonacci retracement), however, near term oversold condition should prevent sharp fall below 0.7300-10 and reckon 0.7280-85 would hold from here, bring rebound later. 


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 upside, whilst initial recovery to 0.7535-40 is likely, reckon 0.7370-80 would limit upside and bring another decline later to aforesaid downside retracement targets. A daily close above previous support at 0.7587 would defer and risk a stronger rebound to 0.7640-45 but only break of resistance at 0.7680 would abort and suggest the fall from 0.7750 has ended instead, 



Recommendation: Sell at 0.7570 for 0.7390 with stop below 0.7670



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 Trying to form a short-term base.

EUR/USD is trying to bounce. Hourly support can be found at 1.0570 (i11.04.2017 low). Stronger support can be found at 1.0494 (22/02/2017 low). Resistance can be located at a distant 1.0658 (07/07/2017 reaction high). Expected to see further short-term weakness.

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 Bounce gains momentum.

GBP/USD has bounced near the key support at 1.2334, suggesting a potential short-term base formation. The falling trendline resistances at 1.2500 has been breached. Hourly resistance can be located at 1.2506 and key resistance stands at1.2605 (27/03/2017 high). An hourly support can be found at 1.2405 (11/04/2017 low).

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 Bearish break of horizontal support.

USD/JPY has broken to the downside out of the horizontal support at 110.11 confirming a bearish bias. Other key supports lie at a distant 106.04 (11/11/2016 low). An hourly resistance can be found at 110.11, while a key resistance stands at 112.20 (31/03/2017 high).

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).