Daily Pivots: (S1) 1.2445; (P) 1.2491; (R1) 1.2526; More...

GBP/USD is staying in range below 1.2705 and intraday bias remains neutral for the moment. As noted before, rise from 1.1986 is seen as the third leg of the consolidation pattern from 1.1946. Hence, in case of another rise, we'd expect upside to be limited by 1.2774 resistance and bring down trend resumption. On the downside, below 1.2411 minor support will argue that rise from 1.1986 is completed and turn bias to the downside for 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) 0.9889; (P) 0.9935; (R1) 0.9966; More.....

USD/CHF is still staying in consolidation from 0.9860 and intraday bias remains neutral at this point. Upside of recovery is expected to be limited by 1.0043 resistance and bring another decline. Current fall from 1.0342 is seen as the third leg of the pattern from 1.0327. Below 0.9860 will target 61.8% retracement of 0.9443 to 1.0342 at 0.9786 and below. On the upside, break of 1.0043 will indicate short term bottoming and turn bias back to the upside.

In the bigger picture, rejection from 1.0327 resistance suggests that consolidation pattern from there is still in progress. Fall from 1.0342 is seen as the third leg and retest of 0.9443/9548 support zone could be seen. But we'd expect strong support from there to contain downside. At this point, we're still expecting the larger rally to resume later to 38.2% retracement of 1.8305 to 0.7065 at 1.1359, after the consolidation completes.

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Daily Pivots: (S1) 112.09; (P) 112.77; (R1) 113.22; More...

USD/JPY is staying in consolidation above 112.04 and intraday bias stays neutral for the moment. Outlook is unchanged that choppy decline from 118.65 is seen as a corrective move. Below 112.04 will bring deeper fall but we'd expect strong support from 38.2% retracement of 98.97 to 118.65 at 111.13 to contain downside and bring rebound. Meanwhile, on the upside, above 115.36 resistance will argue that such correction is finished and turn bias to the upside for 118.65. Break will resume whole rise from 98.97 and target 125.85 key resistance.

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) 0.7634; (P) 0.7664; (R1) 0.7711; More...

At this point, AUD/USD's rebound from 0.7158 could still extend higher. But 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 treading 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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Daily Pivots: (S1) 1.2985; (P) 1.3029; (R1) 1.3065; More...

USD/CAD is staying in consolidation from 1.2968 and intraday bias stays neutral for the moment. Overall development affirmed the view that corrective rise from 1.2460 has completed at 1.3598 already, after hitting 50% retracement of 1.4689 to 1.3838. Therefore, deeper decline is expected as long as 1.3168 minor resistance holds. Break of 1.2968 should pave the way to retest 1.2460 low. However, on the upside, break of 1.3168 will mix up the near term outlook and turn focus back to 1.3387 resistance first.

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 could be completed at 1.3598 and fall from there is tentatively seen as the third leg. Break of 1.2460 will target 50% retracement of 0.9460 to 1.4689 at 1.2075 before completing the correction. In case of another rise, we'd look for reversal signal above 61.8% retracement of 1.4689 to 1.2460 at 1.3838.

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The forex markets are generally staying in tight range today with Dollar, Euro and Aussie trading with a soft tone. Recent developments in the US is prompting some analysts to push back their expectations on Fed's hike this year. According to a Reuters poll of dealers, all 14 respondents expected Fed to stand pat in March meeting too. 12 our of 14 expected Fed to hike 0.25% by the end of second quarter. 10 expected interest rate to hit 1.00-1.25% by the end of the year. But only 2 expected interest rate to hit 1.25-1.50%. That is, the majority is expecting Fed to hike only twice this year.

However, San Francisco Fed president John Williams offered some hawkish comments. He noted that "from a risk management point of view, there's an argument to move sooner, rather than wait." And, he maintained that three hikes is "a reasonable guess, a reasonable perspective to have as a base case." And he noted that "there's a lot of potential that this economy is going to perhaps get more of a boost than the base case." Chicago Fed president Charles Evans said Friday that while he expected 2 hikes when he submitted his projections back in December, now, he "could see three hikes" and he "could be comfortable with that." As of Friday, fed fund futures were pricing in only 13.3% chance of a March hike and 68.3% change of a hike by June.

In Eurozone, German finance minister Wolfgang Schäuble blamed ECB for making Euro's exchange rate "too low" and monetary polices that are "too loose" for Germany. He said that "when ECB chief Mario Draghi embarked on the expansive monetary policy, I told him he would drive up Germany's export surplus.... I promised then not to publicly criticise this [policy] course. But then I don't want to be criticized for the consequences of this policy." Last week, Peter Navarro, the head of Donald Trump's new National Trade Council, criticized that Germany exploited the US and EU partners by using a "grossly undervalued" euro.

On the data front, Japan labor cash earnings rose 0.1% yoy in December, below expectation of 0.4% yoy. Australia retail sales dropped -0.1% mom in December versus expectation of 0.3% mom growth. China Caixin PMI services dropped 0.3 pt to 53.1 in January. The economic calendar is relatively light today with German factory orders, Eurozone retail PMI and Sentix investor confidence featured. Looking ahead, RBA and RBNZ rate decisions are the main focuses of the week and both central banks are expected to stand pat. Here are some highlights for the week:

• Tuesday: RBA rate decision, Japan leading indicators; Swiss foreign currency reserve; German industrial production; Canada trade balance, building permits, Ivey PMI; US trade balance
• Wednesday: Japan current account, Eco watcher sentiments; Canada housing starts
• Thursday: RBNZ rate decision; Japan machine orders; Australia NAB business confidence; UK RICS house price balance; Swiss unemployment rate; German trade balance; US jobless claims
• Friday: Japan PPI; Australia home loans; China trade balance; Japan tertiary activity index; UK industrial and manufacturing productions; Canada employment; US import price index, U of Michigan sentiment

USD/CAD Daily Outlook

Daily Pivots: (S1) 1.2985; (P) 1.3029; (R1) 1.3065; More...

USD/CAD is staying in consolidation from 1.2968 and intraday bias stays neutral for the moment. Overall development affirmed the view that corrective rise from 1.2460 has completed at 1.3598 already, after hitting 50% retracement of 1.4689 to 1.3838. Therefore, deeper decline is expected as long as 1.3168 minor resistance holds. Break of 1.2968 should pave the way to retest 1.2460 low. However, on the upside, break of 1.3168 will mix up the near term outlook and turn focus back to 1.3387 resistance first.

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 could be completed at 1.3598 and fall from there is tentatively seen as the third leg. Break of 1.2460 will target 50% retracement of 0.9460 to 1.4689 at 1.2075 before completing the correction. In case of another rise, we'd look for reversal signal above 61.8% retracement of 1.4689 to 1.2460 at 1.3838.

Economic Indicators Update

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Australia retail sales disappoint ahead of tomorrow's RBA decision

Asia Mid-Session Market Update: China Caixin Services PMI edges lower; Australia retail sales disappoint ahead of tomorrow's RBA decision

Friday US markets on close: Dow +0.9%, S&P500 +0.7%, Nasdaq +0.5%

Best Sector in S&P500: Financials

Worst Sector in S&P500: Basic Materials

Biggest gainers: MTD +6.7%; M +6.4%; MS +5.5%

Biggest losers: HBI -16.4%; FCX -5.8%; CMG -4.5%

At the close: VIX 11.0 (-1.0pts); Treasuries: 2-yr 1.20% (flat), 10-yr 2.49% (+2bps), 30-yr 3.11% (+3bps)

Weekend US/EU Corporate Headlines

Dow and DuPont to offer sale of R&D capability to ease antitrust concerns - FT

Board Unanimously Rejects Unsolicited Proposal from Frontline Ltd.

Politics

(US) Defense Secretary Mattis: not considering increasing US forces in the Middle East in response to Iran's misbehavior, but US will not ignore Iran's activities

(US) Homeland Security has "suspended any and all actions" related to implementing Pres Trump's immigration ban on 7 Muslim-majority countries

(US) President Trump: Will not attend May meeting with NATO leaders in Europe

Key economic data:

(CN) CHINA JAN CAIXIN PMI SERVICES: 53.1 V 53.4 PRIOR (first sequential decline in 4 months)

(AU) AUSTRALIA DEC RETAIL SALES M/M: -0.1% (First m/m decline since Aug 2015) V 0.3%E; Q4 Q/Q: 0.9% V 0.9%E

(AU) AUSTRALIA JAN ANZ JOB ADVERTISEMENTS M/M: 4.0% (2-year high) V -2.2% PRIOR

(JP) JAPAN DEC LABOR CASH EARNINGS Y/Y: 0.1% V 0.4%E ; REAL EARNINGS (EX-INFLATION) Y/Y: -0.4% V 0.0% PRIOR; 2016: 0.5% (biggest increase since 2010)

Asia Session Notable Observations, Speakers and Press

Asian markets tracking the Friday rally on Wall St, where low wage growth component of the monthly jobs data eases the pressure on the Fed to deliver on its promise of higher rates in the most immediate term; Australia markets underperforming as commodity prices retreat.

Political standoff in the US between the DOJ and the Courts remains tense after a Washington State judge temporarily blocked the administration's travel ban and Homeland Security dept suspended all implementation; White House plans to appeal the order.

China Jan Caixin services PMI eased for the first time in 4 months after hitting a multi-month high in Dec. Economists noted the contrast of employment components in manufacturing vs services, with the former reducing employment and the latter hiring faster. Rising input prices were also cited, along with expectations of decelerating economy after Q1 given decreasing propensity for restocking.

Ahead of tomorrow's RBA decision, where expectations are largely for a rate hold, today's Australia retail sales were disappointing registering first sequential decline in over a year. Some economists see that as a one-off given some recent liquidation activity in the industry, others expect the reduced activity to give RBA pause while also monitoring the price developments.

Japan wage growth slowed in December, though 2016 wage inflation was still the highest since 2010.

China

(CN) China State Researcher Baoliang: China should assess impact of President Donald Trump’s economic policies and guard against forex market volatility and capital outflows - Chinese press

(CN) China should raise central fiscal deficit to 3.5% of GDP - Chinese press

(CN) China Foreign Min Lu Kang: US should stop "making wrong remarks" about security in the South China Sea - press

Australia/New Zealand:

(AU) JPMorgan economist: Weakness in Australia retail data was heavily concentrated in households good retailing, which may be due to liquidation sales of a major Australian hardware/home improvement retailer - SMH

(NZ) JPMorgan: RBNZ policy statement this week may come across as hawkish as it trumpets recent return of inflation above 1% as evidence price pressure is picking up - press

Asian Equity Indices/Futures (00:00ET)

Nikkei +0.2%, Hang Seng +0.6%, Shanghai Composite +0.4%, ASX200 -0.1%, Kospi +0.2%

Equity Futures: S&P500 flat; Nasdaq flat, Dax flat, FTSE100 -0.1%

FX ranges/Commodities/Fixed Income (00:00ET)

EUR 1.0770-1.0790; JPY 112.20-112.70; AUD 0.7655-0.7685; NZD 0.7295-0.7305; GBP 1.2475-1.2500

Apr Gold +0.4% at 1,225/oz; Mar Crude Oil +0.4% at $54.03/brl; Mar Copper +0.7% at $2.64/lb

SPDR Gold Trust ETF daily holdings rise 3.3 tonnes to 814.5 tonnes; 3rd straight increase; Highest since Dec 31st

(AU) Australia Port Hedland Jan Iron Ore Exports 40.3Mt v 43.9Mt m/m, +19% y/y

(CN) PBOC SETS YUAN MID POINT AT 6.8606 V 6.8556 PRIOR; weakest Yuan setting since Jan 20th

(CN) PBOC skips reverse repo operations v CNY50B on Feb 2nd and raising all offer yields by 10bps

(KR) South Korea sells 3-yr govt bonds; avg yield 1.655%

Asia equities / Notables / movers

7267.JP Honda: Reports 9-month Net ¥521B v ¥438B y/y, Op Profit ¥703B v ¥567B y/y, Rev ¥10.24T v ¥10.94T y/y; +2.0%

5214.jp Nippon Electric: CLSA Raised 5214.JP to Outperform from Underperform; +6.1%

7270.JP Fuji Heavy May report FY16/17 op profit of ¥410B, -28% y/y but above ¥373B prior forecast - Nikkei; -0.6%

NAB.AU NAB: Q1 trading statement; +0.8%

IGO.AU Independence Group: Credit Suisse Raised IGO.AU to Outperform from Neutral; +1.8%

DUE.AU Duet: Establishes A$150B debt facility with Westpac; -1.5%

AWE.AU AWE: Macquarie cut; -1.7%

338.HK Sinopec Shanghai: Nomura cut; -1.0%

610.HK Wai Kee Holdings: Guides FY16 net profit at least +50% y/y; +5.2%

240.HK Build King Holdings; Guides FY16 net profit at least +50% y/y; +11.3%

149.HK China Agri Products: Profit warning; -24.6%

Market movers today

In the US, the data calendar is light and we expect focus to remain on Donald Trump's policies. One game changer may be the confirmation of Steven Mnuchin as Treasury Secretary.

In the euro area, the first release of interest is Sentix investor confidence. Sentix trended upwards in H2 16 and reached 18.2 in January 2017, its highest level since August 2015. The current situation and expectations components have both risen to historically high levels but we have seen a loss of momentum in both ZEW and ifo expectations, which could be a drag on Sentix expectations. Therefore, we expect Sentix to rise marginally to 19.0 in February, possibly dragged down by a declining expectations component.

We are also due to get German factory orders for December today. Factory orders have followed a rising tendency since 2013 but have experienced large fluctuations, with a 5% monthly increase in October and a 2.5% decline in November. We expect a bounce back in December, with monthly growth of 2%. Our view of another increase is supported by the manufacturing PMI in November and December, which showed strength in the new orders indicator.

In the UK, there are no significant data releases. The main event in the UK this week is the House of Commons vote on the Article 50 bill on Wednesday. The vote is expected to be passed and put the government on course to trigger Article 50 on 9 March as planned.

Selected market news

This morning, Asian markets followed US equity markets higher, boosted by the US jobs report on Friday, which revealed surprisingly strong job growth while wage growth remains muted. This is a perfect match for Asian emerging markets as the underlying US economic growth suggests solid global demand, while the risks of a near-term Fed hike (earlier than our expectation of a June rate hike) appears relatively slim given the muted inflationary wage pressures in the US economy. The market is pricing in only about 45% for a rate hike in May, while about 75% for a rate hike in June.

Furthermore, financial sector stocks were buoyed by talks on the possible easing of financial regulation by the Trump administration. The National Economic Council Director Gary Cohn indicated on Friday that the new administration will look at the Volcker Rule and ‘all aspects of the Dodd-Frank legislation' in order to free up capital and stimulate lending to the economy.

Meanwhile, other aspects of Trump's policy agenda remain in doubt. Over the weekend, Trump lost a bid to restart the travel ban while the US appeals court reviews the immigration restrictions. Moreover, the US administration imposed new sanctions on Iran on Friday following the recent missile test by Iran. The sanctions target 13 individuals and 12 entities seen as being linked to terrorism. The policy announcements from the US administration will continue to be closely scrutinised this week, amid a very thin data calendar in the US.

Global Markets:

• Asian stock markets: Nikkei up 0.10 %, Shanghai Composite gained 0.50 %, Hang Seng rose 0.65 %, ASX 200 fell 0.20 %
• Commodities: Gold at $1125 (+0.35 %), Silver at $17.59 (+0.60 %), WTI Oil at $54.00 (+0.30 %), Brent Oil at $57.00 (+0.30 %)
• Rates: US 10-year yield at 2.46, UK 10-year yield at 1.36, German 10-year yield at 0.41

News & Data:

• China Caixin Services PMI (Jan): 53.1 (prev 53.4)
• China Caixin Composite PMI (Jan): 52.2 (prev 53.5)
• Australia Retail Sales (MoM) Dec: -0.1% (est 0.3% prev 0.2%)
• Australia Retail Sales Ex-Inflation (QoQ) Q4: 0.9% (est 0.9% prev -0.1%)
• Australia Melbourne Institute Inflation (YoY) Jan: 2.1% (prev 1.8%)
• Australia Melbourne Institute Inflation (MoM) Jan: 0.6% (prev 0.5%)
• Japan Labour Cash Earnings (YoY) Dec: 0.1% (rev prev 0.5%)
• Japan Real Cash Earnings (YoY) Dec: -0.4% (rev prev 0.0%)
• PBoC Fixes USDCNY Reference Rate At 6.8606 (prev fix 6.8556 prev close 6.8727)

CFTC Positioning Data:

• EUR short 46K vs. 52K short last week. Shorts trimmed by 6K
• GBP short 62K vs. 66K short. Shorts trimmed 4K
• JPY short 58K vs. 67K short last week. Shorts trimmed by 9K
• CHF short 17K vs. 14K short last week. Shorts trimmed by 3K
• CAD long 3K vs. 3K long last week. Unchanged
• AUD long 12K vs 10K long last week. Longs increase by 2K
• NZD short 1K vs 10K short last week. Shorts trimmed by 9K

Markets Update:

The Dollar weakened in Asia. While the NFP number beat expectations, average hourly earnings came in below expectations, which lowered expectations of another Fed rate hike soon. Meanwhile, the Australian Dollar came under pressure as well, after retail sales disappointed. They declined 0.1 % month-on-month, while the market was looking for +0.3 % print.

Gold rose from $1219 to $1225 amid the Dollar weakness. However, it fell slightly in the mid-Asian session after risk sentiment improved somewhat. Most Asian stock indices finished the day with a gain.

Upcoming Events:

• 09:30 GMT – Euro Zone Sentix Investor Confidence
• 14:00 GMT – ECB President Draghi speaks
• 21:30 GMT – FOMC Member Harker speaks

The Week Ahead:

Tuesday, February 7th

• 02:00 GMT – New Zealand Inflation Expectations
• 03:30 GMT – RBA Rate Decision
• 03:30 GMT – RBA Statement
• 07:00 GMT – German Industrial Production
• 07:45 GMT – French Current Account
• 08:30 GMT – UK Halifax House Price Index
• 13:30 GMT – US Trade Balance
• 13:30 GMT – Canadian Trade Balance
• 15:00 GMT – US JOLTs Job Openings
• 15:00 GMT – Canadian Ivey PMI
• 16:35 GMT – German Bundesbank President Weidmann speaks

Wednesday, February 8th

• 13:15 GMT – Canadian Housing Starts
• 15:30 GMT – US Crude Oil Inventories
• 20:00 GMT – RBNZ Rate Decision
• 20:00 GMT – RBNZ Statement
• 21:00 GMT – RBNZ Governor Wheeler speaks
• 21:45 GMT – New Zealand Building Consents

Thursday, February 9th

• 00:00 GMT – Australian HIA New Home Sales
• 00:30 GMT – Australian NAB Business Confidence
• 06:45 GMT – Swiss Unemployment Rate
• 07:00 GMT – German Trade Balance
• 13:30 GMT – US Initial Jobless Claims
• 14:10 GMT – FOMC Member Bullard speaks
• 18:30 GMT – Bank of England Governor Carney speaks

Friday, February 10th

• 00:30 GMT – Australian Home Loans
• 02:00 GMT – Chinese Trade Balance
• 07:45 GMT – French Industrial Production
• 09:00 GMT – Italian Industrial Production
• 09:30 GMT – UK Trade Balance
• 09:30 GMT – UK Industrial Production
• 09:30 GMT – UK Manufacturing Production
• 13:30 GMT – US Employment Change
• 13:30 GMT – US Unemployment Rate
• 15:00 GMT – UK NIESR GDP Estimate
• 15:00 GMT – US Michigan Consumer Sentiment

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

Weekly gain/loss: + 94 pips

Weekly closing price: 1.0784

In spite of the prior week's palpable selling wick, last week's movement chalked up a nice-looking weekly bullish engulfing candle, which, as you can see, forced the pair to cross swords with a weekly resistance level coming in at 1.0819. This – coupled with the 2016 yearly opening level located just above it at 1.0873, could very well see buying fade this week.

On the other side of the coin, nonetheless, daily action recently bounced off daily support drawn from 1.0710 and shows room to extend north up to the daily resistance penciled in at 1.0850. While the weekly and daily timeframe structures are currently opposing one another, one thing to keep in mind here is that 1.0850 sits beautifully in between the aforementioned weekly resistance and 2016 yearly opening base. Therefore, at least in our opinion, this is a nearby zone to keep an eye on for shorting opportunities this week.

Friday's US employment report published mixed figures. Non-farm employment change came in above expectations at 227k, whereas both the unemployment rate and average hourly earnings were less encouraging. The aftermath of the event initially sent the single currency to lows of 1.0709, clipping the top edge of a H4 demand base at 1.0684-1.0709, before reversing tracks and eventually clocking highs of 1.0797 on the day.

Our suggestions: Directly above current price on the H4 chart is a nice-looking area of resistance at 1.0819/1.08. Building a case for entry here we have the following structures in play (yellow zone): a psychological resistance barrier at 1.08, February's opening level at 1.0801, a H4 Quasimodo resistance at 1.0812, a H4 trendline resistance extended from the high 1.0873 and finally we also have the weekly resistance mentioned above at 1.0819.

Although there is a possibility that price may fake through this H4 sell area to tap the daily resistance at 1.0850 and maybe even the 2016 yearly opening level at 1.0873, we still feel a short from the above noted H4 sell zone is something to consider. Whether you believe this area is stable enough to justify a trade without the need for additional confirmation is, of course, down to the individual trader. For us personally, we're opting to wait for a reasonably sized H4 bearish candle to take shape before deciding if a trade from this zone is worthy of our capital. As of now, risk/reward from this region looks reasonably favorable given that the next downside target on the H4 scale comes in at the H4 demand mentioned above at 1.0684-1.0709.

Data points to consider: There are no scheduled high-impacting news events on the docket today relating to these two markets.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: 1.0819/1.08 ([wait for a reasonably sized H4 bear candle to form before looking to execute a trade] stop loss: ideally beyond the trigger candle).

GBP/USD:  

Weekly gain/loss: – 65 pips

Weekly closing price: 1.2478

Over the last week, the weekly bulls were unable to gain much ground beyond the weekly Quasimodo resistance line at 1.2673, resulting in the unit breaking a two-week bullish phase and erasing almost 50% of the previous week's gains. The next support target from this angle is reasonably nearby at 1.2329: the 2017 yearly opening level, followed relatively closely by a weekly Quasimodo support at 1.2200.

Moving down to the daily timeframe, we can see that Thursday's candlestick printed a strong-looking daily bearish engulfing candle out of a daily supply zone coming in at 1.2728-1.2657. As you can see, follow-through selling was seen during Friday's segment, but failed to overcome the daily support area registered at 1.2510-1.2415. Should a breakdown through this barrier take place this week, this will bring the daily demand zone at 1.2252-1.2342 in view, which happens to converge nicely with the 2017 yearly opening level mentioned above, and also a daily trendline support extended from the high 1.3437.

A quick recap of Friday's movement on the H4 shows that a rather muted response transpired following the release of the US monthly employment figures. The H4 candles were seen capped by December's opening level at 1.2514 and a H4 trendline support stretched from the low 1.2260. That being said though, the week did in fact end with a (H4) close below the above noted H4 trendline support, indicating further selling may be on the cards today down to H4 support registered at 1.2427.

Our suggestions: 1.2427 is a noteworthy area of support, in our opinion. Not only is it housed within the lower limits of the daily support area at 1.2510-1.2415, it's also seen in close proximity to the 1.24 handle and H4 trendline support drawn from the high 1.2432 (yellow zone). The only grumble we have concerning a buy trade from here is that weekly price, as mentioned above, looks as though it wants to cross swords with the 2017 yearly opening level, which is located around the top edge of daily demand at 1.2252-1.2342. So, there is a chance that price may ignore our pre-determined H4 buy zone!

Therefore, In order for this zone to be considered a valid area of support, we would need to see a reasonably sized H4 bull candle form from within the walls of this neighborhood. Only then would our desk look to buy, targeting the 1.25 band as an initial take-profit zone.

Data points to consider: There are no scheduled high-impacting news events on the docket today relating to these two markets.

Levels to watch/live orders:

• Buys: 1.2390/1.2427 ([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).

AUD/USD:  

Weekly gain/loss: + 136 pips

Weekly closing price: 0.7679

Following a brief pause in action two weeks back the weekly bulls resumed bidding price to the upside last week. This saw the market settle for the week within striking distance of 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). As such, there's a possibility that the buying pressure may diminish this week.

Positioned nearby the oncoming weekly trendline resistance (0.8163) is a daily Quasimodo resistance penciled in at 0.7734 and a daily resistance at 0.7720. This, along with the underside of weekly supply at 0.7752 defines what our team would label as a strong-looking sell zone with attractive confluence.

The aftermath of Friday's US employment release initially saw price dip to lows of 0.7619, before reversing and exploding to the upside, ending the week shaking hands with the H4 channel resistance band drawn from the high 0.7569. While a downside move from this angle is feasible today, it's likely that we'll see price edge north and attack offers located around the 0.77 handle, and quite possibly the nearby daily resistance level at 0.7720. Strengthening this possibility is that Aussie retail sales is estimated to have improved, which if it turns out be the case, this would very likely be enough to lift prices up to the higher-timeframe resistance structures discussed above.

Our suggestions: Obviously dependent on the Aussie retail sales figures, our desk favors the 0.7752/0.7722 region (underside of weekly supply and daily resistance at 0.7720) as an area of promising resistance today. Entering from here without waiting for additional confirmation, however, is not something we'd recommend! Ideally, we'd like to see price strike the above noted higher-timeframe area and print a H4 bearish close back below the 0.77 handle. Only then would we consider a sell trade, targeting the lower edge of the H4 channel support taken from the low 0.7449.

Data points to consider: Aussie retail sales scheduled to be released at 12.30am GMT.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: 0.7752/0.7722 ([a H4 bearish close back below the 0.77 handle is required before looking to execute a trade] stop loss: ideally beyond the trigger candle).

USD/JPY 

Weekly gain/loss: – 250 pips

Weekly closing price: 112.55

After printing back-to-back weekly buying tails, little follow-through emerged last week with price action penciling in a near-full-bodied weekly bearish candle and touching a fresh low of 112.05. The other key thing to note here is the fact that price is now seen trading within shouting distance of a weekly support area marked at 111.44-110.10, which, in our opinion, has the potential to at least stall prices this week.

Since Tuesday, the daily candles have been bouncing off the top edge of a daily demand area drawn from 111.35-112.37, which happens to be positioned around the upper limit of the aforementioned weekly support area. A breakdown into this daily zone would not only see weekly price tag the weekly support area, but it could also pull prices beyond the current daily demand down to a nearby daily broken Quasimodo line at 110.58.

The after-effects of Friday's US employment report saw a rapid spike to highs of 113.47, before withdrawing lower back down to the upper wall of a H4 demand coming in at 112.05-112.37. As of current price, the pair is somewhat sandwiched in between this H4 demand base and February's opening level at 112.77.

Our suggestions: A buy trade could be possible around the current H4 demand area, seeing as how it is reinforced by the daily demand zone mentioned above at 111.35-112.37. Still, traders need to be prepared for a violation of this H4 barrier down to around the H4 mid-way point at 111.50, since this is where the top edge of the current weekly support area is located!

In view of how deep price has already driven into the H4 demand, we will not be looking to buy from here today.

Data points to consider: There are no scheduled high-impacting news events on the docket today relating to these two markets.

Levels to watch/live orders:

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

USD/CAD:  

Weekly gain/loss: – 129 pips

Weekly closing price: 1.3019

Weekly demand at 1.3006-1.3115 looks as if it's hanging on by just a thread at the moment! With that in mind, beneath this base sits a weekly trendline support extended from the high 1.1278 that could, given the force of last week's bearish descent, come into play this week.

Zooming in and looking at the daily picture, the pair established support around the 1.3006 region last week which converges with a daily trendline support extended from the low 1.2654. Of particular interest here is the series of higher lows that formed from Wednesday onwards. While this does somewhat reflect a bullish tone here, we also have to take into account that Friday's session chalked up an indecision candle with a slight bearish edge to it and, in addition to this, price is potentially in the process of forming the D-leg to a daily AB=CD symmetrical bull pattern that terminates at an area below the current daily support: a daily demand base coming in at 1.2822-1.2883 (see black arrows).

Having posted a daily high of 1.3074 moments after Friday's US employment release, we can see that the H4 candles failed to sustain gains beyond the H4 mid-way resistance point at 1.3050. As a result, the key figure 1.30 was brought into play shortly after, which, as is evident from the H4 chart, remained firm into the week's closing bell.

Our suggestions: To our way of seeing things, this is quite a difficult market to trade at the moment. On the one hand we have what appears to be a fading weekly demand area, and on the other hand, there are signs of bullish life around the current daily support level! Although 1.30 has effectively held ground, upside from this angle is relatively limited. February's opening level at 1.3039 sits just above, alongside the H4 mid-way resistance 1.3050. Given these factors, our team will lay low going into Monday's session and look to reassess on Tuesday.

Data points to consider: There are no scheduled high-impacting news events on the docket today relating to these two markets.

Levels to watch/live orders:

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

USD/CHF:  

Weekly gain/loss: – 76 pips

Weekly closing price: 0.9913

Last week's descent marks the pair's sixth consecutive losing week, with the unit managing to touch a low of 0.9861. The pair munched through weekly support at 0.9943 (now acting resistance), and concluded the trading week rebounding from a weekly trendline support taken from the low 0.9443. Any sustained move below this line would likely place the weekly Quasimodo support at 0.9639 in the firing range.

On the other side of the ledger, however, daily flow retested the underside of the aforementioned weekly resistance on Friday and printed a nice-looking daily selling wick. With very little daily support seen to the downside until 0.9841, this will likely encourage further selling in this market today/early this week.

Sparked by Friday's US employment numbers, H4 action blasted to a high of 0.9988, missing parity (our pre-determined H4 sell zone) by only a few pips! The advance, nevertheless, as you can see, was a short-lived one. The pair tumbled to lows of 0.9906, ending the day closing just ahead of the 0.99 handle and nearby February opening level at 0.9890.

Our suggestions: While selling the daily bearish candle is tempting, it's not something we'd advise. Not only do you have potential weekly buyers in play right now (see above), but you also have to contend with the possibility that 0.99/0.9899 on the H4 chart could put the brakes on any today! What's more, even with a break below this H4 barrier, H4 demand at 0.9832-0.9865 is seen just below, which happens to merge with the daily support level discussed above at 0.9841! As a result of this, opting to stand on the sidelines may very well be the better path to take today.

Data points to consider: There are no scheduled high-impacting news events on the docket today relating to these two markets.

Levels to watch/live orders:

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

DOW 30:  

Weekly gain/loss: – 19 points

Weekly closing price: 20056

During the course of last week's session, although the DOW closed marginally in the red we did see the unit chalk in a nice-looking weekly bullish tail that missed clipping the 2017 yearly opening level at 19769 by only a few points. In view of this, there are absolutely no weekly resistance levels in this market right now. Therefore, the best we can do for the time being is continue looking to ‘buy the dips'.

However, before our team looks to buy medium term, we will need to see daily price engulf the nearby daily supply coming in at 20138-20075. As we write, the candle action is currently responding to the lower edge of this base and could send the market back down to retest daily support at 19964.

Stepping across to the H4 candles, we can see that US stocks rallied following Friday's US employment report, forcing the market to stab above H4 supply at 20059-20043 going into the close. Right now, the H4 bears remain steady within this zone, but have yet to make any noteworthy push to the downside. The next level of interest seen from this area comes in at 20000, followed closely by the H4 support at 19989.

Our suggestions: Regardless of the weekly chart (see above), both the daily and H4 charts indicate that selling could be the key theme today. In order for us to become sellers here, however, a lower-timeframe sell signal (see the top of this report) would need to take shape within the walls of the current H4 zone.

Data points to consider: There are no scheduled high-impacting news events on the docket today that will likely affect the US equity market.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: 20059-20043 ([waiting for a lower-timeframe signal to form is advised prior to pulling the trigger] stop loss: dependent on where one confirms this area).

GOLD

Weekly gain/loss: +$28.9

Weekly closing price: 1219.8

From the weekly chart this morning, it's clear to see that the latest action overcame the weekly trendline resistance taken from the low 1130.1, and now could possibly be heading toward the weekly resistance pegged at 1241.2. Ultimately though, in order for this to be achieved, the daily supply zone drawn in at 1232.9-1224.5 would need to be consumed. However, with that daily zone out of the picture, this does not leave a lot of wiggle room before price touches base with the above noted weekly resistance.

Looking over to the H4 candles, Friday's movement spiked below February's opening level at 1211.5 following the release of the US employment figures, but, as you can see, managed to recover relatively quickly and advance to a high of 1221.2 by the closing bell. Of note here is the H4 AB=CD bearish pattern (see black arrows) that looks as if it will complete its D-leg today around the top edge of a H4 supply area at 1232.9-1228.3 (positioned within the upper limits of the aforementioned daily supply). However, what is also interesting is the fact that the H4 AB=CD 161.8% ext. connects beautifully with the weekly resistance mentioned above at 1241.2.

Our suggestions: The area to watch at the moment can be seen between the H4 127.2%/161.8% extensions (yellow zone – 1241.7/1232.9). Be that as it may, we would not be comfortable entering short from here UNTIL a reasonably sized H4 bear candle takes form.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: 1241.7/1232.9 ([wait for a H4 bear candle to form before looking to execute a trade] stop loss: ideally beyond the trigger candle)