Sample Category Title

Cable is trading near 1.2180 area within wave five drop from 1.2568 which can be coming to an end. However, there is still room for a leg down to 1.2100 before we may get a strong turn. But as always, we need to see a rise in five small waves back to 1.2300 before we may confirm a turning point.

GBPUSD, 1H

Fresh weakness back below 0.7600 handle turns near-term focus lower after recovery attempt stalled at 0.7630. Fresh easing was supported by 10/30 SMA's bear-cross at 0.7630, increasing risk of retesting recent correction low at 0.7541 and possible extension towards plethora of strong supports that lay below and consisting of 200SMA (0.7527), Fibo 38.2% of 0.7158/0.7739 and 55/100SMA SMA's bull-cross at 0.7508 that mark the lower breakpoint. The notion is supported by lower top left at 0.7630 and signals of extension of corrective phase from 0.7739. However, the pair may extend consolidation within recently established range, ahead of US jobs data that may give more clues about near-term direction.

Res: 0.7606, 0.7630, 0.7648, 0.7680
Sup: 0.7541, 0.7527, 0.7508, 0.7463

The pair remains neutral in the near term, leaving double-Doji in past two days, with the price action holding so far above strong support at 113.56 (Fibo 38.2% of 111.67/114.73 upleg).

Near-term price action is stuck between 113.56 and 114.00 (Fibo 38.2% and 23.6%) with mixed daily studies supporting directionless mode that may extend, as the pair is looking for firmer signals on US jobs data on Friday.

Break above initial pivot at 114.00 is needed to sideline downside risk and shift near-term focus higher and expose 114.50 zone, where daily cloud is twisting that may attract for further upside action.

Conversely, loss of 113.56 pivot and a cluster of supports, formed by 10/20/30 daily MA’s would generate stronger bearish signal.

Res: 114.14, 114.38, 114.50, 114.73
Sup: 113.56, 113.30, 113.00, 112.84

Cable remains firmly in red and approaches next target at 1.2155 (Fibo 76.4% of 1.1986/1.2704 rally), after Monday's close below 1.2260 pivot (Fibo 61.8%) generated strong signal of bearish continuation. Fundamentals are adding on downside pressure from firmly bearish technical studies that may extend bear-leg from 1.2300 lower base towards January's low at 1.1986. Slow stochastic is oversold on daily chart but so far without firmer bullish signals, however, consolidative/corrective action could be anticipated in the near-term. Session high and hourly lower base at 1.2212 marks initial resistance, ahead of former triple upside rejection at 1.2300 and falling 10SMA at 1.2327 that are expected to cap extended upticks.

Res: 1.2212, 1.2262, 1.2300, 1.2327
Sup: 1.2155, 1.2119, 1.2035, 1.2000

USD/CHF - 1.0129

Original strategy :

Buy at 1.0110, Target: 1.0210, Stop: 1.0075

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 1.0080, Target: 1.0200, Stop: 1.0045

Position : -

Target :  -

Stop : -

Dollar’s retreat after yesterday’s rise to 1.0171 suggests top has been formed and consolidation below this level would be seen and pullback to 1.0105-10 cannot be ruled out, however, reckon downside would be limited to support at 1.0073 and bring another rise later, above said resistance at 1.0171 would confirm recent erratic upmove from 0.9861 has resumed for further gain towards 1.0200-10 but overbought condition should prevent sharp move beyond previous chart resistance at 1.0248, risk from there is seen for a retreat later.

In view of this, would not chase this rise here and would be prudent to buy dollar on 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 - 1.2165

New strategy  :

Stand aside

Position : -

Target :  -

Stop : -

Although cable has fallen again after brief recovery and near term downside risk remains for recent decline to extend further weakness to 1.2150, loss of near term downward momentum should prevent sharp fall below 1.2100-10 and reckon 1.2070-75 would hold from here, risk from there has increased for a rebound to take place later.

In view of this, would not chase this fall here and would be prudent to stand aside in the meantime. Above the Kijun-Sen (now at 1.2193) would bring test of 1.2210-15, however, break there is needed to signal an intra-day low is formed, bring correction to the Ichimoku cloud (now at 1.2246-58) but price should falter well below resistance at 1.2301 and bring another selloff.

EUR/USD - 1.0555

Original strategy  :

Buy at 1.0535, Target: 1.0635, Stop: 1.0500

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 1.0525, Target: 1.0625, Stop: 1.0490

Position : -

Target :  -

Stop : -

Although the single currency has remained under pressure after retreating from 1.0640 and near term downside risk remains for weakness to 1.0540-45, reckon downside would be limited to 1.0525-30 and bring another rebound later, above 1.0600-05 would bring test of said resistance at 1.0640 but break there is needed to 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, however, 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 abort and 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.

Yesterday, the UK House of Lords dealt a blow to Theresa May's Brexit plans. The Lords voted for an amendment to the Brexit bill that will guarantee Parliament a "meaningful vote" on the final exit deal May negotiates with Brussels. This amendment essentially gives lawmakers a veto over the final deal, and allows them the option to send the government back to the negotiating table in case they are not satisfied with the deal it agrees with its EU counterparts. May had already pledged to give Parliament a vote on the final deal, but it would only be a "take it or leave it" vote, implying that in case lawmakers said no, the UK would walk away without a deal.

Even though this is a "soft Brexit" signal, as it would restrict May's ability to actually follow through with her "hard Brexit" plans, GBP was little changed on the news. We believe that this is mainly due to the fact that this amendment must also be approved by the House of Commons. The government has already confirmed that it will fight these changes in the lower house and seek to overturn them. We think that there is a high possibility of that happening given that the Commons have already shown they do not intend to interfere with the government's plans, by voting for the bill the first time without any material amendments.

Focus now turns to Chancellor Hammond, who will deliver his Spring Budget to Parliament today. Following his comments on Sunday that it is sensible to maintain fiscal discipline in order to ensure the UK can weather economic surprises, we expect a less expansionary budget than previously. We believe that signs of some fiscal tightening could bring the pound under renewed selling interest, bearing in mind that a reduction in government spending could weigh on the nation's GDP.

GBP/JPY traded lower yesterday and during the Asian morning today, it managed to touch its toe below the support (now turned into resistance) barrier of 138.80 (R1). Given that the rate is trading below the downtrend line taken from the peak of the 15th of December and also below the prior upside support line drawn from the low of the 16th of January, we believe that the near-term outlook remains negative. Therefore, we would expect the dip below 138.80 (R1) to carry extensions towards our next support hurdle of 137.90 (S1). Switching to the daily chart, we believe that the broader outlook is cautiously bearish as well. However, a clear close below 137.00 (S2) is needed to signal that the bigger downtrend is back in force.

As for the rest of today's highlights: During the European day, we have a very light data calendar, with no major indicators due to be released.

In the US, the ADP employment report for February is due out. The private sector is expected to have added 190k jobs, less than the robust 246k in January, but still a solid number that could raise speculation for the NFP figure to meet its forecast of 190k as well and thereby, support the dollar. EUR/USD moved somewhat lower yesterday, falling just below the support (now turned into resistance) level of 1.0570 (R1). A strong ADP report could add some more fuel to the pair's decline and is possible to pave the way for another test near the psychological zone of 1.0500 (S1). Looking ahead, we think that following the new administration's freeze on public sector hiring in late January, we are likely to see the ADP print coming in closer to the NFP number, considering that the NFP figure will now include fewer public employees, which are not measured in the ADP report. We also get the nation's final labor cost index for Q4.

From Canada, we get housing starts for February and building permits for January. Housing starts are expected to have rebounded, but building permits are expected to have slowed somewhat. Given the mixed expectations, the reaction in CAD could remain relatively limited.

Besides UK Chancellor Hammond, we do not have any other speakers scheduled for today.

GBP/JPY

Support: 137.90 (S1), 137.00 (S2), 136.50 (S3)

Resistance: 138.80 (R1), 139.70 (R2), 140.70 (R3)

EUR/USD

Support: 1.0500 (S1), 1.0450 (S2), 1.0390 (S3)

Resistance: 1.0570 (R1), 1.0630 (R2), 1.0500 (R3)

USD/JPY - 114.08

Original strategy  :

Sell at 114.55, Target: 113.55, Stop: 114.85

Position :  -

Target :  -

Stop : -

New strategy  :

Stand aside

Position :  -

Target :  -

Stop : -

Despite intra-day marginal fall to 113.61, as the greenback has rebounded after holding above support at 113.56, suggesting consolidation above this level would be seen and recovery to 114.30-35 cannot be ruled out, however, reckon upside would be limited to 114.50-55 and price should falter below last week’s high at 114.75, bring further choppy trading. Only break of 114.75 would signal the rise from 111.69 has resumed and extend gain to 114.96 (previous resistance) but price should falter well below resistance at 115.38.

On the downside, below said support at 113.56 would revive near term bearishness and add credence to our view that top has been formed at 114.75, bring retracement of recent rise to 113.20-25 (50% Fibonacci retracement of 111.69-114.75), however, downside would be limited to 113.00 and 112.84-86 (previous resistance and 61.8% Fibonacci retracement) should remain intact, bring rebound later.

The Euro holds stable below thickening daily cloud and cracked daily Tenkan-sen (1.0566) that adds weight on negative near-term tone.

Immediate target at 1.0549 (Fibo 61.8% of 1.0493/1.0638 upleg) is eyed, with close below here needed to confirm lower top at 1.0638.

Strong bearish setup of daily studies supports scenario of full retracement of 1.0493/1.0638 correction and fresh bearish extension on firm break below 1.0493 base (lows of 22Feb / 02 Mar).

However, fundamentals are likely to influence near-term action, with today's US ADP data seen as indication for more significant US NFP numbers on Friday, which are expected to generate stronger signal.

Also, ECB's policy meeting, due on Thursday, will be closely monitored.

Break out of initial range between 1.0493/1.0638 to define near-term direction.

Res: 1.0566, 1.0585, 1.0605, 1.0637
Sup: 1.0549, 1.0528, 1.0493, 1.0454