Sample Category Title

USD/CHF dropped further to 0.9084 last week but recovered again. Initial bias remains neutral this week first. Outlook stays bearish as long as 0.9407 resistance holds. Sustained break of 61.8% projection of 1.0146 to 0.9355 from 0.9545 at 0.9056 will pave the way to 100% projection at 0.8754, which is close to 0.8756 long term support. Nevertheless, on the upside, break of 0.9407 should confirm short term bottoming and turn bias back to the upside.

In the bigger picture, rise from 0.8756 (2021 low) has completed at 1.0146, well ahead of 1.0342 long term resistance (2016 high). Based on current downside momentum, fall from 1.0146 should be a medium term down trend itself. Next target is a test on 0.8756 low. Strong support should be seen there to bring rebound. Still, further decline will now be expected as long as 0.9407 resistance holds, in any case.

In the long term picture, long term sideway pattern from 1.0342 (2016 high) is extending and it's probably in another medium term down leg. Downside will likely be contained by 0.8756 support in case of deeper fall. Overall, range trading should continue until further development.

AUD/USD edged higher to 0.7062 last week but retreated since then. Initial bias remains neutral this week first. Overall outlook stays bullish as long as 0.6721 support holds. On the upside, break of 0.7062 will resume rise from 0.6169 to 61.8% projection of 0.6169 to 0.6892 from 0.6721 at 0.7168 next. However, firm break of 0.6721 will indicate short term topping, and turn bias back to the downside.

In the bigger picture, corrective decline from 0.8006 (2021 high) should have completed with three waves down to 0.6169 (2022 low). Further rally should be seen to 61.8% retracement of 0.8006 to 0.6169 at 0.7304. Sustained break there will pave the way to retest 0.8006. This will now remain the favored case as long as 0.6721 support holds.

In the long term picture, current development suggests that fall from 0.8006 was merely a correction to the rise from 0.5506 (2020 low). Sustained trading above 55 month EMA (now at 0.7193) will raise the chance of up trend resumption through 0.8006 at a later stage.

USD/CAD fell sharply after hitting 55 day EMA and 1.3519 last week. But stays above 1.3320 support. Initial bias remains neutral this week first. On the downside, break of 1.3320 will resume the fall from 1.3704 to 1.3224 key support level. On the upside, though, above 1.3519 will turn bias back to the upside for 1.3704 resistance.

In the bigger picture, as long as 1.3222 cluster support (38.2% retracement of 1.2005 to 1.3976 at 1.3223) holds, larger up trend from 1.2005 (2021 low) is still expected to resume through 1.3976 high at a later stage. However, firm break of 1.3222/3 will indicate that the trend might have reversed. Deeper fall would be seen to next cluster support at 1.2726 (61.8% retracement at 1.2758).

In the longer term picture, price actions from 1.4689 (2016 high) are seen as a consolidation pattern only, which might have completed at 1.2005. That is, up trend from 0.9506 (2007 low) is expected to resume at a later stage. This will remain the favored case as 55 month EMA (now at 1.2953) holds.

GBP/JPY retreated after rebounding to 161.51 last week. Initial bias remains neutral this week first. On the upside, above 161.51 will bring further rise to 55 day EMA (now at 162.32) and above. Nevertheless, on the downside, break of 155.33 will resume the whole decline from 172.11 to 153.70 fibonacci level.

In the bigger picture, as long as 163.02 support turned resistance holds, decline from 172.11 medium term top is expected to continue to 38.2% retracement of 123.94 to 172.11 at 153.70. Sustained break there will raise the change of trend reversal and target 61.8% retracement at 142.34. Nevertheless, break of 163.02 support turned resistance will argue that the decline has completed, and retain medium term bullishness.

In the longer term picture, as long as 55 month EMA (now at 152.38) holds, rise from 122.75 could still extend higher at a later stage.

EUR/JPY stayed in range of 137.37/142.84 last week and outlook is unchanged. Initial bias remains neutral this week first, and another fall is in favor. Break of 137.37 will resume the whole decline from 148.38 to 135.40 fibonacci level next. However, firm break of 142.84 will argue that the correction from 148.38 has completed, and bring stronger rise back to 146.71 resistance.

In the bigger picture, as long as 55 week EMA (now at 138.62) holds, larger up trend from 114.42 (2020 low) is still in progress for 149.76 long term resistance. However, firm break of 55 week EMA will bring deeper fall to 38.2% retracement of 114.42 to 148.38 at 135.40. Sustained break there will raise the chance of trend reversal, and target 61.8% retracement at 127.39.

In the long term picture, outlook will stay bullish as long as 134.11 resistance turned support holds (2021 high). Sustained break of 149.76 (2014 high) will open up further rally, as resumption of the rise from 94.11 (2012 low), towards 169.96 (2008 high).

EUR/GBP dropped sharply to 0.8720 last week but turned sideway after hitting 55 day EMA. Initial bias is turned neutral this week first. On the downside, below 0.8720 will resume the fall from 0.8896 to 61.8% retracement of 0.8545 to 0.8896 at 0.8679. Sustained break there will pave the way back to retest 0.8545 low. On the upside, though, above 0.8802 will bring retest of 0.8896 resistance.

In the bigger picture, current development argues that rebound from 0.8545 is merely a correction to fall from 0.9267. Sustained trading below 55 day EMA (now at 0.8748) will affirm this bearish case and target 0.8545 and below. Nevertheless, strong rebound from current level will retain near term bullishness for another rise through 0.8896 later.

In the long term picture, long term range pattern is extending. But rise from 0.6935 (2015 low) is expected to extend at a later stage, to 0.9799 (2009 high).

EUR/AUD recovered to 1.5749 last week but retreated from there. Initial bias is turned neutral this week first. Corrective pattern from 1.5976 could still extend with another fall. But strong support could be seen from 38.2% retracement of 1.4281 to 1.5976 at 1.5329 to bring rebound. On the upside, above 1.5749 will resume the rise from 1.5376 for retesting 1.5976 high.

In the bigger picture, it's still early to confirm if rise from 1.4281 represents bullish trend reversal. But as long as 1.5271 support holds, such rally is in favor to continue. Break of 1.5976 will target 1.6434 key resistance next. On the other hand, firm break of 1.5271 will retain medium term bearishness instead.

In the longer term picture, focus stays on 55 month EMA (now at 1.5595). Sustained trading above there will raise the chance of bullish trend reversal, and at least bring further rally to 1.6434 cluster resistance, 38.2% retracement of 1.9799 (2020 high) to 1.4281 at 1.6389. However, rejection by 55 month EMA will suggest that down trend from 1.9799 is still in progress for another low below 1.4281.

EUR/CHF's sharp retreat last week might have completed at 0.9873 already, after drawing support from 55 day EMA. Initial bias is mildly on the upside this week for retesting 1.0095 resistance. On the downside, though, break of 0.9917 minor support will turn bias back to the downside to resume the correction to 38.2% retracement of 0.9407 to 1.0095 at 0.9832.

In the bigger picture, the initial rejection by 55 week EMA (now at 1.0039) mixed up the outlook. On the upside, sustained trading above 55 week EMA will raise the chance of bullish trend reversal. Rise form 0.9407 should then target 1.0505 cluster resistance (2020 low at 1.0505, 61.8% retracement of 1.1149 to 0.9407 at 1.1484). However, firm break of 0.9832 support will revive medium term bearishness and bring retest of 0.9407 low instead.

In the long term picture, it's still way to early too call for bullish trend reversal with upside capped well below 55 month EMA and 1.0505 support turned resistance (2020 low).

BoJ and Davos were the major focuses of last week. Much volatility was seen in Nikkei, JGB yields, and Yen. As dusts settled, the Japanese currencies ended as the worst performer, but closed inside prior week's range. Australian Dollar was the next weakest after poor job data. Dollar was the third, after many Fed officials indicated their support for a 25bps hike in February.

New Zealand Dollar ended the strongest despite Prime Minister Jacinda Ardern's surprised resignation. Sterling and Swiss Franc followed. But it should noted that Euro did stage a strong rebound against European peers after ECB President Christine Lagarde pledged to "stay the course", countering rumors of a slower rate hike.

A look at JGB yield, Nikkei, and NZD/JPY after BoJ drama

Despite all the speculations, BoJ eventually decided to keep monetary policy unchanged last week, maintaining short term interest rate at -0.10% and the 10-year yield cap at 0.50%. Governor Haruhiko Kuroda reiterated the pledge to maintain extremely accommodative monetary for the time being. Much volatility was seen in JGB yields, Nikkei and Yen. However, as BoJ won't meet again until March 8, speculations on policy move should cool for a while.

10-year JGB yield closed lower at 0.404 after hitting as high as 0.585.

The move in 9-year JGB yield was more drastic, hitting as high as 0.700 before eventually closing at 0.488...

and 8-year yield which surged to 0.674 before closing at 0.473.

Yield curve remains "distorted" with a dip at 10-year, but the distortion became much less serious.

Nikkei had a wild ride, hitting 25748.10, the rebounded to 26816.68, then closed the week at 26553.52. For the near term, risk is still mildly on the downside as long as the index stays below the falling 55 day EMA (now at 26926.60), i.e. around 27k handle. A break through 25661.89 support cannot be ruled out. But even in case of a fall, strong support should be seen around 24681.74 to contain downside. The level is close to 55 month EMA, which stands at 24767.44.

While Yen was sold off towards the end of the week, all Yen crosses just closed inside prior week's range. The 2.64% gain in the top mover NZD/JPY might look huge. It's indeed just a leg inside a near term sideway pattern. For the near term, risk will stay on the downside as long as 84.97 resistance holds. Break of 81.02 will extend the corrective pattern from 87.86 (with fall from 88.16 as the third leg) towards 38.2% retracement of 59.49 (2020 low) to 87.86 at 77.02. But break of 84.97 will bring stronger rebound back to 87.86/88.16 resistance zone.

Risk sentiment mixed but Bitcoin hints underlying appetite?

In the US, sentiment was mixed with DOW finished lower by -2.7% for the week, and S&P 500 lost -0.66%. But NASDAQ bucked the trend and gained 0.55%. As for NASDAQ the support from 55 day EMA is a positive sign. Near term focus is back on 11571.64 resistance. Firm break there will indicate at least a stronger rebound back to 13181.08 resistance, with prospect of bullish reversal.

Meanwhile, even though the reversal might still be delayed. It's looking increasing likely that correction from 16212.22 will finish at around current level at 10k handle, with 55 month EMA at 10801.78 and 38.2% retracement of 1265.52 to 16212.22 at 10502.58.

While, again, overall sentiment was mixed, the bullish development in Bitcoin argues that there might be some risk appetite building up underneath. The strong break of 21468 resistance should confirm medium term bottoming at 15452 on bullish convergence condition in daily and week MACD.

It's still early to call for a large scale up trend. But further rally is now expected as long as 20389 support holds. Bitcoin would target 25198 resistance, or even further to 55 week EMA (now at 25730). Reactions from there will reveal the underlying buying momentum.

But anyways, rise in Bitcoin could happen in tandem with NASDAQ, which takes overall markets higher.

Dollar index extending the fall from 114.77

Dollar index's fall from 114.77 has somewhat slowed slightly, but there is no sign of bottoming yet. USD/JPY's mild recovery doesn't warrant a strong rebound yet. At the same time, EUR/USD's up trend is still on the risk track. Additionally, risk on sentiment could continue cap any upside in DXY.

For the near term, further decline is expected as long as 103.44 support turned resistance holds. Fall from 114.77 could extend to 61.8% retracement of 89.20 to 114.77 at 98.96 before getting enough support. Nevertheless, break of 103.44 should at least trigger an attempt towards 55 day EMA (now at 105.08).

USD/JPY Weekly Outlook

USD/JPY edged lower to 127.20 last week but turned sideway since then. Initial bias stays neutral this week first. There is no clear sign of bottoming yet, and another fall remains mildly in favor. Break of 127.20 will resume the whole decline from 151.93 and target 121.43 fibonacci level. Nevertheless, break of 131.56 should confirm short term bottoming, and turn bias back to the upside for stronger rebound.

In the bigger picture, the break of 55 week EMA (now at 131.52) raises the chance of medium term bearish reversal, but that's not confirmed yet. Strong support could be seen around 61.8% retracement of 102.58 to 151.93 at 121.43 and 38.2% retracement of 75.56 to 151.93 at 122.75 to bring rebound. But break of 131.56 resistance is needed to indicate bottoming first. Otherwise further fall will remain in favor.

In the long term picture, 151.93 looks increasingly likely a major top. But it's too early to call for long term bearish reversal at this point. Rebound from around 38.2% retracement of 75.56 to 151.93 at 122.75 will keep the case open for price action from 151.93 to be just a corrective pattern.

Monday, Jan 23, 2023

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