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Daily Pivots: (S1) 120.01; (P) 120.56; (R1) 121.11; More...

EUR/JPY's rise from 118.23 accelerates to as high as 122.34 so far today and intraday bias remains on the upside. As noted before, corrective fall from 124.08 has completed at 118.23 after defending 118.45 cluster support (38.2% retracement of 109.20 to 124.08 at 118.39). Rise from there should target a test on 123.30/124.08 resistance zone. Break will extend larger rally from 109.20 to next key resistance at 126.09. On the downside, below 121.18 minor support will turn intraday bias neutral first. But pull back should be contained above 120.01 support and bring another rally.

In the bigger picture, price actions from 109.20 medium term bottom are seen as part of a medium term corrective pattern from 149.76. Strong rebound from 118.45 resistance turned support suggests that it's still in progress. Break of 124.08 will target 126.09 key resistance level. We'd be cautious on strong resistance there to limit upside. However, sustained break there will be a strong sign of medium term momentum and could target 141.04 resistance next.

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

Following a somewhat hopeful ECB press conference on Thursday, the single currency gravitated higher. As you can see though the rally was a relatively short-lived on as price failed to sustain gains beyond the 1.06 handle, and ended the day closing just ahead of the March opening level at 1.0569. Assuming that the bears continue to stamp in their authority today, this monthly level along with the nearby H4 mid-way support at 1.0550 will likely be taken out.

On the whole, this pair has been consolidating since 22nd Feb amid a daily supply at 1.0676-1.0608 and a daily support drawn from 1.0520. Overhead on the weekly chart, nevertheless, we can see that price remains bolstered by a weekly support area at 1.0333-1.0502 and nearby 2017 yearly opening level at 1.0515.

Our suggestions: Based on the above points, our team still has their eye on the 1.05/1.0520 barrier. The area, as far as we can see, boasts the following converging structures: a round number at 1.05, a daily support at 1.0520, a potential symmetrical H4 AB=CD formation completing just ahead of 1.05, the 2017 yearly opening level at 1.0515 as well as collectively being reinforced by the weekly support area at 1.0333-1.0502. In spite of this, we would not be comfortable trading from here without additional lower-timeframe confirmation (see the top of this report) seeing as how the area has been tested twice already.

Data points to consider: US employment report at 1.30pm GMT.

Levels to watch/live orders:

• Buys: 1.05/1.0520 ([wait for a lower-timeframe signal to form before looking to pull the trigger] stop loss: dependent on where one confirms the zone).
• Sells: Flat (stop loss: N/A).

GBP/USD

As can be seen from the H4 chart this morning, the pair spent yesterday's sessions teasing the H4 mid-way support level coming in at 1.2150. Perhaps the most compelling factor here is that this level is joined closely by the daily support barrier seen at 1.2135, which also happens to be positioned just ahead of a daily AB=CD 161.8% Fib ext. at 1.2111 (taken from the high 1.2706). Although these structures establish a relatively solid band of support, it might be worth noting that weekly action recently slipped below a weekly Quasimodo support at 1.22.

As mentioned in yesterday's report, we would not feel comfortable buying this market until we see a H4 close back above the 1.22 handle. This would not only confirm buyer strength, it would also likely open up the doors to the H4 mid-way resistance 1.2250 which denotes the underside of a daily resistance area at 1.2252.

Our suggestions: All in all, we do not see a lot to hang one's hat on at the moment. Even with a H4 close above 1.22, there is not a lot of room for this unit to advance unless one, of course, is able to pin down a setup which requires a reasonably small stop! With that being said, we'll remain flat for the time being and reassess post NFP.

Data points to consider: UK manufacturing at 9.30am. US employment report at 1.30pm GMT.

Levels to watch/live orders:

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

AUD/USD

For those who read yesterday's report you may recall our team mentioning that should a reasonably sized H4 bull candle be seen within the walls of the current H4 demand base at 0.7493-0.7518, we would consider entering long. As you can see, such a candle did present itself going into the US open. We bought at the close (0.7520) and placed our stop below the candle low at 0.7489. We are, as you can see, currently in drawdown and going by the recent daily close beyond daily demand at 0.7511-0.7543 (now considered a resistance area); we may take a small loss here. On a positive note, however, weekly price remains trading within a weekly support area at 0.7524-0.7450.

Our suggestions: Given that our desk is already involved in this market, we will be monitoring how H4 price behaves going into the US employment report later on today. Ultimately, we do not want to run the risk of having the market jump below our stop and magnify losses. As such, we may look to close out this position before our stop is hit.

Data points to consider: US employment report at 1.30pm GMT.

Levels to watch/live orders:

• Buys: 0.7520 ([live] stop loss: 0.7489).
• Sells: Flat (stop loss: N/A).

USD/JPY

Kicking this morning's report off with a look at the weekly timeframe, it's clear that the bulls are currently in the driving seat for the time being. The next upside hurdle to have noted can be seen around the weekly resistance level fixed at 116.08. Despite the weekly bulls displaying strength at the moment, daily price is seen trading within the walls of a daily resistance area at 115.62-114.60 (capped upside since mid-Jan 2017). In conjunction with the daily chart, the H4 candles also recently entered into the jaws of a H4 supply zone coming in at 115.37-115.18. However, shorting from this base is challenging owing to the nearby psychological boundary seen directly below at 115.

Our suggestions: We would not consider becoming sellers in this market until a H4 close below 115 has taken shape. The next H4 support target on tap beyond this number is seen relatively nearby at 114.59 – a mere 40 pips to play with. Therefore, unless you're able to pin down a lower-timeframe setup to short beyond 115 that requires a stop of no more than 20 pips, it would not likely be worth trying to short given the risk/reward. On the buy side of this market, we will not look to become buyers in this market today. Ideally, a daily close above the current daily resistance area will need to be seen beforehand.

Data points to consider: US employment report at 1.30pm GMT.

Levels to watch/live orders:

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

USD/CAD

US dollar bulls closed higher for a fourth consecutive day in recent trading, consequently placing the daily candles within striking distance of the daily Quasimodo resistance line at 1.3557. Looking over to the H4 chart, the pair is now seen retesting the 1.35 handle as support which could potentially be enough to fuel an advance up to the H4 mid-way resistance line at 1.3550 (located seven pips below the aforementioned daily Quasimodo resistance). While we are very interested in selling from the daily Quasimodo level, we are at the same time also a little concerned having seen weekly action break above the 2017 yearly opening level at 1.3434/long-term weekly trendline resistance extended from the high 1.4689.

Our suggestions: In the event that H4 price remains supported by 1.35 and manages to print a lower-timeframe confirming buy signal (see the top of this report), we would look to buy this unit intraday and target 1.3550. On the assumption that this setup comes to fruition, we may also consider shorting from the 1.3550 region. This, however, will depend on the time of day and also if price is able to chalk in a reasonably sized H4 bearish candle.

Data points to consider: US/Canadian employment change at 1.30pm GMT.

Levels to watch/live orders:

• Buys: 1.35 region ([wait for a lower-timeframe signal to form before looking to pull the trigger] stop loss: dependent on where one confirms the zone).
• Sells: 1.3550 region ([wait for a reasonably sized H4 bearish close to form before looking to pull the trigger] stop loss: ideally beyond the trigger candle).

USD/CHF

During the course of yesterday's sessions, the 1.01 psychological handle was brought into the picture and has, as you can see, held firm as support. Despite this, we see very little to hang our hat on looking at H4 structure. Price is currently capped between 1.01 and a nearby H4 resistance level drawn from 1.0135.

Looking over to the bigger picture, weekly action shows price found resistance a few pips ahead of the 2017 yearly opening level at 1.0175 earlier this week. Along the same vein, daily price also recently clipped the underside of a daily supply zone coming in at 1.0248-1.0168 (encapsulates the aforementioned 2017 yearly opening base).

Our suggestions: According to the higher timeframes, further selling could be at hand. A violation of the 1.01 level would likely stimulate a continuation move south down to the March opening level at 1.0066 (converges with a H4 trendline support taken from the low 0.9929). As we're sure you'll agree, this does not leave one a lot of room to play with! With that being the case, and considering the fact that we have the mighty NFP just around the corner, we will remain on the sidelines for the time being.

Data points to consider: US employment report at 1.30pm GMT.

Levels to watch/live orders:

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

DOW 30

In recent trading, we saw the DOW aggressively spike through the March opening level at 20824 and tag in fresh bids from a H4 demand area coming in at 20769-20801. The move from this area was, as you can probably see, also bolstered by a daily demand zone at 20714-20821 which happens to smother the aforementioned H4 demand area. Despite daily price trading from a daily demand barrier, the H4 chart shows the unit is currently testing the underside of a H4 supply area formed from 20951-20911.

Our suggestions: Essentially, we will not look to become buyers in this market until H4 price takes out the 21000 resistance. A H4 close above this number, followed with a retest and a reasonably sized H4 bullish candle would, in our opinion, be enough to justify a long position here, targeting the H4 supply seen overhead at 21139-21101 and quite possibly beyond.

Data points to consider: US employment report at 1.30pm GMT.

Levels to watch/live orders:

• Buys: Watch for price to engulf 21000 and then look to trade any retest seen thereafter (waiting for a lower-timeframe confirming signal to form following the retest is advised] stop loss: dependent on where one confirms the level).
• Sells: Flat (stop loss: N/A).

GOLD

The gold market has really been hit hard this week, losing almost $35 in value! In spite of this, we may see the yellow metal recover some of its losses today. From a technical standpoint, weekly price does show that the unit could possibly trade down to 1180.1: a weekly support level. On the other hand though, daily action recently tested the top edge of a daily support area drawn in at 1197.4-1187.7. Along the same vein, the H4 candles also connected with a H4 trendline support extended from the low 1170.8.

As of yet, there's been very little buyer intent registered from this H4 trendline. Should the buyers regain consciousness here, there's a chance we could see price tag the overhead H4 supply area at 1208.8-1204.5. Conversely, a break below the current H4 trendline could lead to further selling down to the H4 support logged at 1187.7 (denotes the lower edge of our daily support zone).

Our suggestions: Given the conflicting signals seen from the weekly and daily timeframes, this is a difficult market to judge. Essentially, neither a long nor short seems attractive. Personally, we may just hang fire for the moment, let the NFP do its thing, and look to reassess post the event.

Levels to watch/live orders:

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

Currency pair USD/JPY

The USD/JPY broke above the resistance top (dotted red) of the wave 1 (blue), which could start the wave 3 (brown) of wave 3 (blue). Price needs to reach at least the 161.8% Fibonacci target before the wave 3 can be confirmed.

The USD/JPY keeps pushing with higher highs and price seems to be extending the wave 5 (orange) with 5 internal waves (magenta/pink). Once the wave 3 (magenta) is completed, then a corrective chart pattern such as a bull flag or contracting triangle must emerge to confirm wave 4 (magenta). A break of that pattern could lead to a wave 5 (magenta) of wave 5 (orange).

Currency pair EUR/USD

The EUR/USD indeed showed a bullish bounce at the 78.6% Fibonacci retracement level of wave B vs A (blue). Price is now approaching the resistance trend line (red) of the consolidation zone (red/green). A break above resistance (red) could see a test of the wave 2 Fibonacci levels (purple) although a break above the 100% level invalidates the wave structure. A failure to break resistance (red) could see expand within the consolidation (red/green).

The EUR/USD could be in a bullish 5 wave pattern (orange) within wave C (blue). A break below the fractal at the 50% Fibonacci level of wave 4 vs 3 would invalidate this wave structure. A break above resistance (red) could see a fragile breakout towards the Fib levels.

Currency pair GBP/USD

The GBP/USD broke above an inner resistance line (dotted orange) but remains in a downtrend channel (red lines). Price has both channel resistance (red) and horizontal resistance (orange) nearby. A bearish break below support (green) could see price move towards 1.20 which is a psychological round level, previous bottom (green) and 161.8% Fibonacci target.

The GBP/USD remains bearish in my view as long as price stays below horizontal resistance levels (orange). The divergence between the bottoms could indicate that a bearish break of support (green) might lack strength but price could reach the bottom of the channel again.

Daily Pivots: (S1) 1.4016; (P) 1.4067; (R1) 1.4142; More...

Intraday bias in EUR/AUD remains on the upside as rise from 1.3624 continues. The cross should target 1.4289 resistance next. Current development, with a short term bottom formed at 1.3624, is taken as an early sign of larger trend reversal after defending 1.3671 key support. Break of 1.4289 will confirm this case and target 1.4721 resistance next. However, break of 1.3874 minor support will dampen our bullish view and turn bias back to the downside for 1.3624 instead.

In the bigger picture, price actions from 1.6587 medium term top are viewed as a corrective pattern. We'd expect strong support from 1.3671 key level to contain downside and bring rebound. Up trend from 1.1602 should not be finished and will resume later. Break of 1.4721 resistance will indicate completion of such correction and turn outlook bullish for retesting 1.6587 high. However, sustained break of 1.3671 will invalidate our bullish view and would turn focus back to 1.1602 long term bottom.

Daily Pivots: (S1) 0.8660; (P) 0.8690; (R1) 0.8724; More...

Intraday bias in EUR/GBP remains mildly on the upside for the moment. Upside moment remains unconvincing. But further rise is still expected to 0.8851 resistance and above. Price actions from 0.8303 are viewed as the second leg of the correction from 0.9304. Hence, we'd expect strong resistance from 100% projection of 0.8303 to 0.8851 from 0.8402 at 0.8950 to limit upside. On the downside, below 0.8655 minor support will turn bias neutral again. But further rise would remain in favor as long as 0.8546 support holds.

In the bigger picture, price actions from 0.9304 are viewed as a medium term corrective pattern. Deeper fall cannot be ruled out yet. But we'd expect strong support from 0.8116 cluster support (50% retracement of 0.6935 to 0.9304 at 0.8120) to contain downside. Overall, the corrective pattern would take some time to complete before long term up trend resumes at a later stage. Break of 0.9304 will pave the way to 0.9799 (2008 high).

Daily Pivots: (S1) 1.0679; (P) 1.0714; (R1) 1.0739; More...

EUR/CHF attempted for another rally but failed to break through 1.0749 resistance again. Intraday bias remains neutral at this point. With 1.0683 minor support intact, further rise is still expected. As noted before, a short term bottom is likely in place at 1.0629 on bullish convergence condition in 4 hour MACD. Current development raised the chance of larger trend reversal after defending 1.0620 key support level. Decisive break of 1.0749 should affirm this bullish case and target 1.0897. On the downside, though, below 1.0683 minor support will turn bias back to the downside for 1.0629 instead.

In the bigger picture, the decline from 1.1198 is seen as a corrective move. There is no confirmation of completion yet. Sustained trading below 38.2% retracement of 0.9771 to 1.1198 at 1.0653 will target 50% retracement at 1.0485. However, strong rebound from 1.0620 and break of 1.0897 resistance will indicate trend reversal and turn outlook bullish.

Daily Pivots: (S1) 0.7499; (P) 0.7553; (R1) 0.7582; More...

Intraday bias in AUD/USD stays on the downside with fall from 0.7740 still in progress. Whole rebound from 0.7158 should be completed. The pair should now target lower side of the range at 0.7144/7158 support zone. On the upside, break of 0.7631 resistance is needed to indicate completion of such decline. Otherwise, outlook will stay cautiously bearish in case of recovery.

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 0.8164) and above.

Daily Pivots: (S1) 1.3483; (P) 1.3508; (R1) 1.3536; More...

Intraday bias in USD/CAD remains on the upside as rise from 1.2968 is still in progress. The pair should target 1.3598 high next. Decisive break there will resume the medium term rally from 1.2460 and target next fibonacci level at 1.3838. On the downside, break of 1.3371 minor support is needed to indicate short term topping. Otherwise, outlook will remain bullish in case of retreat.

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 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. Break of 1.2968 wold at least bring at retest of 1.2460 low. However, sustained trading above 1.3838 would pave the way to retest 1.4689 high.

Daily Pivots: (S1) 1.2131; (P) 1.2163; (R1) 1.2193; More...

With 1.2213 minor resistance intact, intraday bias in GBP/USD stays mildly on the downside for 1.1946/86 key support zone. As noted before, consolidation pattern from 1.1946 should have completed with three waves to 1.2705 already. Break of 1.1946 will confirm our bearish view and resume the larger down trend. On the upside, above 1.2213 minor resistance will turn bias neutral and bring recovery. But outlook will remain cautiously bearish as long as 1.2346 support turned resistance holds.

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.

Global Markets:

• Asian stock markets: Nikkei up 1.35 %, Shanghai Composite fell 0.05 %, Hang Seng declined 0.10 %, ASX 200 rose 0.55 %
• Commodities: Gold at $1198 (-0.45 %), Silver at $16.93 (-0.65 %), WTI Oil at $49.65 (+0.75 %), Brent Oil at $52.50 (+0.65 %)
• Rates: US 10 year yield at 2.62, UK 10 year yield at 1.23, German 10 year yield at 0.43

News & Data:

• Australia Home Loans (MoM) (Jan): 0.50% (est -1.00%, prev 0.40%)
• Asia stocks firm ahead of U.S. jobs, dollar vs yen at one-and-half-month high – RTRS
• Oil edges off three-month low, but glut worries fester – RTRS
• Dollar on track for winning week as U.S. jobs data awaited, euro firm – RTRS

Markets Update:

The US Dollar remains strong ahead of today’s NFP release. The market has increased its expectations for the number following the strong ADP employment change print.

EUR/USD recovered slightly after the ECB meeting. The central bank kept rates and the size of its QE programme unchanged, as expected, but Mario Draghi was slightly less dovish during his press conference. This helped the Euro to recover to 1.0620. In Asia, the pair consolidated in a 1.0570-1.06 range.

USD/JPY has cleared some important resistance levels and is on its way to test key resistance at 115.50. A major breakout is unlikely ahead of the NFP release. However, if the number is strong and it breaks above 115.50, it would signal that the rally can continue towards 117.

AUD/USD is still under pressure but support at 0.75 has held so far. Resistance is now seen at 0.7570/80, followed by 0.7630.

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