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A note on lower timeframe confirming price action…

Waiting for lower timeframe confirmation is our main tool to confirm strength within higher timeframe zones, and has really been the key to our trading success. It takes a little time to understand the subtle nuances, however, as each trade is never the same, but once you master the rhythm so to speak, you will be saved from countless unnecessary losing trades. The following is a list of what we look for:

• A break/retest of supply or demand dependent on which way you're trading.
• A trendline break/retest.
• Buying/selling tails – essentially we look for a cluster of very obvious spikes off of lower timeframe support and resistance levels within the higher timeframe zone.
• Candlestick patterns. We tend to only stick with pin bars and engulfing bars as these have proven to be the most effective.

EUR/USD

After whipsawing through a H4 trendline resistance extended from the low 1.0579 and tapping fresh offers at the underside of a H4 supply at 1.0667-1.0650 in the early hours of yesterday's segment, we can see that he EUR continued to weaken against its US counterpart. In one fell swoop, the pair swallowed both H4 support at 1.0621 (now a resistance) and the 1.06 handle, leaving price free to challenge the nearby December opening level at 1.0590.

Looking across to the higher-timeframe structures, it's clear to see that the weekly bears remain in the driving seat for the time being. In conjunction with this, daily demand at 1.0589-1.0662 is also holding on by just a thread at the moment. The next downside target on the higher timeframes can be seen at a daily support level coming in at 1.0520, which happens to be sited only a few pips above the 2017 yearly opening level at 1.0515/weekly support area at 1.0333-1.0502.

Our suggestions: In the event that a H4 close is seen beyond December's opening level today, the next H4 support in the firing range can be seen at the 2017 yearly opening level (which as we already know sits just beneath a daily support at 1.0520). This could set the foundation for a reasonable short trade today if the H4 candles retest the broken H4 levels as resistance (as per the black arrows) and pencil in a H4 bear candle.

Data points to consider: German Prelim GDP release at 7am. US PPI data at 1.30pm, Fed Chair Yellen speaks at 3pm followed by FOMC member Kaplan taking the stage at 6pm GMT.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: Watch for a H4 close below the1.0590 region and then look to trade any retest seen thereafter ([waiting for a H4 bear candle to form following the retest is advised before pulling the trigger] stop loss: ideally beyond the trigger candle).

GBP/USD

In recent sessions, we saw the GBP/USD settle just above December's opening level at 1.2516, following a modest retest seen from the 1.25 handle. Provided that the bulls defend 1.2516 as support today, we see little standing in the way of price challenging the H4 mid-way resistance at 1.2550, which happens to align nicely with a H4 Quasimodo resistance left shoulder (see black arrow).

As far as structure goes, there is unfortunately very little direction seen from the bigger picture at this time. The weekly candles are currently trading mid-range between the 2017 yearly opening level at 1.2329 and a weekly Quasimodo resistance coming in at 1.2673. By the same token, a similar pattern exists on the daily chart. Daily price is loitering between a daily demand at 1.2252-1.2342 (bolstered by a daily trendline support stretched from the high 1.3437) and a daily supply penciled in at 1.2728-1.2657.

Our suggestions: On account of there being little higher-timeframe convergence seen on the H4 chart, we will not be looking for anything other than a bounce today. With this in mind, a bounce from 1.2516/1.25 is possible, in our opinion. However, it'll only be considered a valid bounce if, and only if, it's accompanied by a lower-timeframe buy signal (see the top of this report). The other key thing to keep in mind here is that one would also require a relatively small stop loss in order to achieve reasonable risk/reward up to the 1.2550 neighborhood.

Data points to consider: UK CPI at 9.30am. US PPI data at 1.30pm, Fed Chair Yellen speaks at 3pm followed by FOMC member Kaplan taking the stage at 6pm GMT.

Levels to watch/live orders:

• Buys: 1.2516 ([wait for a lower-timeframe signal to form before looking to execute a trade] stop loss: dependent on where one confirms the level).
• Sells: Flat (stop loss: N/A).

AUD/USD

Despite the commodity currency closing the day in negative territory yesterday, the pair may very well be in the process of carving out a bottom against its US counterpart. Going into the US session, we can see that the pair momentarily surpassed the H4 trendline support taken from the high 0.7695, and came within striking distance of connecting with a H4 demand area seen at 0.7617-0.7630. The H4 trendline remains in play as of now, which could lead to a short-term bounce back up to the H4 mid-level resistance at 0.7650.

Given the above factors, how do things stand on the higher timeframes? Well, from the weekly chart, the Aussie remains lurking nearby a weekly trendline resistance taken from the high 0.8163, followed closely by a weekly supply zone logged in at 0.7849-0.7752 (bolstered by yet another weekly trendline resistance stretched from the high 0.7835). What's more, positioned closely to the weekly trendline resistance (0.8163) is a daily Quasimodo resistance penciled in at 0.7734 and a daily resistance at 0.7720.

Our suggestions: Assuming that the H4 bulls are able to lift price back above the 0.7650 mark today, a long from here could be something to think about. On the assumption that a H4 bullish close is seen beyond this number, and price retests it as support as well as forms a lower-timeframe buy signal (see the top of this report), we would look to long this market, targeting the 0.77 handle. The main ingredient behind our thinking here that there's room seen, albeit not much, for further upside on the bigger picture (see above).

Once/if price crosses swords with 0.77, our team will shift from longs to shorts since between the underside of the weekly supply at 0.7752 and the daily resistance at 0.7720, we have a relatively strong-looking higher-timeframe sell zone in the making.

Data points to consider: Chinese CPI at 1.30am. US PPI data at 1.30pm, Fed Chair Yellen speaks at 3pm followed by FOMC member Kaplan taking the stage at 6pm GMT.

Levels to watch/live orders:

• Buys: Watch for a H4 close above the 0.7650 region and then look to trade any retest seen thereafter ([waiting for a lower-timeframe signal to form following the retest is advised before pulling the trigger] stop loss: dependent on where one confirms this level).
• Sells: 0.7752/0.7720 ([wait for a H4 bear candle to form before pulling the trigger] stop loss: ideally beyond the trigger candle).

USD/JPY

The USD/JPY, as you can see, started the week off on a positive note, gapping over 30 pips north into the jaws of a H4 supply zone drawn from 113.96-113.43. In spite of this, buying pressure diminished rather quickly following a whipsaw through the top edge of the H4 area, which saw the unit consolidate throughout the remainder of the day between 114.16/113.43.

With the weekly candles currently reflecting a bullish stance from just ahead of the weekly support area at 111.44-110.10, and daily price looking on course to gravitate higher up to a daily resistance area at 115.62-114.60, the current H4 supply may be on the verge of giving way.

Our suggestions: Beyond the current H4 supply area, we see room for price to challenge December's opening base at 114.68, which, as you may have noticed, is positioned within the lower edge of the aforementioned daily resistance area. Should a H4 close take shape above the H4 supply today, as the higher-timeframes suggest, and is followed up with both a retest and a lower-timeframe buy signal (see the top of this report), our desk would look to buy, targeting the 114.68 boundary.

Data points to consider: US PPI data at 1.30pm, Fed Chair Yellen speaks at 3pm followed by FOMC member Kaplan taking the stage at 6pm GMT.

Levels to watch/live orders:

• Buys: Watch for a H4 close above 113.96-113.43 and then look to trade any retest seen thereafter ([waiting for a lower-timeframe signal to form following the retest is advised before pulling the trigger] stop loss: dependent on where one confirms this zone).
• Sells: Flat (stop loss: N/A).

USD/CAD

During the course of Monday's trading, the H4 candles managed to find a foothold around the underside of 1.31 and clock a low of 1.3054 on the day. While this is the fourth consecutive bearish day for the pair, we feel the market's structure is signaling oversold conditions at the moment. Directly ahead we have the H4 mid-level support 1.3050, which, of course, could hold price higher today. Beyond here, however, sits a H4 demand base coming in at 1.3006-1.3035, which happens to be bolstered by both a weekly demand area at 1.3006-1.3115 and a daily support level at 1.3006. Apart from this, the H4 demand area also boasts the following converging structures: February's opening level at 1.3039, a H4 trendline support taken from the low 1.2968, a H4 AB=CD (see black arrows) 127.2% approach terminating around 1.3036 mark and to top it off there's also the daily trendline support taken from the low 1.2654 intersecting with this H4 zone.

Our suggestions: While buying from the H4 demand area may very well be tempting considering its confluence, we still have to remain cognizant of the 1.30 figure seen just below it. This watched number could act as a magnet to price and pull the pair through our H4 buy zone! Therefore, to be on the safe side, we will wait for a reasonably sized H4 bull candle to take shape here before pressing the buy button. This will by no means guarantee a winning trade, but what it will do is show buyer interest within a high-probability reversal zone.

Data points to consider: US PPI data at 1.30pm, Fed Chair Yellen speaks at 3pm followed by FOMC member Kaplan taking the stage at 6pm GMT.

Levels to watch/live orders:

• Buys: 1.3006-1.3035 ([wait for a reasonably sized H4 bull candle to form before pulling the trigger] stop loss: ideally beyond the trigger candle).
• Sells: Flat (stop loss: N/A).

USD/CHF

Kicking this morning's report off with a look at the weekly chart, we can see that weekly price is currently edging above the 2016 yearly opening level at 1.0029. In order to confirm this break, however, we would require a closing weekly candle. The story on the daily chart shows that price recently crossed above the daily trendline resistance taken from the high 0.9956, but immediately touched gloves with the underside of a daily supply coming in at 1.0122-1.0060. Swinging across to the H4 candles, the pair broke through both H4 resistance at 1.0041 and the H4 mid-way resistance at 1.0050, and ended the day respecting the H4 AB=CD (see black arrows) 161.8% extension line at 1.0069.

Our suggestions: In light of recent action, selling right now, even though the unit is bolstered by a daily supply and a H4 161.8% ext., is a risky play in our book. Not only do the H4 candles have to contend with nearby H4 mid-way support at 1.0050, a H4 support at 1.0041 and a H4 trendline support taken from the high 1.0136, but also there's the daily trendline support etched from the high 0.9956 to consider, as well as the recent break above the 2016 yearly opening level! As a result of the above, we feel it best to remain on the sidelines for now.

Data points to consider: CHF PPI at 8.15am. US PPI data at 1.30pm, Fed Chair Yellen speaks at 3pm followed by FOMC member Kaplan taking the stage at 6pm GMT.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: Flat (stop loss: N/A).

DOW 30

The DOW is absolutely on fire! The market extended Friday's gains yesterday, allowing the unit to tap fresh record highs of 20440. According to Bloomberg, banks rallied and investors continued to assess corporate earnings that are posting the best growth since 2014.

Given that there is absolutely no weekly resistance levels in sight, the best we can do for the time being is continue looking to ‘buy the dips'. The closest higher-timeframe area can be seen at 20003-20091: a daily demand that is positioned directly above a daily support barrier at 19964.

Our suggestions: While the H4 demand area at 20197-20218 boasts little higher-timeframe (structural) convergence and sits quite a distance from current price, there is very little else to work with at the moment! Despite this H4 demand positioned in-line with the current uptrend, trading this area without additional confirmation, nevertheless, is not something our desk would be comfortable with. Waiting for a reasonably sized H4 bull candle to print before pressing the buy button would, in our opinion, be the safer route to take here.

Data points to consider: US PPI data at 1.30pm, Fed Chair Yellen speaks at 3pm followed by FOMC member Kaplan taking the stage at 6pm GMT.

Levels to watch/live orders:

• Buys: 20197-20218 ([wait for a H4 bull candle to form before looking to execute a trade] stop loss: ideally beyond the trigger candle).
• Sells: Flat (stop loss: N/A).

GOLD

For those who have been following our reports on gold recently you may recall our desk highlighting a short position we took from 1239.6, with a stop logged in at 1245.4. As mentioned in Friday's report, we liquidated 70% of the position around the H4 demand area at 1227.6-1230.5 and reduced risk to breakeven. Our next port of call for profit taking is still seen at February's opening base drawn from 1211.5. However, before this can be achieved, price will have to overcome the H4 demand area seen at 1221.5-1224.8.

Fortunately for us, bullion fell to the downside during Monday's segment and also pierced below the above noted H4 demand. Whether or not this move was enough to consume the majority of stop orders beyond this zone is difficult to tell. However, what we will say is that the H4 candles have yet to generate any follow-through buying following the whipsaw, and instead reflect somewhat of a bearish tone at present.

The above – coupled with an upside rejection being seen from the underside of a weekly resistance level at 1241.2, and a very weak-looking daily support area at 1232.9-1224.5, could trigger further selling today.

Our suggestions: What is still quite notable from recent trade is the possible H4 AB=CD pattern (see black arrows) terminating at the H4 161.8% ext. at 1207.8. Notice that it not only bottoms nearby the February opening level at 1211.5, it is also located nearby a H4 trendline support etched from the low 1145.9 (1207.8/1211.5 zone). Not only is this a reasonable area to take profits on our current short position at 1239.6, it's also a platform in which one could potentially hunt for long opportunities. With this area lacking higher-timeframe (structural) convergence, however, we would require a H4 bull candle to form here in order to validate this area before pulling the trigger.

Levels to watch/live orders:

• Buys: 1207.8/1211.5 ([wait for a H4 bull candle to form before looking to execute a trade] stop loss: ideally beyond the trigger candle).
• Sells: 1239.6 ([live order] stop loss: breakeven).

Currency pair EUR/USD

The EUR/USD is building a bearish trend channel (red/green line). Price should reach the 161.8% Fibonacci level of wave 3 (blue) before breaking the resistance (red) otherwise the channel is invalid. The angle of the support trend line (blue) is suggesting that the bearish momentum is slowing down.

The EUR/USD completed an ABC within wave 4 (green) and is now potentially retracing back towards the Fibonacci resistance of wave 4 (blue). A break above the Fibonacci resistance and trend line (red) invalidates the formation of a wave 3 (blue) and there could be a larger bullish ABC correction.

Currency pair GBP/USD

The GBP/USD is trying to break above the resistance trend line (dotted orange) of the larger contracting triangle chart pattern. This could lead to a potential breakout towards the larger resistance zone (brown). A bearish continuation could see price push towards 1.05.

The GBP/USD bullish breakout could lead to bullish momentum as part of waves 3 (orange/purple). A break below the support trend line (green) would invalidate the wave bullish trend.

Currency pair USD/JPY

The USD/JPY is building a bull flag (purple lines) after breaking above resistance (dotted red). A break above the flag could see price continue towards the next Fibonacci target of wave 3 (blue).

The USD/JPY broke below the support trend line (dotted green) which could indicate a larger wave 2 (brown) retracement. A bearish ABC zigzag (orange) could unfold towards the Fibonacci levels of wave C vs A and 2 vs 1.

Global Markets:

• Asian stock markets: Nikkei down 0.30 %, Shanghai Composite lost 0.15 %, Hang Seng declined 0.10 %, ASX 200 gained 0.05 %
• Commodities: Gold at $1227 (+0.12 %), Silver at $17.84 (+0.10 %), WTI Oil at $53.05 (+0.25 %), Brent Oil at $55.75 (+0.25 %)
• Rates: US 10-year yield at 2.44, UK 10-year yield at 1.29, German 10-year yield at 0.33

News & Data:

• China CPI (YoY) Jan: 2.5% (est 2.4% prev 2.1%)
• China PPI (YoY) Jan: 6.9% (est 6.5% prev 5.5%)
• Australia NAB Business Survey (Jan):
• Conditions: 16 (rev prev 10)
• Confidence: 10 (prev 6)
• Australia ANZ Roy Morgan Weekly Consumer Confidence Index (w/e 12 Feb): 116.4 (prev 117.5)
• PBoC Fixes USDCNY Reference Rate At 6.8806 (prev fix 6.8898)
• Fed’s Kaplan: Fed Should Be Taking Steps to Remove Additional Amounts of Accommodation
• Kaplan: Fed Should Raise Rates Sooner Than Later

Markets Update:

The US Dollar declined slightly in Asia, as risk appetite improved and the demand for risk currencies increased. AUD/USD rose from 0.7635 to 0.7675 following stronger than expected NAB business confidence data. Higher than anticipated inflation and PPI data from China additionally boosted the positive sentiment in markets.

Nevertheless, USD/JPY came under pressure shortly after the Tokyo open. The pair declined from 113.75 to 113.35 and support is now seen at 113.10, followed by 112.60.

While it has been rather quiet in the FX market in the past 24 hours, there will be plenty of data releases today with potential to move the market. Further, Fed Chair Janet Yellen will testify later in the day.

Upcoming Events:

• 07:00 GMT – German CPI
• 07:00 GMT – German GDP
• 08:15 GMT – Swiss CPI
• 09:00 GMT – Italian GDP
• 09:30 GMT – UK CPI
• 10:00 GMT – German ZEW Economic Sentiment
• 10:00 GMT – Euro Zone GDP
• 10:00 GMT – Euro Zone Industrial Production
• 10:00 GMT – Euro Zone ZEW Economic Sentiment
• 13:30 GMT – US PPI
• 13:50 GMT – FOMC Member Lacker speaks
• 15:00 GMT – Fed Chair Yellen speaks
• 18:00 GMT – FOMC Member Kaplan speaks
• 18:15 GMT – FOMC Member Lockhart speaks
• 23:30 GMT – Australian Westpac Consumer Sentiment

Key Points:

• ABC wave looking fairly likely to take shape.
• EMA crossover should see the B leg complete properly.
• Long-term trend line should cap downside risks at the end of the wave.

The Swissy has an interesting set up developing which could lead to both some upside and downside trading opportunities over the coming weeks. In the near-term, gains could continue to be posted all the way back up to the 1.0187 handle. In the medium-term however, we could see the USDCHF sinking back to test the trend line around the 0.9789 mark.

One of the key drivers of these moves is the development of a rather solid looking ABC wave. These waves have been seen for many crosses since the post-election rally and there is no real reason to suspect that the Swissy will be much different. Although, before we can be certain that this is indeed an ABC wave, we will have to see this pair move back to the 1.0187 mark.

Fortunately, we have some evidence to suggest that this is likely to come to pass within the next few weeks. Firstly, the daily EMA’s are on the cusp of having a bullish crossover which typically denotes a shift in sentiment from bearish to bullish. Indeed, the parabolic SAR has already inverted to signal that bullish momentum is on the rise and should be carrying the pair higher. Moreover, now that the USDCHF has closed above the key 38.2% Fibonacci level, there should be little in its way.

However, the brevity of this rally may be somewhat more pronounced than we would typically expect. This comes largely by virtue of the historical zone of resistance around the 1.0187 handle which should prove to be our reversal point. Whilst, yes, the pair has pushed beyond this price recently, the fact that it also coincides with the appropriate retracement for the B leg of the corrective wave should hinder attempts to break through again.

Once this reversal has occurred, losses should extend back to around the 0.9789 level before the USDCHF reaches yet another impasse. At this level, some strong historical support will come into play as a result of the long-term ascending trend line. Interestingly, this point once again coincides with the appropriate retracement typical of the forecasted ABC wave which won’t go unnoticed by traders.

Ultimately, whether or not this pattern eventuates is largely dependent on both US and Swiss economic data, alongside Trump’s day-to-day influence. However, due the likely uptick in market fears as Brexit approaches, we can expect the Franc’s safe haven status to begin to drag the pair lower in the medium-term. Of course, this broadly fits with the technical analysis above and is worth keeping in mind.

EUR/USD

The EUR/USD pair fell briefly below the 1.0600 threshold for the first time in over three weeks, as the "Trump-trade" continues firming up, with Wall Street reaching all-time highs for a third consecutive session. Action across the forex board was limited, as the calendar was extremely light in this first day of the week, although plenty of first-tier data will be released during the upcoming days, with German inflation, EU preliminary Q4 GDP, UK inflation and US PPI among the most relevant for this Tuesday. The positive mood was triggered by comments from US President Trump, after spending the weekend with Japanese PM Abe, who said that "bilateral co-operation is essential," between the two nations, somehow, toning down his rhetoric about foreign policy. Weighing on the common currency were comments from IMF Lagarde, who said that the organism can agree special deals for any country. The bailout program of the troubled country is under review, with the parts unable to reach an agreement that can save Athens from default.

The EUR/USD pair settled around the 1.0600 level by the end of the day, with a clear bearish stance having took one step further in its way to breaking below the critical 1.0565 support, the 23.6% retracement of the November/January decline. In the 4 hours chart, a bearish 20 SMA keeps containing the downside, now converging with the 200 SMA at 1.0650, whilst technical indicators hold within bearish territory, although with no certain directional strength, amid limited volumes. Advances up to the 1.0700/20 region will be likely be seen as selling opportunities, although a break beyond this last could see the recovery extending up to 1.0800/40, should upcoming US data disappoint big.

Support levels: 1.0590 1.0565 1.0520

Resistance levels: 1.0650 1.0690 1.0720

USD/JPY

The USD/JPY pair added modest 40 pips at the beginning of the week, surprisingly limited, despite rising US yields and equities. Early Monday, Japan released its Q4 GDP figures, showing that the economy expanded by 0.2% in the three months to December, and by 1% annually. The figures were slightly below market's expectations of 0.3% and 1.1% respectively, although Japan’s finance minister, Nobuteru Ishihara, said that the soft growth didn't affect the government’s view that the economy remains in a moderate recovery. During the upcoming Asians session, the country will release its December industrial production figures, with better-than-expected readings fueling confidence among local investors and resulting in the JPY easing further. From a technical point of view, the upward potential remains limited, given that the pair is below the critical 114.50/60 region, the 23.6% retracement of the latest bullish run, and where a bearish 200 SMA stands in the 4 hours chart. In the same time frame, the Momentum indicator has turned sharply lower, but remains within positive territory, while the RSI has also turned modestly lower around 60. The daily low was set at 113.43, the immediate support and the level to break to see the pair easing further below the 113.00 mark.

Support levels: 113.40 113.00 112.60

Resistance levels: 114.00 114.55 114.90

GBP/USD

The GBP/USD pair closed the day marginally higher around the 1.2500 level, with Pound's bulls offsetting moderate dollar's demand. Investors are waiting for the upcoming releases in the UK this week, with the kingdom set to publish its wholesale and retail inflation figures for January this Tuesday, generally expected above December final readings, and employment numbers next Wednesday. Focus will be on inflation, as a faster-than-expected pace of price growth, may force the BOE to revert its latest decision to cut rates to record lows, pushing the Pound higher as speculative interest rushes to price in the possible Central Bank's move. From a technical point of view, the pair met selling interest around the 23.6% retracement of the January/February rally this at 1.2535, the level to surpass to consider a more constructive outlook. In the 4 hours chart, the price is stuck around a horizontal 20 SMA, whilst technical indicators head nowhere around their mid-lines, reflecting the current investors' wait-and-see stance. Short term buying interest is aligned between 1.2470 and 1.2480, with a break below it probably resulting on a test of 1.2430, the next Fibonacci support.

Support levels: 1.2470 1.2430 1.2390

Resistance levels: 1.2535 1.2585 1.2620

GOLD

Spot gold fell to $1,219.26 a troy ounce this Monday, as risk appetite dominate the scene. The bright metal, however, bounced from the level to close the day around 1,226.50, on physical demand at the bullion market, as Indian jewelers bought to meet the wedding season demand. Also, limiting the slide were higher base-metal prices, on fears of copper shortages amid a strike in one of Chile's largest mine. The daily chart for gold indicates that the upward potential eased, but it's too early to call for a retracement, given that the price remains well above a bullish 20 DMA that remains above the 100 DMA, whilst technical indicators retreat, but remain within positive territory. In the 4 hours chart, the price is below a bearish 20 SMA that holds a few cents above the 50% retracement of the post-US election decline, this last around 1,230.00, while technical indicators have recovered within negative territory, holding below previous daily highs. Renewed selling interest below the mentioned daily low will likely see the commodity approaching the critical 1,200 region this Tuesday, where the latest bullish movement will be at risk of reversing.

Support levels: 1,219.20 1,210.10 1,200.00

Resistance levels: 1,230.00 1,237.10 1,244.70

WTI CRUDE

West Texas Intermediate crude oil futures advanced for a second consecutive day, with the commodity setting a couple of cents above 53.00. WTI set a daily high of $53.20 a barrel, still underpinned by Wednesday's news, showing an unexpected draw in US gasoline stockpiles that suggest rising demand for the commodity. Despite a large build in crude inventories, the commodity advanced for a second consecutive day, although the price continues developing within the range set mid December. Technically, the daily chart shows that the price is now around a flat 20 SMA, whilst technical indicators have turned flat around their mid-lines, indicating a limited upward scope. In the 4 hours chart, the price advanced beyond a still bearish 20 SMA, but is currently struggling with the 100 and 200 SMAs, both flat, whilst the Momentum indicator heads higher above its 100 level and the RSI remains flat around 54, in line with the longer term view.

Support levels: 52.50 51.80 51.10

Resistance levels: 53.20 53.65 54.20

DJIA

US equities extended their Thursday's rally, with all of the three major indexes closing the day at all-time highs. On Friday, the Dow Jones Industrial Average added 96 points or 0.48% to end at 20,269.37, while the S&P gained 0.36% to 2,316.10. The Nasdaq Composite settled at 5,734.13, up by 18 points. Stocks rallied on Trump's promises of an upcoming tax reform, and a recovery in oil prices that lifted the energy sector. Within the Dow, Caterpillar led gainers, up by 2.50%, followed by NIKE that added 1.65% and Boeing, up by 1.19%. On the losing side, Coca-Cola topped losers' list, down 1.62%, followed by Wal-Mart Stores that shed 1.53%. From a technical point of view, the upside is favored given that in the daily chart the Dow is well above a modestly bullish 20 SMA, whilst the RSI indicator heads higher around 70, with the Momentum indicator, however, diverging, neutral around its 100 line. In the 4 hours chart, the bias is firmly bullish with the index well above a bullish 20 SMA, the Momentum indicator heading north near overbought readings and the RSI hovering around 72.

Support levels: 20,228 20,157 20,090

Resistance levels: 20,297 20,350 20,415

FTSE 100

The FTSE 100 closed the day at 7,278.92, up by 20 points or 0.28%, underpinned by an advance in mining-related equities. Despite Pound's strength, a strike in Chile's largest copper mine kept the benchmark afloat. Anglo American gained 4.21%, Rio Tint 3.0% while Glencore added 2.56%, all topping gainers´ list. Capita, on the other hand, was the worst performer, down by 2.38%, followed by Fresnillo that lost 1.99%. In the daily chart, the upward momentum is fading in technical indicators, although they remain within positive territory, whilst the index stands above a bearish 20 DMA, currently at 7,190. In the shorter term and according to the 4 hours chart, the risk is towards the upside, as technical indicators have turned flat near overbought readings, but the benchmark stands above a bullish 20 SMA and not far from the record high posted last January at 7,354.

Support levels: 7,208 7,163 7,128

Resistance levels: 7,275 7,326 7,354

DAX

The German DAX advanced 108 points or 0.92% to close at its highest in over two weeks, as European equities benefited from a rally in basic resources´ stocks that began in Asia. Volkswagen was the best performer, up by 2.42%, while Deutsche Bank also made it to the top ten list, closing up 1.65%. Commerzbank was unable to follow suit, ending the day 0.34% lower. The index is biased higher according to technical readings in the daily chart, as it stands above a horizontal 20 DMA, whilst the Momentum indicator aims modestly higher around its 100 level, and the RSI indicator heads north around 62. In the shorter term, and according to the 4 hours chart, the 20 SMA has turned higher, now converging with the 100 SMA around 11,640, the Momentum indicator advances near overbought readings, whilst the RSI indicator consolidates within overbought readings, also maintaining the risk towards the upside.

Support levels: 11,745 11,694 11,640

Resistance levels: 11,815 11,854 11,891

Daily Pivots: (S1) 1.0572; (P) 1.0615 (R1) 1.0639; More.....

EUR/USD's fall from 1.0828 is still in progress and intraday bias remains on the downside. Corrective rise from 1.0339 should have completed at 1.0828 already. Decline from there should target a test on 1.0339 low first. Decisive break there will confirm resumption of medium term down trend. On the upside, however, above 1.0713 minor resistance will delay the bearish case and turn bias neutral first.

In the bigger picture, whole down trend from 1.6039 (2008 high) is in progress. Such down trend is expected to extend to 61.8% projection of 1.3993 to 1.0461 from 1.1298 at 0.9115. On the upside, break of 1.1298 resistance is needed to confirm medium term bottoming. Otherwise, outlook will stay bearish in case of rebound.

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Daily Pivots: (S1) 113.37; (P) 113.77; (R1) 114.13; More...

USD/JPY's rebound from 111.58 is still in progress and intraday bias remains on the upside. Correction from 118.65 should have completed at 111.58, on bullish convergence condition in 4 hour MACD. Further rally would be seen to 115.36 resistance. Break will confirm this bullish case and target 118.65 high next. In that case, the larger rally from 98.97 could be resuming. On the downside, below 112.85 minor support will dampen this bullish view and could extend the correction from 118.65. In that case, downside should be contained by 38.2% retracement of 98.97 to 118.65 at 111.13 and bring rebound.

In the bigger picture, price actions from 125.85 high are seen as a corrective pattern. The impulsive structure of the rise from 98.97 suggests that the correction is completed and larger up trend is resuming. Decisive break of 125.85 will confirm and target 61.8% projection of 75.56 to 125.85 from 98.97 at 130.04 and then 135.20 long term resistance. Rejection from 125.85 and below will extend the consolidation with another falling leg before up trend resumption.

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Daily Pivots: (S1) 1.2483; (P) 1.2511; (R1) 1.2551; More...

GBP/USD is staying in range of 1.2346/2705 and intraday bias remains neutral. Price actions from 1.1946 are viewed as a consolidation pattern, with rise from 1.1986 as the third leg. In case of another rise, we'd expect upside to be limited by 1.2774 to bring larger down trend resumption. On the downside, below 1.2346 will revive the case that such consolidation is completed at 1.2705 already. In that case, intraday bias will turn back to the downside for retesting 1.1946 low.

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 bottoming 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.

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Daily Pivots: (S1) 1.0026; (P) 1.0048; (R1) 1.0077; More.....

USD/CHF's rebound from 0.9860 short term bottom is still in progress and intraday bias remains the upside. Sustained trading above 55 day EMA (now at 1.0038) will pave the way for a test on 1.0342 high. On the downside, below 0.9985 minor support will turn focus back to 0.9860 instead.

In the bigger picture, prior rejection from 1.0327 resistance argues that USD/CHF is staying in a medium term sideway pattern. In any case, decisive break of 1.0342 resistance is needed to confirm underlying strength. Otherwise, we'll stay neutral in the pair first. In case of another fall, we'd expect strong support from 0.9443/9548 support zone. Meanwhile firm break of 1.0342 will target 38.2% retracement of 1.8305 to 0.7065 at 1.1359.

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Daily Pivots: (S1) 0.7620; (P) 0.7650; (R1) 0.7670; More...

Intraday bias in AUD/USD remains neutral for the moment. With 0.7510 support intact, further rise cannot be ruled out. However, lost of upside momentum is seen in bearish divergence condition in 4 hours MACD. We'd expect strong resistance from 0.7777/7833 resistance zone to limit upside and bring near term reversal. On the downside, break of 0.7510 minor support will indicate that rise from 0.7158 has completed already and turn bias back to the downside for this key near term support level.

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 seek to 55 month EMA (now at 0.8205) and above.

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