Sample Category Title

USD/CHF - 1.0158

Most recent candlesticks pattern : N/A

Trend                                    : Near term up

Tenkan-Sen level                  : 1.0151

Kijun-Sen level                    : 1.0142

Ichimoku cloud top                 : 1.0136

Ichimoku cloud bottom              : 1.0122

Original strategy :

Buy at 1.0080, Target: 1.0200, Stop: 1.0045

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 1.0080, Target: 1.0200, Stop: 1.0045

Position : -

Target :  -

Stop : -

Although the greenback has rebounded after finding support at 1.0123 yesterday, break of this week’s high at 1.0171 is needed to signal recent erratic rise from 0.9861 low has resumed and extend further gain to 1.0200-10 but near term overbought condition should limit upside to 1.0220-25 and price should falter below previous chart resistance at 1.0248. If said resistance at 1.0171 continues to hold, then further consolidation would take place and risk of another retreat to 1.0123 cannot be ruled out, however, reckon downside would be limited to 1.0100 and support at 1.0173 should hold, bring another rise later.

In view of this, would not chase this rise here and would be prudent to buy dollar on subsequent pullback as support at 1.0073 should limit downside. A drop below 1.0065 support would abort and signal top is formed instead, risk weakness to 1.0040-45 but reckon support at 1.0009 would remain intact. 

GBP/USD - 1.2158

Most recent candlesticks pattern   : N/A

Trend                                 : Near term down

Tenkan-Sen level                 : 1.2166

Kijun-Sen level                    : 1.2175

Ichimoku cloud top              : 1.2235

Ichimoku cloud bottom        : 1.2208

New strategy  :

Sell at 1.2215, Target: 1.2115, Stop: 1.2250

Position : -

Target :  -

Stop : -

As cable has remained under pressure after recent selloff, adding credence to our bearish view that recent decline from 1.2706 is still in progress and may extend further weakness to 1.2110-15, then 1.2090, however, loss of near term downward momentum should prevent sharp fall below 1.2070-75 and price should stay above 1.2050, risk from there is seen for a rebound later.

In view of this, would not chase this fall here and would be prudent to sell cable on recovery as 1.2210-15 should limit upside. Above resistance at 1.2253 would defer and suggest a temporary low is possibly formed instead, risk a stronger rebound to 1.2275-80 but price should falter below resistance at 1.2301 and bring another selloff.

EUR/USD - 1.0530

Most recent candlesticks pattern   : N/A

Trend                      : Sideways

Tenkan-Sen level              : 1.0538

Kijun-Sen level                  : 1.0551

Ichimoku cloud top             : 1.0599

Ichimoku cloud bottom      : 1.0575

Original strategy  :

Buy at 1.0525, Target: 1.0625, Stop: 1.0490

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 1.0515, Target: 1.0625, Stop: 1.0485

Position : -

Target :  -

Stop : -

Although the single currency has remained weak and near term downside risk remains for the retreat from 1.0640 to extend marginal weakness from here, reckon downside would be limited to 1.0515-20 and bring another rebound later, above 1.0575 would suggest an intra-day low is formed, bring recovery to 1.0600-05 and possibly 1.0625, however, reckon said resistance at 1.0640 would hold. Only a break above 1.0640 would extend the erratic rise from 1.0493 low for retracement of early decline to 1.0660-65 (50% Fibonacci retracement of 1.0829-1.0493) and possibly towards resistance at 1.0680 but price should falter well below 1.0700-05 (61.8% Fibonacci retracement).

In view of this, we are looking to buy euro on dips. Below 1.0510 would risk retest of 1.0493 but only break there would shift risk back to the downside and signal recent decline from 1.0829 has resumed for further selloff to 1.0470 and then towards previous support at 1.0454.

USD/JPY - 114.52

Most recent candlesticks pattern   : N/A

Trend                      : Near term up

Tenkan-Sen level              : 114.44

Kijun-Sen level                  : 114.19

Ichimoku cloud top             : 113.88

Ichimoku cloud bottom      : 113.86

Original strategy  :

Buy at 114.20, Target: 115.20, Stop: 113.85

Position :  -

Target :  -

Stop : -

New strategy  :

Buy at 114.20, Target: 115.20, Stop: 113.85

Position :  -

Target :  -

Stop : -

Yesterday’s rally after finding renewed buying interest at 113.61 signals the rise from 111.69 is still in progress and may extend further gain towards previous chart resistance at 114.96, however, break there is needed to signal early erratic rise from 111.59 low has resumed and extend gain towards another previous resistance at 115.38 but price should falter below previous resistance at 115.62, bring retreat later.

In view of this, we are looking to buy dollar on pullback as the Kijun-Sen (now at 114.19) should limit downside and bring another rise later. Below 113.95 support would signal an intra-day top is formed instead, risk weakness towards said strong support at 113.56-61 which is likely to hold from here.

Weekly

• Last Candlesticks pattern: N/A
• Time of formation: N/A
• Trend bias: Near term up

Daily

• Last Candlesticks pattern: Hammer
• Time of formation: 3 Feb 2016
• Trend bias: Up

EURGBP – 0.8677

As the single currency has continued edging higher after breaking resistance at 0.8646, adding credence to our view that low has been formed at 0.8403 and mild upside bias remains for the rise from there to extend further gain to 0.8705-10, above there would signal the fall from 0.8857 has ended, bring headway to 0.8740-45, however, near term overbought condition should prevent sharp move beyond 0.8770 and price should falter below 0.8810-15, risk from there has increased for a retreat to take place later.

On the downside, expect pullback to be limited to 0.8585-90 and the Tenkan-Sen (now at 0.8559) should contain weakness, bring another rise later. A daily close below the Kijun-Sen (now at 0.8549) would defer and suggest first leg of rise from 0.8403 has ended, bring weakness to 0.8500-05 but only a drop below this level would abort our bullishness and bring further fall to 0.8460-65, however, price should stay well above said support at 0.8403, bring another rebound later. 

Recommendation: Buy at 0.8585 for 0.8750 with stop below 0.8500.

On the weekly chart, as euro has rebounded after finding support at 0.8403 late last month, suggesting the retreat from 0.8857 has ended at 0.8403 and consolidation with mild upside bias is seen for gain to 0.8705-10, then 0.8740-45, however, reckon upside would be limited to 0.8800 and price should falter well below resistance at 0.8857, bring further choppy trading later. Only a break of said resistance at 0.8857 would revive bullishness and extend the rise from 0.8304 to 0.8940 (50% Fibonacci retracement of 0.9576-0.8304 and current level of the Kijun-Sen) but price should falter below resistance at 0.9026.

On the downside, whilst pullback to 0.8520-25 cannot be ruled out, reckon 0.8495-00 would limit downside and bring another rebound. Below 0.8460-65 would bring retest of 0.8403 but break there is needed to revive bearishness and extend the fall from 0.8857 to 0.8350-55. Looking ahead, below there would signal decline from 0.9576 top has resumed for retest of 0.8304 but only break there would extend the fall from 0.9576 top for retracement of medium term upmove to previous support at 0.8251, then 0.8200.

Weekly

• Last Candlesticks pattern: Shooting star
• Time of formation: 1 Feb 2016
• Trend bias: Up

Daily

• Last Candlesticks pattern: Doji
• Time of formation: 1 Sep 2016
• Trend bias: Near term down

EUR/CHF – 1.0708

The single currency continued finding good support just above last month’s low at 1.0631, suggesting further consolidation above this level would be seen and test of resistance at 1.0752 is likely, however, a daily close above there is needed to signal a temporary low is formed, bring a stronger rebound to 1.0785-90, break there would signal recent decline has ended and bring further subsequent gain to 1.0850 but price should falter below key resistance at 1.0899 (Dec high), risk from there is seen for a retreat later.

On the downside, whilst pullback to 1.0660-65 cannot be ruled out, reckon downside would be limited and said strong support at 1.0631 should remain intact, bring another rebound later. Only a break below this support would the erratic decline from 1.1201 (2016 high) has resumed for further fall to 1.0590-00, then towards 1.0530-35 but loss of downward momentum should prevent sharp fall below 1.0500, price should stay well above 1.0400-10, risk from there has increased for a strong rebound to take place later.

Recommendation: Exit short entered at 1.0705 and stand aside for now.

 
On the weekly chart, as the single currency staged a strong rebound after holding above last month’s low at 1.0631 and a long white candlestick was formed, suggesting consolidation above this level would be seen and test of 1.0752-62 resistance cannot be ruled out, however, a weekly close above the Kijun-Sen (now at 1.0808) is needed to signal a temporary low has been formed at 1.0631, bring retracement of recent decline to 1.0850 but reckon resistance at 1.0899 would hold from here.

On the downside, expect pullback to be limited to 1.0650 and as long as said support at 1.0631 holds, risk of another rebound remains. A drop below indicated support at 1.0622-31 is needed to confirm recent decline from 1.1201 top is still in progress and may extend further fall to 1.0550-55, then 1.0500-10, however, oversold condition should prevent sharp fall below 1.0400-10 (100% projection of 1.1201-1.0622 measuring from 1.1001) and price should stay well above previous support at 1.0314, risk from there is seen for a rebound to take place later.

Global Markets:

• Asian stock markets: Nikkei up 0.30 %, Shanghai Composite fell 0.85 %, Hang Seng declined 1.20 %, ASX 200 lost 0.45 %
• Commodities: Gold at $1204 (-0.45 %), Silver at $17.19 (-0.60 %), WTI Oil at $50.60 (+0.65 %), Brent Oil at $54.55 (+0.85 %)
• Rates: US 10 year yield at 2.56, UK 10 year yield at 1.22, German 10 year yield at 0.37

News & Data:

• China CPI (YoY) (Feb): 0.80% (est 1.70%, prev 2.50%)
• China CPI (MoM) (Feb): -0.20% (est 0.60%, prev 1.00%)
• China PPI (YoY) (Feb): 7.80% (est 7.70%, prev 6.90%)
• Japan M2 Money Stock (YoY) (Feb): 4.20% (est 4.20%, prev 4.10%)
• Japan M3 Money Stock (YoY) (Feb): 3.60% (est 3.60%, prev 3.50%)
• Japan Labour Cash Earnings (YoY) (Jan): 0.50% (est 0.40%, prev 0.50%)
• Japan Real Cash Earnings (YoY) (Jan): 0.00% (prev 0.10%)
• UK RICS House Price Balance (Feb): +24% (est +23%, prev rev +24%)

Markets Update:

The US Dollar is rallying again following stronger than expected ADP employment data yesterday. Expectations for a strong NFP number have increased, and the market is now looking for a number above 190k.

EUR/USD is slowly approaching the 1.05 level. Key support is now seen at 1.0450 and a break below would signal a test of the December low could follow soon. Meanwhile, USD/JPY had a strong bounce off 113.60 support and rallied to 114.75 in yesterday's NY session. Resistance pre-115 remains solid, but if NFP beats expectations, it will likely test 115.50.

AUD/USD is testing key support around 0.75 and a break below would confirm the top at 0.7740, suggesting a correction to 0.73 could follow.

Oil had a big move in the late NY session. WTI declined from 53 to almost 50 after data from the EIA showed a large increase in oil inventories.

The main event today is the ECB rate decision. The central bank is expected to keep rates unchanged, but the focus will be on Mario Draghi’s press conference and hints whether QE could end sooner than anticipated.

Upcoming Events:

• 06:45 GMT – Swiss Unemployment Rate
• 12:45 GMT – ECB Interest Rate Decision
• 13:30 GMT – ECB Press Conference
• 13:30 GMT – US Initial Jobless Claims

Key Points:

• Rising wedge has resolved earlier than expected.
• Ascending trend line should now be tested.
• Near-term recovery also likely prior to any further slips.

A shock 8.21M build in US Crude Oil Inventories sent oil prices reeling during the prior session, resolving the developing rising wedge slightly earlier than anticipated. As a result, from a technical perspective, we expect to have price action remain on the downside, even if we are likely to see a small degree of recovery take place in the immediate future.

First and foremost, now that the oil seems to have been freed from its medium-term wedge, we should see it begin to test the confines of the long-term structure. Specifically, we are somewhat overdue for the ascending trend line to be met with a serious challenge which could mean we are about to see losses extend significantly in as we move forward.

This change in momentum would broadly be in line with other technical readings as the commodity has dipped below the 100 day moving average whilst the 12 and 20 day averages have crossed over. Further, the unexpected plunge has inverted the Parabolic SAR bias to bearish as well which could herald a return of bearish sentiment for oil.

However, it's worth noting that despite this longer-term shift in bias, we could have a modest recovery on hand in the coming session. As is shown on the daily chart, the stochastics have careened into oversold territory and oil's rout has seemly halted around the 38.2% Fibonacci level. Combined, these two factors could indicate that the commodity might pull back slightly to around the 51.41 mark priorto the 100 day EMA slapping it lower again.

From a fundamental perspective, the severity of the plunge makes it clear that, in the market's view at least, OPEC's production freeze is proving ineffectual. Indeed, the cartel'sboast of 140% compliance with its freeze targets by members and 50-60% compliance by non-OPEC members seems to have fallen on deaf ears. As a result, we may see traders take a dimmer and dimmer view of the whole attempt to keep prices buoyant which could see us move back into the $40-50 range.

Ultimately, the proof will be in the pudding so to speak and we will simply have to wait and see if this plunge is indicative of anything more serious than a temporary blip. However, given the technicals discussed above, there is a fairly strong case for continued losses for oil which certainly won't be going unnoticed by the bears out there.

Key Points:

• Cable retreating towards a key support zone formed by the October low.
• RSI Oscillator close to oversold.
• Watch for a retracement back towards the long side in the coming week.

The past week has seen a rapid descent for the Cable as sentiment has flowed strongly into the greenback as speculation of an impending FOMC rate hike has continued to mount. Subsequently, we have seen price action drop from around the 1.2600 handle to its current level at 1.2160. However, it remains to be seen how much further the embattled pair will go given that we are now nearing the depths of the October 2016 low.

Fundamentally, the Cable has had a punishing few months with the uncertainty of the Brexit negotiations causing capital flows away from the Pound. In addition, the recent sharp falls in the BRC Retail Sales monitor to -0.4% y/y and the Halifax HPI to 0.1% have complicated assessing the pair’s current fundamental direction. However, the near term outlook is not highly negative despite ongoing rhetoric around the impact of an exit from the EU. Inflationary pressures are starting to awaken in the UK and GDP is proving to be relatively robust in light of the ongoing uncertainty. Subsequently, there are plenty of fundamental factors to suggest that the currency pair’s current malaise is a temporary decline.

From a technical perspective, the pair’s price action has recently been exhibiting strong bearish tendencies as it moves back towards the 1.21 handle. However, a key zone of support is looming at 1.2031 and the RSI Oscillator is nearing oversold levels on the daily timeframe. Subsequently, there are plenty of indicators that we are likely to see a swing back to the long side if price action can remain above the 1.2031 support zone.

It would appear that the majority of selling pressure has largely come from capital flows into the greenback in an attempt to position ahead of the FOMC decision. Subsequently, as we move towards completely pricing in a rate hike decision, there is less reason to see further sharp declines in the Cable’s valuation.

Ultimately, the most likely scenario for the pair in the coming week is a continual gentle drift lower until the support zone is reached and then a sharp reversal back towards strong resistance around the 1.2500 handle. At this stage, it’s unknown if the Cable can break out of its current range but the presently low valuation is unlikely to hold over the medium term, especially if further certainty over the Brexit is reached.

Daily Pivots: (S1) 1.0524; (P) 1.0549 (R1) 1.0564; More.....

EUR/USD continues to weaken today but stays in range of 1.0493/1.0630. Intraday bias remains neutral at this point. On the downside, below 1.0493 support will affirm the case that fall from 1.0828 is resuming the larger down trend. In that case, intraday bias will be back to the downside for resting 1.0339 low. On the upside, firm break of 1.0630 resistance will argue that pull back from 1.0828 is completed. Also, rise from 1.0339 could possibly be resuming. In that case, intraday bias will be turned back to the upside for 1.0828 resistance and above.

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.