Sample Category Title

GBP/CHF – 1.2507

 



GBP/CHF – Circle wave v ended at 0.9106 and major correction has commenced for subsequent gain to 1.5547.

 

As sterling found decent demand at 1.2285 and has staged a stronger-than-expected rebound, dampening our bearishness and suggesting the fall from 1.2660 has ended at 1.2215 last month, hence upside risk is seen for test of resistance at 1.2596 (last month’s high) but reckon said resistance at 1.2660 would hold from here, bring further choppy trading within early established range. Only a break of 1.2660 would shift risk back to the upside for the rebound from 1.2102 to extend further gain to 1.2745-55, above there would signal the retreat from 1.2915 has ended at 1.2102 and encourage for subsequent rise to 1.2800-10 first.

To recap the larger degree count, the selloff from 2.4965 (July 2007) is the beginning of wave V with circle and is labeled as 1: 2.3760, 2: 2.4425, wave 3 extension ended at 1.1470, followed by wave 4 at 1.5547, the quick rebound from 0.9106 suggests wave 5 as well as entire circle wave V could have ended there, hence consolidation with mild upside bias is seen for major correction to take place, bring initial test of 1.5547 (previous 4th of a lesser degree).



On the downside, whilst initial pullback to 1.2460-65 cannot be ruled out, reckon support at 1.2440-45 would limit downside and bring another rise later. Below 1.2355-60 would defer and risk test of said support at 1.2285 but only break there would revive bearishness and suggest the rebound from 1.2215 has ended instead, bring retest of this support first. A break of 1.2215 would signal the erratic fall from 1.2915 has resumed and extend weakness to previous support at 1.2102 which is likely to hold on first testing. Looking ahead, only a break below this level would extend the fall from 1.2915 to 1.2000-10 and later towards previous support at 1.1962 but reckon key support at 1.1899 would contain downside.

 


Recommendation: Stand aside for this week.

 

On the Monthly chart, the longer-term count is that major downtrend is under way with circle wave I at 2.8645 (Sep 1.978), then wave II with circle at 4.6175 (Feb 1981), the wave III with circle ended at 1.7425 (Nov 1995) and followed by wave IV with circle at 2.4965 (July 2007 with a short wave C) and wave V with circle has possibly ended at 0.9106. A monthly close above 1.5547 would add credence to this view, bring major correction to 1.7000, then towards psychological level at 2.0000.

Daily Pivots: (S1) 1.3290; (P) 1.3357; (R1) 1.3393; More....

Intraday bias in USD/CAD is back on the downside after taking out 1.3341 minor support. Correction fall from 1.3534 is resuming for 1.3263 and below. In that case, we'd expect strong support from 1.3184 cluster level (61.8% retracement of 1.2968 to 1.3534 at 1.3184, 100% projection of 1.3534 to 1.3263 from 1.3455 at 1.3814 too) to contain downside and bring rebound. On the upside, break of 1.3455 will turn bias back to the upside for 1.3534 resistance.

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. The second leg from 1.2460 is likely still in progress and could target 61.8% retracement of 1.4689 to 1.2460 at 1.3838. We'd look for reversal signal there to start the third leg. However, break of 1.2968 will argue that the third leg has already started and should at least bring a retest of 1.2460 low. Meanwhile, sustained trading above 1.3838 would pave the way to retest 1.4689 high.

Daily Pivots: (S1) 0.7483; (P) 0.7495; (R1) 0.7515; More...

Intraday bias stays on the downside with 0.7531 minor resistance intact. Rise from 0.7158 is already completed at 0.7748. And, near term trend has reversed. Deeper fall should be seen back to support zone next. On the upside, above 0.7351 minor resistance will turn bias neutral and bring recovery. But upside should be limited by 0.7586 support turned resistance to bring fall resumption.

In the bigger picture, we're still treating price actions from 0.6826 low as a correction. And, as long as 38.2% retracement of 0.9504 to 0.6826 at 0.7849 holds, long term down trend from 1.1079 is expected to resume sooner or later. Break of 0.6826 low will target 0.6008 key support level. However, firm break of 0.7849 will indicate that rise from 0.6826 is developing into a medium term rebound, rather than a sideway pattern. In such case, stronger rise should be seen to 55 month EMA (now at 0.8142) and above.

EUR/JPY - 117.35

Recent wave: wave v of (C) ended at 94.12 and major correction in wave A has ended at 149.79

Trend: Near term down

Original strategy:

Sell at 119.00, Target: 117.00, Stop: 119.60

Position: -
Target: -
Stop: -

New strategy :

Sell at 119.00, Target: 117.00, Stop: 119.60

Position: -
Target:  -
Stop:-

Although the single currency has remained under pressure, loss of near term downward momentum should prevent sharp fall below 116.50-60 and risk has increased for a rebound later, above 118.05-10 would bring recovery to 118.40-45 but upside should be limited to 118.90-00 and bring another decline later, bearishness is seen for recent erratic decline from 124.10 top (2016 high) to extend weakness to 116.50-60 but oversold condition should prevent sharp fall below 116.15-20 and reckon 116.00 would hold from here.

In view of this, would not chase this fall here and would be prudent to sell euro on subsequent rebound as 118.90-00 should limit upside. Above 119.06 resistance would defer and suggest a temporary low is possibly formed, risk rebound to 119.40-50 but price should falter below resistance at 119.85, bring another selloff. 

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).

AUD/USD – 0.7509

Recent wave: Wave 5 ended at 1.1081 and major correction has commenced for fall to 0.7000 and then towards 0.6500-10

Trend: Near term down

Original strategy :

Bought at 0.7525, Target: 0.7680, Stop: 0.7465

Position: - Long at 0.7525
Target:  - 0.7680
Stop: - 0.7465

New strategy :

Hold long entered at 0.7525, Target: 0.7680, Stop: 0.7465

Position: - Long at 0.7525
Target:  - 0.7680
Stop:- 0.7465

As aussie has remained week after recent selloff, marginal weakness from here cannot be ruled out, however, loss of near term downward momentum should prevent sharp fall from there and bring rebound later, above 0.7550 would bring test of indicated resistance at 0.7588, break there would suggest a temporary low is possibly formed, bring rebound to 0.7625-30 and later towards resistance at 0.7680-85.

In view of this, we are holding on to our long position entered at 0.7525. Below indicated support at 0.7465-70 would signal the fall from 0.7750 is still in progress for further weakness to 0.7450-55 (50% Fibonacci retracement of 0.7158-0.7750), however, oversold condition should limit downside to 0.7380-85 (61.8% Fibonacci retracement), risk from there is seen for a rebound later.

On the 4-hour chart, the move from 0.8066 is the wave 5 with i: 0.8860, ii: 0.8315, wave iii is an extended move ended at 1.0183, iv: 0.9706 and wave v has ended at 1.1081 (also the top of entire wave 5). The subsequent selloff is the major correction which is unfolding as ABC-X-ABC and 2nd A leg has ended at 0.8848, followed by a-b-c wave B which ended at 0.9758, hence, 2nd C wave is now in progress and indicated downside target at 0.7000 and 0.6950 had been met, so further fall to 0.6710-20 cannot be ruled out.

Daily Pivots: (S1) 1.0574; (P) 1.0590 (R1) 1.0611; More....

With 1.0688 resistance intact, deeper fall is still expected in EUR/USD to 1.0494 support. As noted before, corrective rise from 1.0339 is likely finished after being rejected by 55 week EMA. And, the larger down trend is ready to resume. Decisive break of 1.0494 support will confirm this bearish case and target 1.0339 low. Break of 1.0339 will confirm down trend resumption and target 100% projection of 1.1298 to 1.0339 from 1.0905 at 0.9946. On the upside, however, break of 1.0688 resistance will delay the bearish case and turn focus back to 1.0905 resistance instead.

In the bigger picture, as long as 1.1298 key resistance holds, whole down trend from 1.6039 (2008 high) is still expected to continue. Break of 1.0339 low will send EUR/USD through parity to 61.8% projection of 1.3993 to 1.0461 from 1.1298 at 0.9115. However, considering bullish convergence condition in weekly MACD, break of 1.1298 will indicate term reversal. this would also be supported by sustained trading above 55 week EMA.

This morning at 09:30 BST will see the release of a series of UK inflation data for March including; CPI, core CPI, PPI and core PPI. It will likely cause volatility for GBP and GBP crosses. GBP/USD is currently trading above the psychological level at 1.2400.

The German ZEW economic sentiment and current situation (Apr), and Eurozone industrial production (Feb), at 10:00 BST, will likely affect the strength of the Euro and the trend of the DAX index.

UK CPI has seen an uptrend since the end of 2015, helped by a weakening Sterling rising food and fuel prices. CPI and the core CPI for February both reached above the Bank of England’s 2% target for the first time since January and July 2014 respectively.

UK inflation uptrend is likely to continue; however, the economic prospect seems to be uncertain due to Brexit uncertainty. The Bank of England is likely to keep rates on hold for the near future.

Wednesday April 12, at 09:30 BST, will see the release of UK labour market data (Mar), including average earnings (from Dec to Feb). If the pace of wage growth is slower than the pace of inflations rise then it will likely result in the weakening of household spending and purchasing power, which will lead to the slowdown of economic growth.

To adapt to rising inflation the UK government is increasing the minimum wage from £7.20 to £7.50 this month and has frozen tax on petrol and diesel for the seventh year.

Monday morning, during the early European session, the dollar index hit its highest level of 101.24 since March 15. However, it retraced and is now trading below the resistance level at 101.00. Fed Chair Yellen made a speech yesterday at the University of Michigan. She stated that “the US economy is healthy and growing at a moderate pace with the Fed close to achieving its goals on employment and inflation, neutral monetary policy and that a gradual rate hike would be appropriate”.

FOMC voting member, Neel Kashkari, will make a speech at 18:45 BST this evening.

There are only two weeks ahead until the first round voting of the French presidential election. Polls conducted by BVA-SALES FORCE showed a tightening race: Macron, Le Pen and Fillion are 23%, 23%, and 19% respectively. Macron and Le Pen got a lower share of the vote compared to 25% from a previous poll. Surprisingly, the far-left candidate Jean-Luc Melenchon, has slipped to third position, with 19% of voters, which is equal to Fillion, which poses more uncertainty to the election.

Fed Chair Yellen maintained the status quo in her remarks yesterday, offering little fresh guidance to investors regarding the Fed's next move. The Fed chief indicated that the economy is “pretty healthy” and that she expects it to grow at a moderate pace moving forward. Even though she did not discuss the timing of the next hike, or the hot topic of a reduction in the Fed's balance sheet, she did reiterate that she supports more near-term hikes in general. Given the lack of new information, the reaction in the dollar on these comments was relatively muted. We think that USD traders may now turn their attention to CPI and retail sales data for March, due out on Friday, for updated signals on when the Committee may act next.

USD/JPY traded lower yesterday ahead of Yellen, breaking below the support (now turned into resistance) barrier of 111.00 (R1). The decline continued after the Fed chief's comments, perhaps aided by some yen safe-haven demand amid reports of rising political tension in the Korean peninsula. During the early European morning Tuesday, the rate looks to be headed for a test near the support obstacle of 110.35 (S1). If the bears prove strong enough to overcome that level, then we may see another test near the 110.00 (S2) zone, marked by the low of the 7th of April.

Today's highlights:

During the European day, we get the UK CPI data for March. The forecast is for the headline CPI rate to have held steady, while the core rate is expected to have ticked down. We see the risks surrounding the core CPI forecast as skewed to the upside, perhaps for an unchanged rate, given that the nation's services PMI for the month showed that prices charged by service provides increased at the fastest rate for eight-and-a-half years. In case of a positive surprise in the core figure, GBP could recover some of its recent losses.

GBP/USD rebounded yesterday after finding support near the 1.2370 (S1) level. At the time of writing, the rate looks ready to challenge the 1.2430 (R1) territory as a resistance. Investors could stay near that level waiting for today's inflation data. If the core CPI rate stays unchanged, it may encourage the bulls to push the battle higher. A clear break above 1.2430 (R1) could pave the way for our next resistance zone at 1.2490 (R2).

We also get Sweden's CPI data for March. Expectations are for both the headline and the core rates to have declined. Such declines could amplify speculation regarding further easing by the Riksbank, which at its latest policy gathering shifted to a much more dovish tone. The Bank made it clear that there is still a greater probability for the repo rate to be cut rather than raised in the near term, and we think that a notable slowdown in inflation is likely to raise that probability further. Thus, this could bring SEK under renewed selling interest.

From Germany, we get the ZEW survey for April. The forecast is for both the expectations and the current conditions indices to have risen, which could be a first sign that Eurozone's largest economy entered the second quarter on a solid footing. Although this survey is usually not a major market mover for the euro, improving sentiment among financial experts could cause a modest positive reaction in the DAX. We also get the bloc's industrial production data for February.

In the US, the NFIB small business optimism index for March, and the JOLTS job openings survey for February are due out.

We have only one speaker on the agenda: Minneapolis Fed President Neel Kashkari.

USD/JPY

Support: 110.35 (S1), 110.00 (S2), 109.70 (S3)

Resistance: 111.00 (R1), 111.60 (R2), 112.20 (R3)

GBP/USD

Support: 1.2370 (S1), 1.2340 (S2), 1.2300 (S3)

Resistance: 1.2430 (R1), 1.2490 (R2), 1.2550 (R3)

Daily Pivots: (S1) 1.2377; (P) 1.2402; (R1) 1.2441; More...

With 1.2505 minor resistance intact, further fall is still expected in GBP/USD. Triangle pattern from 1.1946 could be finished with five waves to 1.2614 too. Deeper decline would be seen back to 1.2108 first. Decisive break there will argue that medium term down trend is resuming. In that case, GBP/USD should take out 1.1946/1986 support zone to 61.8% projection of 1.5016 to 1.1946 from 1.2614 at 1.0717. On the upside, however, break of 1.2505 resistance will invalidate this immediately bearish case. Then, it will turn bias back to the upside for 1.2614 resistance instead.

In the bigger picture, fall from 1.7190 is seen as part of the down trend from 2.1161. There is no sign of medium term reversal yet. Sustained trading below 61.8% projection of 2.1161 to 1.3503 from 1.7190 at 1.2457 will target 100% projection at 0.9532. Overall, break of 1.3444 resistance is needed to confirm medium term bottoming. Otherwise, outlook will remain bearish.

Daily Pivots: (S1) 1.0071; (P) 1.0089; (R1) 1.0104; More.....

With 1.0023 minor support intact, further rise is expected in USD/CHF. As noted before, corrective fall from 1.0342 should have finished with three waves down to 0.9812. Further rise should now be seen to 1.0169 resistance first . Decisive break there will confirm this bullish case and target 1.0342 key resistance next. On the downside, below 1.0023 minor support will bring consolidations before staging another rally.

In the bigger picture, we're still maintain that firm break of 1.0342 key resistance is needed to confirm underlying bullish momentum in the cross. However, the corrective nature of the fall from 1.0342 to 0.9812 is starting to give the medium term outlook a bullish favor. Hence, in stead of looking for topping signal around 1.0342, we'd now pay closer attention to upside acceleration as USD/CHF approaches this level again.