Sample Category Title

Daily Pivots: (S1) 1.0548; (P) 1.0589 (R1) 1.0627; More.....

Intraday bias in EUR/USD strays neutral as consolidation from 1.0493 temporary low continues. With 1.0678 minor resistance intact, deeper decline is still expected. We're viewing fall from 1.0828 as resuming the larger down trend. Below 1.0493 will target 1.0339 low first. Break will confirm our bearish view and target parity. However, break of 1.0678 will dampen our view and turn focus back to 1.0828 resistance instead.

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.

Daily Pivots: (S1) 1.2390; (P) 1.2434; (R1) 1.2486; More...

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

In the bigger picture, fall from 1.7190 is seen as part of the down trend from 2.1161. There is no sign of medium term bottoming yet. Sustained trading below 61.8% projection of 2.1161 to 1.3503 from 1.7190 at 1.2457 will target 100% projection at 0.9532. Overall, break of 1.3444 resistance is needed to confirm medium term bottoming. Otherwise, outlook will remain bearish.

Daily Pivots: (S1) 1.0058; (P) 1.0077; (R1) 1.0110; More.....

USD/CHF is bounded in consolidation below 1.0140 temporary top and intraday bias stays neutral first. With 0.9966 support intact, further rise is in favor. Above 1.0140 will turn bias to the upside and target a test on 1.0342 resistance. Based on neutral medium term outlook, we'd be cautious on topping at around 1.0342. Meanwhile, break of 0.9966 will indicate completion of the rebound from 0.9860. And intraday bias will be turned back to the downside for 0.9860.

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

Daily Pivots: (S1) 112.13; (P) 112.48; (R1) 113.06; More...

USD/JPY is still bounded in range of 111.58/114.94 and intraday bias remains neutral. The corrective fall from 1118.65 could extend lower. But we'd still expect strong support from 38.2% retracement of 98.97 to 118.65 at 111.13 to contain downside and bring rebound. On the upside, above 114.94 resistance should confirm completion of pull back from 118.65. In such case, intraday bias will be turned back to the upside for retesting 118.65.

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.

Daily Pivots: (S1) 1.3114; (P) 1.3147; (R1) 1.3211; More...

USD/CAD recovers notably today but stays in range of 1.2968/3211. Intraday bias remains neutral first. On the upside, break of 1.3211 resistance will argue that fall from 1.3598 has completed at 1.2968. And more importantly, rise from 1.2460 is still in progress. In that case, intraday bias will be turned back to the upside for 1.3598 and above. On the downside, below 1.2968 will revive the case that rise from 1.2460 is completed and turn outlook bearish for this low. Overall, choppy rise from 1.2460 is still seen as a corrective move.

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.

Global Markets:

• Asian stock markets: Nikkei rallied 0.60 %, Shanghai Composite gained 0.30 %, Hang Seng rose 0.05 %, ASX 200 up 0.10 %
• Commodities: Gold at $1254 (-0.40 %), Silver at $18.35 (-0.40 %), WTI Oil at $54.20 (+0.30 %), Brent Oil at $56.65 (+0.40 %)
• Rates: US 10-year yield at 2.37, UK 10-year yield at 1.15, German 10-year yield at 0.20

News & Data:

• Japan Industrial Production (Jan Prelim) (MoM): 0.4% (prev 0.7%)
• Japan Industrial Production (Jan Prelim) (YoY): 4.3% (prev 3.2%)
• Australia ANZ Roy Morgan Weekly Consumer Confidence (Feb 26): 119.1 (prev 113.7)
• Australia New Home Sales Jan (MoM): -2.2% (prev 0.20%)
• Australia Current Account Balance (Q4): -A$3.9b (prev -A$11.4b)
• Australia Private Sector Credit Jan (MoM): 0.2% (prev 0.7%)
• Australia Private Sector Credit Jan (YoY): 5.4% (prev 5.6%)
• New Zealand Trade Balance (Jan): -285m (prev -41m)
• New Zealand Money Supply M3 Jan (YoY): 6.4% (prev 6.4%)
• Japan Vehicle Production Jan (YoY): 3.8% (prev 4.2%)
• PBoC Fixes USDCNY Reference Rate At 6.8750 (prev fix 6.8814)

Markets Update:

The markets have remained relatively quiet as traders and investors are looking forward to the speech by US President Trump this evening. Trump is expected to talk about his tax plan and infrastructure spending. His promises have helped to boost the equity markets in the past few months, and expectations are hence high.

Should tonight's outcome be positive – meaning that the expectations of the market have been fulfilled – stocks are likely to rally further along with the US Dollar. However, should Trump be too vague or disappoint the market in general, the both equities and the USD are likely to come under pressure.

USD/JPY rallied in yesterday's late NY session and reached a high of 112.80. Should it break above the resistance a 113, the next notable level lies at 113.80. EUR/USD consolidated in a 1.0565-90 range in Asia, while GBP/USD spent it in a 1.2420-40 range.

Upcoming Events:

• 07:45 GMT – French CPI
• 07:45 GMT – French GDP
• 10:00 GMT – Italian CPI
• 13:30 GMT – US GDP
• 14:45 GMT – US Chicago PMI
• 15:00 GMT – US CB Consumer Confidence
• 15:00 GMT – US Richmond Manufacturing Index
• 20:00 GMT – FOMC Member Harker speaks
• 20:30 GMT – FOMC Member Williams speaks
• 21:00 GMT – US President Trump speaks
• 22:30 GMT – Australian AIG Manufacturing Index

Key Points:

• Falling wedge being felt again.
• EMA bias still highly bearish.
• Market unease should help to increase downside risk.

The EURCHF had some strong buying pressure in the prior session but this may not be very sustainable given the pair’s overall technical bias. Specifically, aside from the long-term falling wedge, there are a number of signals indicating that we are liable to see a reversal in the very near-term. As a result of this, downside risks are present, even if the lower constraint is likely to cap losses around the 1.0620 handle.

Starting with the wedge, the presence of the structure on its own should be reason enough to suspect an impending slip for the EURCHF. Notably, the long-term pattern has weathered some fairly withering assaults yet remained firmly intact. As a result, we expect the outcome of this latest push higher to be met with a similar fate as both the December and January rallies which should mean a reversal is now imminent.

However, due to the narrowing of the constraints of the wedge, one could argue that we might instead see the upside breakout that this pattern should eventually inspire. Unfortunately for the bulls, this would be at odds with a number of other technical readings that are currently evident on the charts.

Firstly, the current price level coincides with not only the upside constraint of the wedge but also the 50.0% Fibonacci retracement. This retracement has historically proven itself to be a reversal point and has been a rather stubborn zone of resistance over the past few weeks. Secondly, the EMA configuration remains highly bearish and is in little danger of reversing this bias any time soon. This is largely due to the stochastics which are on the cusp of moving into overbought territory and are preventing traders from seriously considering going against the trend.

From a fundamental perspective, any long-term upsides for any CHF cross are a fairly distant prospect. This largely stems from the persistent, if not consistent, level of unease that many market participants refuse to acknowledge is current at play. Indeed, with a VIX reading below 15, one can be forgiven for ignoring the role that the CHF’s safe haven status is playing in supressing pairs such as the EURCHF.

Ultimately, we could begin to see upside potential begin to rise as the world acclimatises to the Trump presidency and we get some firm details on his much talked about policies. However, in the near to medium-term, the technicals and the fundamentals seem to be in agreement that we are likely to see the downtrend extend for some time. But what does this mean for the next week or so? Well, as mentioned above, a reversal is now looking very probable and this will likely see the pair drift back towards the 1.0620 handle.

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

In recent sessions, we can see that the single currency rose on both weak US core durable goods data and disappointing US pending home sales. Despite this, the rally was a short-lived one as price failed to sustain gains beyond the H4 supply area seen at 1.0632-1.0620 (located within daily supply coming in at 1.0676-1.0608). With the H4 candles now seen trading below December's opening level at 1.0590, the next downside objective, in our view, falls in at the H4 mid-level support drawn from 1.0550, shadowed closely by January's opening base at 1.0515.

Our suggestions: Personally, we would consider shorting at this time. The 1.05/1.0520 area, nevertheless, looks great for a bounce north (yellow rectangle). The zone comprises of: a round number at 1.05, a H4 trendline support taken from the low 1.0339, January's opening level at 1.0515, daily support at 1.0520 and let's not forget that all of this is further reinforced by the weekly support area at 1.0333-1.0502. This barrier, in our humble opinion, has sufficient confluence to justify a trade without the need for additional confirmation.

Data points to consider: US prelim GDP at 1.30pm, CB consumer confidence at 3pm GMT.

Levels to watch/live orders:

• Buys: 1.05/1.0520 ([an area one could possibly trade at market] stop loss: 1.0490).
• Sells: Flat (stop loss: N/A).

GBP/USD

The GBP/USD pair, as you can see, recently managed to find a pocket of bids around the H4 support area drawn in at 1.2383-1.2394. The unit eventually advanced north from here on weak US pending home sales and shook hands with the H4 mid-way resistance band at 1.2450. As of this time, we do not see much direction, at least from a structural perspective, coming in from the bigger picture. Weekly action remains trading mid-range between the 2017 yearly opening level at 1.2329 and a weekly Quasimodo resistance coming in at 1.2673. By the same token, a similar pattern is in motion on the daily chart. The daily candles are seen loitering between daily demand at 1.2252-1.2342 (houses the aforementioned 2017 yearly opening level) and a daily supply penciled in at 1.2728-1.2657 (also houses the above noted weekly Quasimodo resistance level).

Our suggestions: By and large, we still do not see much to hang our hat on at the moment, as price shows very little confluence. Without it, trading becomes a challenging task! Therefore, we'll continue to remain on the sidelines today and reassess going into Wednesday's session.

Data points to consider: US prelim GDP at 1.30pm, CB consumer confidence at 3pm GMT.

Levels to watch/live orders:

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

AUD/USD

During the course of yesterday's sessions, the commodity-driven currency tapped the underside of 0.77 and sold off to lows of 0.7669. What is quite notable from a technical perspective this morning is the potential H4 AB=CD bullish pattern (black arrows) in process, terminating around the H4 mid-way support neighborhood at 0.7650. While this number boasts a H4 demand seen at 0.7649-0.7656 and a H4 channel support extended from the low 0.7605, we still remain hesitant. Our reasoning lies within the higher-timeframe structure. Both the weekly and daily charts show room to trade beyond the current H4 demand base to 0.76, as we have a daily support level planted around that area at 0.7609.

Our suggestions: Does this mean we are going to completely ignore the above noted H4 demand? No. Despite the area being positioned at somewhat of a disadvantage on the higher timeframes, our desk believes that a bounce could still be seen from here. But, before trading long from this region we would insist on seeing a reasonably sized H4 bull candle take shape. What this will do is show buyer interest within the walls of a high-probability reversal zone.

Data points to consider: US prelim GDP at 1.30pm, CB consumer confidence at 3pm GMT.

Levels to watch/live orders:

• Buys: 0.7649-0.7656 ([wait for a reasonably sized H4 bull candle to form before looking to execute a trade] stop loss: ideally beyond the trigger candle).
• Sells: Flat (stop loss: N/A).

USD/JPY

Try as it might, the USD/JPY could not muster enough strength to break through the 112 handle yesterday, and ended the day topping around the underside of the H4 supply at 112.95-112.81/February's opening level at 112.70. Although this move is bolstered by a daily demand area coming in at 111.35-112.37, we would need to see the H4 candles close above the 113 neighborhood before considering becoming buyers in this market. Beyond 113 is a H4 supply sitting at 113.84-113.62, followed closely by the 114 handle.

Our suggestions: Given the structure seen from the daily timeframe at the moment, we will not be looking to sell this unit today. And, as mentioned above, it will take a H4 close above 113 to be seen before we look to buy. An ideal setup here would be a H4 close higher, followed by a retest of this number as support and a reasonably sized H4 bull candle!

Data points to consider: US prelim GDP at 1.30pm, CB consumer confidence at 3pm GMT.

Levels to watch/live orders:

• Buys: Watch for a H4 close above 113 and look to trade any retest seen thereafter ([we would also advise waiting for a reasonably sized H4 bull candle to form following the retest before looking to execute a trade] stop loss: ideally beyond the trigger candle).
• Sells: Flat (stop loss: N/A).

USD/CAD

Underpinned by a weekly demand base coming in at 1.3006-1.3115, the pair was able to touch gloves with a daily resistance area yesterday seen at 1.3212-1.3169. Any sustained move beyond this daily zone would likely place the daily supply base at 1.3387-1.3317 in the firing range.

Turning our attention to the H4 candles, the recent advance has brought the piece up to within striking distance of the 1.32 handle. Apart from price currently being supported by a weekly demand, H4 action is also in the process of forming a H4 AB=CD bearish D-leg, which terminates around the underside of a H4 supply at 1.3299-1.3265 (H4 127.2% Fib ext. at 1.3263). In addition to this, there's also an intersecting H4 upper channel resistance line coming in from the high 1.3171.

Our suggestions: In essence, we have two possible setups to consider:

• A decisive H4 close above 1.32, followed by a retest and a reasonably sized H4 bull candle would, in our opinion, be enough evidence to suggest price wants to test the above noted H4 supply area. Therefore, one may look to consider longs from here.
• The aforementioned H4 supply is not only a good take-profit target, it's also a fine place to look to sell from given the surrounding confluence. However, we would advise waiting for a H4 bearish candle to take shape before committing yourself to a position here. The reason simply comes down to the possibility of a fakeout through our H4 supply zone up to the underside of the nearby daily supply at 1.3317.

Data points to consider: US prelim GDP at 1.30pm, CB consumer confidence at 3pm GMT.

Levels to watch/live orders:

• Buys: Watch for a H4 close above 1.32 and then look to trade any retest seen thereafter ([we would also advise waiting for a reasonably sized H4 bull candle to form following the retest before looking to execute a trade] stop loss: ideally beyond the trigger candle).
• Sells: 1.3299-1.3265 ([wait for a reasonably sized H4 bear candle to form before looking to execute a trade] stop loss: ideally beyond the trigger candle).

USD/CHF

Amid yesterday's US segment, the USD/CHF retested the H4 mid-way number coming at 1.0050 and gravitated north up to the H4 supply barrier seen at 1.0116-1.0099. As we mentioned in Monday's report, while this H4 supply zone could potentially hold the market lower today, we feel it is somewhat vulnerable since the more attractive zone (in yellow) is seen above! The area comprises of the following converging structures: both December and January's opening levels at 1.0170/1.0175, a H4 AB=CD 127.2% Fib ext. at 1.0185, an upper H4 channel resistance line pegged from the high 1.0044, a H4 Quasimodo resistance at 1.0197, a 1.02 psychological handle and let's not forget that all of this is seen housed within the daily supply zone coming in at 1.0248-1.0168.

Our suggestions: In light of this confluence, our team will, dependent on the time of day, look to sell from the H4 127.2% Fib ext. level with stops placed a few pips above 1.02. In addition to this, we see little reason not to look to buy any break of the current H4 supply zone up to our H4 sell area. However, we would insist on not only a clean H4 close above the supply, but also a retest of the zone as demand followed by a reasonably sized H4 bull candle before committing to a position.

Data points to consider: US prelim GDP at 1.30pm, CB consumer confidence at 3pm GMT.

Levels to watch/live orders:

• Buys: Watch for a H4 close above the current H4 supply area and look to trade any retest seen thereafter ([we would also advise waiting for a reasonably sized H4 bull to form following the retest candle before looking to execute a trade] stop loss: ideally beyond the trigger candle).
• Sells: 1.0185 region ([an area one could possibly trade at market] stop loss: 1.0205).

DOW 30

Although price managed to clip fresh a fresh record high of 20843 yesterday, trade was quiet on Monday with price ranging a mere 74 points. Due to this lackluster performance, much of the following report will echo similar thoughts put forward in Monday's analysis…

As can be seen from the weekly chart, another healthy round of buy orders flowed into the market last week, consequently registering a third consecutive weekly gain. With equities now trading at record highs, where do we go from here? Well, given that there is absolutely no weekly resistance levels in sight, the best we can do for the time being is continue looking to ‘buy the dips'. The closest higher-timeframe area can be seen at 20527-20626: a daily demand zone.

Over on the H4 chart, price respected the H4 support area at 20690-20720 beautifully on Friday and rallied to a high of 20816. Although this zone boasts no higher-timeframe (structural) convergence, the buyers have already proved its value. Therefore, it remains of interest to our desk today.

Our suggestions: Just to be clear here though, placing pending orders at this zone is not advised, since there's little stopping price from ignoring this area and heading to the H4 demand zone below at 20621-20650, which happens to be positioned around the top edge of the current daily demand base. Waiting for additional confirmation such as a lower-timeframe buy signal (see the top of this report) or a reasonably sized H4 bull candle is, at least in our opinion, the safer, more logical, path to take.

Data points to consider: US prelim GDP at 1.30pm, CB consumer confidence at 3pm GMT.

Levels to watch/live orders:

• Buys: 20690-20720 ([waiting for additional confirmation is advised before looking to execute a trade] stop loss: dependent on how one chooses to confirm the zone).
• Sells: Flat (stop loss: N/A).

GOLD

For those who read Monday's report on gold you may recall our desk talking about shorting from the H4 161.8% Fib ext. at 1260.4, which is sited within a H4 supply at 1264.7-1254.6. As you can see, bullion sold off beautifully from this line and is on course to test the H4 demand coming in at 1247.6-1249.8. Well done to any of our readers who managed to jump aboard this move!

While the H4 candles are currently reflecting a bearish tone, as well as daily action recently kissing the underside of a daily resistance seen at 1262.1, where do we go from here when weekly price, only last week, closed above a weekly resistance at 1241.2?

Our suggestions: There is a chance that price could very well continue selling off this week, with price taking out not only the current H4 demand, but also the H4 support area seen below it at 1244.5-1242.4, since weekly movement may retest the recently broken weekly resistance as support.

With this in mind, we are looking to short from the H4 Quasimodo resistance at 1260.0 today. Not only is it located within the above noted H4 supply, it also sits just below the H4 161.8% Fib ext. at 1260.4 and daily resistance at 1262.1. However, we must stress that we would pass on this setup if price connects with the H4 demand beforehand since this is our first take-profit target.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: 1260.0 region ([an area one could possibly trade at market] stop loss: above the H4 supply at 1264.7-1254.6).

Key Points:

• Price action trading near key reversal zone.
• RSI Oscillator close to overbought.
• FOMC rate hikes likely to start a significant slide in the gold price.

Gold has seen a resurgence over the past few months as the metal has seemingly rallied from the December $1122.75 low as it clawed its way back above the key $1200 handle. Subsequently, price action has proved fairly robust as it has climbed higher in a relatively clear ABCD pattern that looks close to completing around the 61.8% Fibonacci level. However, the momentum has started to stall and we could be seeing the first stages in a retreat back towards the key $1200 handle.

In fact, a cursory review of the underlying technical indicators provides some illuminating information. In particular, the RSI Oscillator is currently flirting with overbought levels and has been for some time despite price action having continued to climb. In addition, price action is nearing a key reversal point at the 61.8% Fibonacci level at $1280.10. This level also happens to coincide with the end of the potential ABCD pattern. Subsequently, the pressures are building for a significant pullback.

Additionally, gold faces another important battle as the FOMC continues to ratchet up the rhetoric for a March interest rate hike. The last decade has seen a relatively impressive correlation between the price of Gold and interest rates (Treasury Yields). The seemingly depressed rates of return, due to economic malaise, has seen capital flood into the precious metal. However, with a new cycle of tightening ahead of us the spectre of looming falls could be very real indeed.

Subsequently, the medium term is likely to see the precious metal fall further to form new lows well below the $1046 mark. In the short run, the most likely scenario involves price action continuing to rise back towards the $1280 mark before a breakout failure sends the metal sharply lower towards the key $1200 handle over a period of weeks.

Ultimately, the upside is likely to be relatively limited for the precious metal by a range of fundamental factors. Subsequently, the most likely contention is the bearish one which may explain some of the current short side positioning that has been evident. Regardless, Gold is in for a rough few weeks given the mounting risk of short term interest rate hikes.

Daily Pivots: (S1) 0.7654; (P) 0.7681; (R1) 0.7699; More...

AUD/USD is still bounded in range of 0.7605/7740 for the moment. Intraday bias stays neutral at this point. Another rise cannot be ruled out. However, considering bearish divergence condition in 4 hour MACD, upside should be limited by 0.7777/7833 resistance zone and bring near term reversal. On the downside, break of 0.7605 support will indicate that rise from 0.7158 has completed already and turn bias back to the downside for 55 day EMA (now at 0.7559) first.

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 0.8186) and above.