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EURUSD - The pair continues to decline extending its corrective pullback on Tuesday. On the upside, resistance comes in at 1.2000 level with a cut through here opening the door for more upside towards the 1.2050 level. Further up, resistance lies at the 1.2100 level where a break will expose the 1.2150 level. Conversely, support lies at the 1.1900 level where a violation will aim at the 1.1850 level. A break of here will aim at the 1.1800 level. Below here will open the door for more weakness towards the 1.1750. Its daily RSI is bearish and pointing lower suggesting further weakness. All in all, EURUSD faces further downside pressure.

Good day traders!

Commodity remains on bullish side, which was confirmed by a new break to the highs on crude that came out of a fourth wave so fifth wave rise may continue towards our Fib levels placed near 63.00.

Crude oil, 1h

Cable is seen in a fourth wave which will ideally retest levels below 1.35 before it turns up again for a new bullish run into higher degree wave 5. A five wave rally and breach above 1.3612 level would suggest wave 5 to be in progress.

GBPUSD, 1h

The WTI is currently getting close to its December trend lines, and it might be either make it or break it. The POC zone ( Weekly camarilla pivot, D L4, 78.6) is sitting precisely between W H1 and W L1 levels, minor camarillas that usually provide a breakout direction on the instrument. 61.50-70 is the zone. If it rejects the zone, watch for a possible retest of 62.20 and 62.66. However, a drop below 61.50 should aim for 61.24, 60.24 and 60.36 if we see a bearish momentum and 4h close below W L3- 60.94.

• H3 - Weekly Camarilla Pivot (Weekly Interim Resistance)
• W H4 - Weekly Camarilla Pivot (Strong Weekly Resistance)
• D H4 - Daily Camarilla Pivot (Very Strong Daily Resistance)
• D L3 - Daily Camarilla Pivot (Daily Support)
• D L4 - Daily H4 Camarilla (Very Strong Daily Support)
• PPR - Progressive Polynomial Channel
• POC - Point Of Confluence (The zone where we expect price to react aka entry zone)

The euro has continued to drift lower against the greenback during the European trading session, falling to a new 2018 price-low at 1.1921. Broad based intraday strength in the U.S dollar index has been the main drive behind the EURUSD sharp decline. The pair currently trades right around lows of the session, with sellers likely to attempt a further push-lower towards the 1.1910 support region during the upcoming U.S session. The release of U.S Jobs data, and the U.S dollar index's next directional move will likely set the tone for remainder of Tuesday trading.

The EURUSD pair remains strongly bearish while trading below the key 1.1958 level, further losses towards 1.1910 and 1.1858 remain possible.

Should price-action recover above the 1.1958 level, upside resistance for the EURUSD pair is found at the 1.1989 and 1.2030 levels.

The British pound has fallen sharply against the U.S dollar during the European trading session, as buying in the greenback gathers pace. The GBPUSD pair has so far found interim support around the 1.3513 level, with price-action now consolidating around the 1.3530 region. Technical selling accelerated in the pair after a series of failed attempts towards the 1.3585 level, and a strong move-up in the U.S dollar index towards the 92.60 level. Sterling traders now await the release of the U.S JOLTS job opening report, and key Manufacturing data from the United Kingdom on Wednesday.

The GBPUSD pair is intraday bearish while trading below the 1.3550 technical level, further losses towards the 1.3500 and 1.3468 level seem likely.

Should price-action on the GBPUSD pair move above the 1.3550 level, buyers may push price back towards the 1.3585 and 1.3612 resistance points.

Earnings, Retail Sales and Inflation Eyed on Friday

US futures are trading a little flat once again ahead of the open on Tuesday, potentially a sign that markets have entered wait and see mode ahead of the start of earnings season.

Friday marks the unofficial start of earnings season and given the relative lack of notable economic events at the start of the week, it's not surprising to see little movement so far. Equity markets in the US are trading at record highs and with high expectations for earnings season already baked in, there may be an element of caution among investors who will be eagerly anticipating the first batch of results.

Of the economic reports being released this week, the two that stand out are inflation and retail sales figures for December, both of which provide important insight into the US economy. At a time when questions are being asked about whether the Federal Reserve should be pursuing such aggressive tightening, these numbers are very important in determining whether such a move is warranted or should be halted.

Nine Year Low in Unemployment Does Little to Lift the Euro

It's been a relatively quiet morning in Europe on the economic data side as well, with only low tier figures being released. Of those released, the one that stands out was the eurozone unemployment release for November, which fell to 8.7 – the lowest since January 2009 – in line with expectations. This further supports the view that significant progress is being made in the region, although as ever the benefits are not even with some countries in the periphery still seeing very high jobless numbers. Italy, for example, saw unemployment fall to 11%, its lowest since late 2012.
Eurozone Unemployment

The drop in unemployment did nothing to lift the euro, which continued to slide against the dollar, pound and yen. The euro had been on an impressive run up until the end of last week but it appears to have run out of steam just shy of September's highs against the greenback. It's off almost 1.5% from last week's highs but may find some support around 1.19 – 1.1850.

Bitcoin Struggling Again After Modest Late Monday Recovery

Bitcoin continues to be as volatile as ever. After suffering substantial losses on Monday – down close to 15% at one point – Bitcoin did make a modest recovery late in the day but that appears to have been short-lived. It's trading down around 2% currently on the day and I wonder whether the sell-off over the festive period has knocked speculators confidence in it to make the kind of recoveries we saw at times last year.

The inability to make these kinds of recoveries may just be temporary and a period of stability may be sufficient to draw traders back in but I wonder whether another correction may take place before that happens. Bitcoin may have gone through a large correction over the last month but even that only represented about half the huge rise between mid-November and mid-December. Should it survive a couple more weeks without any scares then I think we could see appetite for Bitcoin return.

The DAX has posted slight gains in the Tuesday session. Currently, the index is at 13,380.00, up 0.10% on the day. On the release front, German Industrial Production rebounded with a sharp gain of 3.4%, above the estimate of 1.9%. Germany’s trade surplus widened to EUR 22.3 billion, beating the forecast of EUR 20.7 billion. The eurozone unemployment rate ticked down to 8.7%, matching the forecast.

World stock markets have been pointing upwards early in the New Year, and the DAX has also looked sharp, climbing 3.8% in January. Led by a robust German economy, the eurozone is on track for a strong fourth quarter, as the economy continues to expand and unemployment falls. Inflation has also moved higher, although the ECB is unlikely to reconsider its current stimulus program, which ends in September. One area of concern is the political vacuum in Germany. President Angela Merkel is running a caretaker government, as she has been unable to form a coalition, following the September elections. Merkel is now looking at the Social Democrats to help her make a new government, and preliminary talks are scheduled to begin on Sunday. The negotiations are moving slowly, and are likely to continue for several more months.

German indicators looked sharp on Tuesday. Industrial Production jumped 3.2%, after two consecutive declines. This marked only the second gain since July. Germany’s trade surplus climbed to EUR 22.3 billion in December, its highest surplus since May 2016. December indicators have pointed upward, including manufacturing and services PMIs, retail sales, and employment data. However, the political landscape in the eurozone’s largest economy remains cloudy. President Angela Merkel is now looking at the Social Democrats to help her make a new government, and preliminary talks are underway. The negotiations are likely to be lengthy, and the current caretaker government could remain in office for several more months.

The euro has edged lower in the Tuesday session, following two straight losing sessions. Currently, EUR/USD is trading at 1.1929, down 0.35% on the day. On the release front, German Industrial Production rebounded with a sharp gain of 3.4%, above the estimate of 1.9%. Germany’s trade surplus widened to EUR 22.3 billion, beating the forecast of EUR 20.7 billion. The eurozone unemployment rate ticked down to 8.7%, matching the forecast. In the US, today’s key event is JOLTS Job Openings, which is expected to climb to 6.05 million.

More German indicators more positive news. Industrial Production jumped 3.2%, after two consecutive declines. This marked only the second gain since July. Germany’s trade surplus climbed to EUR 22.3 billion in December, its highest surplus since May 2016. December indicators have pointed upward, including manufacturing and services PMIs, retail sales, and employment data. However, the political landscape in the eurozone’s largest economy remains cloudy. President Angela Merkel is now looking at the Social Democrats to help her make a new government, and preliminary talks are underway. The negotiations are likely to be lengthy, and the current caretaker government could remain in office for several more months.

When the Federal Reserve makes the financial headlines, the discussion is usually focused on interest rates. The Fed took advantage of a strong US economy in 2017, raising interest three times. Another quarter-point hike is widely expected later in January. As of this month, the Fed has started to shrink its massive balance sheet of $4.4 trillion. The balance sheet ballooned during the financial crisis of 2008-2009, and good times have allowed the Fed to begin trimming its portfolio. Incoming Fed Chair Jerome Powell, who takes over in February, has estimated that the balance sheet could drop to anywhere between $2.4 trillion to $2.9 trillion after several years of cuts. Fed policymakers have not indicated a magic number for the balance sheet, but the cuts indicate a vote of confidence in the US economy.

Yen Strengthens on BOJ's QE tightening
400 days without a 5% correction for US indices
Samsung chip business undeforms

European markets are trading higher as investors have reacted to positive German industrial data. The number was simply astonishing, and it printed the reading of 3.4% when the market was expecting a number of 1.8%.

However, the Euro-Dollar paid is still facing it's inevitable correction and this is purely because traders are quick on their feet to take some profit off the table (as the pair touched its high of 1.2083). The strong rebound in the dollar may keep the pressure on the euro for a while but we are not expecting any major selloff. The strength of the Eurozone's economy is robust and it's economic indicators are still pointing that the economy would continue to accelerate at a respectable pace in 2018.

The recent CFTC data also confirms that the recent retracement is only a healthy correction as institutional money still holds a record amount of net long positions. The German industrial data released today puts the approval stamp for traders to hold the bullish view for the euro.

The Eurozone's unemployment number could lift the confidence for amid investors and for the ECB. A Lower unemployment rate doesn't necessarily mean inflation would improve, a measure which the ECB watches very closely, but it is a step in the right direction.

Looking at the performance of the US indices, one thing becomes apparent that the market has moved higher mostly on basis of positive sentiment. It is this very fact that we have not have seen the usual 5% healthy correction which the traders crave for. A correction of 5-10% mostly represents an opportunity for those who have been sitting on the sideline and have not had a chance to participate. In nearly 400 days, we have seen a 5% correction from its 52 week's high.

Similarly, the MSCI world index has also logged its longest winning streak in history without facing a 5% correction. Looking at these record numbers, it becomes evidently clear that the odds are stacked in favour of correction and the correction could extend even further from 5% but we do not expect a meltdown in the market because it's foundation appears to be on strong fundamentals.

The dollar-yen pair is one the most intriguing pair to watch today after the BOJ decided tow tweaked it's bond purchase program. The bank curbed its buying of 10-to -25 years year debt by 10 billion yen. The first cut in debt purchase since 2016 sends the signal to the markets that the super-loose monetary policy party is also coming to an end.

Bitcoin Above 15K

Bitcoin has broken the 15K level once again, an important junction (because if it stays above this, chances are going to continue to make record highs), due to the regulatory concerns. South Korea wants to tighten the regulatory screw again by looking at some specific accounts and China wants to limit the bitcoin mining operation. But these aspects have proven only a blip for Bitcoin and nothing more. Every time, we have heard any regulatory news impacting the cryptocurrency, it has proven to be only an opportunity for bargain hunters to jump onboard. Of course, one may say that Bitcoin is a bubble and it will burst, but the only reality about bubbles is that once they burst, they never come back again. For bitcoin, we have seen several massive price crashes over time, however, the price has bounced back up. Just like the S&P500 index, the big drop during the financial crisis presented the biggest opportunity in a decade.

Samsung Missed It's Earning

It wasn't the kind of quarter that investors were hoping for Samsung. A 1 trillion won or $937 million fourth-quarter profit miss is really a sad news if you are holding Samsung stock. This is primarily due to the downturn in firms chip prices. It was company's strong chip business performance which aided the firm to report robust quarterly earnings in Q2 and Q3. Of course, there is an element of strengthening currency effect which cannot be ignored. Samsung has a strong and prominent position when it comes to its next generation of screens known as organic light -emitting diodes and this area of their business did fuel a rise in sales. Going into Q1 of 201, we do expect their marketing strategies in Q4 of 2017 may bring a steep rise in the top line profit number. Having said that we do believe that their memory chip cycle has peaked as firms like Apple which buys OLED screen and memory chips are looking to make them under their own roof or looking at an alternative method.

Strong bullish acceleration on Tuesday extended recovery leg from 0.9699 (02 Jan low) and penetrated daily cloud (cloud base lies at 0.9813).

Increasing risk appetite on brighter US rate outlook and improving environment on lift above daily Tenkan-sen (0.9801), support the advance.

Narrowing daily cloud which twists next week also attracts as 100/200SMA bull-cross (formed on 04 Jan) underpins the action.

Bulls face immediate barrier at 0.9832 (Fibo 61.8% of 0.9915/0.9699 bear-leg / falling 20SMA), break of which would open cloud top (0.9863) for test.

Initial support lies at 0.9800, followed by pivotal supports at 0.9780 zone, which are expected to hold and keep the downside protected.

Res: 0.9832, 0.9863, 0.9881, 0.9915
Sup: 0.9800, 0.9780, 0.9750, 0.9732