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Trade Idea Wrap-up: GBP/USD – Buy at 1.3350
GBP/USD - 1.3408
Most recent candlesticks pattern : N/A
Trend : Sideways
Tenkan-Sen level : 1.3433
Kijun-Sen level : 1.3404
Ichimoku cloud top : 1.3351
Ichimoku cloud bottom : 1.3338
Original strategy :
Buy at 1.3350, Target: 1.3450, Stop: 1.3315
Position : -
Target : -
Stop : -
New strategy :
Buy at 1.3350, Target: 1.3450, Stop: 1.3315
Position : -
Target : -
Stop : -
As cable found good support at 1.3303 earlier this week and has staged a strong rebound, suggest low has been made there and consolidation with mild upside bias is seen for this rebound from 1.3303 to extend gain to 1.3475-80, then 1.3500, however, near term overbought condition would limit upside and price should falter below indicated resistance at 1.3432, bring another decline later.
In view of this, we are looking to buy cable on dips as 1.3345-50 should limit downside. Below 1.3320-25 would defer and suggest the rebound from 1.3303 has ended, bring retest of this level first, break there would extend the fall from 1.3550 top to 1.3280 and later 1.3250 but price should stay well above previous support at 1.3221.
Trade Idea Wrap-up: EUR/USD – Stand aside
EUR/USD - 1.1803
Most recent candlesticks pattern : N/A
Trend : Near term down
Tenkan-Sen level : 1.1829
Kijun-Sen level : 1.1805
Ichimoku cloud top : 1.1765
Ichimoku cloud bottom : 1.1749
Original strategy :
Exit short entered at 1.1835,
Position : - Short at 1.1835
Target : -
Stop : -
New strategy :
Stand aside
Position : -
Target : -
Stop : -
Yesterday’s strong rebound due to dollar’s broad-based weakness after Fed suggests a temporary low has been formed at 1.1717, hence consolidation above this level would be seen with mild upside bias and gain towards 1.1880 cannot be ruled out, however, near term overbought condition should prevent sharp move beyond 1.1900 and price should falter well below resistance at 1.1940, bring retreat later.
In view of this, would be prudent to stand aside in the meantime. Below 1.1775-80 would suggest an intra-day top is formed instead, bring weakness to 1.1750 but break of 1.1735-40 is needed to revive bearishness and signal the rebound from 1.1717 has ended, bring retest of this level.
US: High Consumer Confidence Matters – Retail Sales Surge
Retail sales surged in November, giving more credence to the strong consumer confidence numbers. Retail sales surged 0.8 percent after an upward revision, from 0.2 percent to 0.5 percent in October.
Gasoline Sales Helped but Overall Retail Sales Were Strong
With the 0.8 percent increase in retail and food services sales in November, plus the upwardly revised October number, from 0.2 percent to 0.5 percent, the last quarter of the year is shaping up to be all that we had envisioned: this holiday season will be a merry one. Furthermore, the strength in retail sales gives credence to the strong increase we have seen for consumer confidence during the past year. That is, the U.S. consumer was highly upbeat going into the last quarter of the year.
The only negative reading for retail sales in November was motor vehicle & parts dealers' sales, which declined 0.2 percent. This was expected as the increase in automobile sales that followed hurricanes Harvey and Irma as people replaced hurricane damaged cars faded away.
It is true that gasoline station sales were up considerably, 2.8 percent, likely due to the recent increase in gasoline prices. However, sales at furniture & home stores were up a strong 1.2 percent while purchases at electronics & appliance stores were up a strong 2.1 percent. Meanwhile, sales from nonstore retailers surged 2.5 percent, which shows the continuous improvement of online retailers and their advance over the more traditional retail sales distribution channels. Furthermore, sales at building material & garden equipment & supplies dealers were also up a strong 1.2 percent, perhaps as a consequence of the rebuilding after the hurricanes, while sales at sporting goods, hobby, book & music stores were up 0.9 percent.
Clothing & clothing accessories stores' sales were up 0.7 percent while health & personal care stores' sales were up 0.4 percent. Meanwhile, sales at food & beverage stores inched up 0.2 percent while general merchandise stores' sales were flat. However, within this sector, sales at department stores, which is one of the weakest sectors of retail, managed to increase 0.3 percent during the month.
Rounding out the report, food services & drinking places' sales, which represent the service side of the retail report, increased a strong 0.7 percent. This sector had been slowing down for some time.
Strong Control Group Sales Good News for PCE and GDP
Perhaps the most market-changing release in November was the very strong control group sales print. Control sales, which are retail sales less food services, gas, automobiles and building materials, and used for the calculation of GDP, surged 0.8 percent in the month. Furthermore, October control group sales were also upwardly revised, from 0.3 percent to 0.4 percent. This means that we should expect another strong performance by the U.S. consumer during the last quarter of the year. The biggest question would probably be: where are consumers getting the money for this strong consumer performance with income growth remaining low?
Trade Idea Wrap-up: USD/JPY – Stand aside
USD/JPY - 112.63
Most recent candlesticks pattern : N/A
Trend : Near term up
Tenkan-Sen level : 112.73
Kijun-Sen level : 112.92
Ichimoku cloud top : 113.44
Ichimoku cloud bottom : 113.40
Original strategy :
Exit long entered at 112.60,
Position : - Long at 112.60
Target : -
Stop : -
New strategy :
Stand aside
Position : -
Target : -
Stop : -
Although the greenback recovered after finding support at 112.46, yesterday’s selloff suggests top has been formed at 113.75, hence upside would be limited to the Kijun-Sen (now at 112.96) and downside risk remains for the retreat from 113.75 to extend weakness to 112.30-35, however, near term oversold condition should limit downside and support at 111.99 should remain intact.
In view of this, would be prudent to stand aside in the meantime. Above previous support at 113.12 (now resistance) would suggest low is possibly formed, bring a stronger rebound to 113.40-45 but price should falter below resistance at 113.75 and bring another decline later.
US: Retail Sales Surge in November on Black Friday and Cyber Monday Strength
Retail sales surged 0.8% in November according to the advance Census Bureau report. This was well ahead of expectations for a 0.3% rise and came atop of large upward revisions to October sales - which are now reported to have risen by 0.5% instead of 0.2%.
Sales at motor vehicle & parts dealers (-0.2%) did little for the headline unlike gasoline station sales which rose by a robust 2.8% - partly a price story. Still, excluding autos and gas, retail sales were up just as much as the headline (0.8%) on the month, also beating expectations of a 0.3% gain.
Building materials (1.2%) had a good month as rebuilding from hurricane damage continued - the series is up 4% since August and 11.2% higher than a year ago - as did eating and drinking place sales (+0.7%). Excluding gas, autos, building materials, and food services, the so-called 'control group' used in calculating GDP was up 0.8% on the month - more than double the consensus call. All the categories in the control group rose, with non-store retailers (+2.5%), electronics (+2.1%), and furniture (+1.2%) leading the pack.
Key Implications
This was a terrific report with a consensus-busting headline that suggests that Americans are finally using the fruits of their labor to buy things for themselves and their loved ones. Strong payroll growth and solid wage gains have together manifested in a windfall of income gains which appears to have been put to use during the Black Friday and Cyber Monday sales ahead of Christmas. Non-store retailers, a category which includes many e-commerce sales, posted a healthy gain that was up 10.5% from last year.
Other encouraging features of the report included the broad-based strength, with just one major category (motor vehicles & parts), lower on the month, and only slightly. Sales of electronics were up higher, likely helped by the release of the new iPhone, but taken together with strength in restaurants suggest that consumers are increasingly comfortable spending on discretionary categories - not just the essentials.
Strength in building materials and furniture was also encouraging. While this partly stems from the rebuilding effort in Texas and Florida following the devastation caused by Harvey and Irma, respectively, it also is a sign of improving housing market activity related to higher existing home sales this year.
Together with the upward revisions, this report suggest that PCE growth during the fourth quarter will be nearly 0.2 percentage points stronger at 2.8% annualized - a fact that has also boosted our GDP tracking for the quarter to 2.8%. The report should also assuage some anxieties amongst the FOMC membership. The Fed rose rates yesterday and pointed to three hikes for 2018. While we think the latter is a bit optimistic, with our baseline forecast having two hikes next year, this report suggests some upside to that call, particularly if it spurs on stronger price growth with it.
EURUSD: Strengthens, Remains On The Offensive
EURUSD: The pair continues to retain its upside pressure with price extension expected. Resistance comes in at 1.1900 level with a cut through here opening the door for more upside towards the 1.1950 level. Further up, resistance lies at the 1.2000 level where a break will expose the 1.2050 level. Its daily RSI is bullish and pointing higher suggesting more strength. Conversely, support lies at the 1.1800 level where a violation will aim at the 1.1750 level. A break of here will aim at the 1.1700 level. Below here will open the door for more weakness towards the 1.1650. All in all, EURUSD faces further downside weakness
EURUSD Posts Neutral to Bullish Bias in Short-Term Timeframe
EURUSD has a neutral to bullish bias in the very short-term timeframe as it struggled within the 38.2% and the 50.0% Fibonacci retracement levels with high at 1.1960 and low at 1.1716. During yesterday's trading session, the common currency pair penetrated above the descending trend line that was holding since December 1st, on the 1-hour chart, and hit the 1.1843 price level.
Further potential upside move is expected until 61.8% Fibo level, near 1.1867. On the reverse side, if the price plunges below the 1.1810 barrier (also the 38.2% Fibonacci level), it will open the way for the 1.1792 level. Momentum indicators are still developing within positive territory but with weakening momentum. The MACD oscillator slipped below its trigger line, whilst the RSI indicator is slightly sloping to the upside. It is worth mentioning that the 50-simple moving average (SMA) created a bullish crossover with the 100-SMA, signaling a bullish tendency in the near term.
Looking at the bigger picture, the pair posted a green day on Wednesday, surging more than 0.7%, following the rebound on the 1.1716 strong support level and the downside pressure has paused for now.
USDJPY Now Bearish Below 113.10 Level
The U.S dollar has moved sharply lower against the Japanese yen following the FOMC monetary policy decision, hitting 112.40. The USDJPY tumbled after the policy statement was released, after already being under selling pressure on Wednesday, following softer November CPI inflation figures from the U.S economy. The pair currently trades around the 112.70 technical level, managing just a marginal recovery from the weekly-low thus far. Heading into the U.S session, the dollar will again take center stage, as U.S Retail Sales and weekly jobs data is released.
The USDJPY pair remains strongly bearish while trading below the 113.10 technical level, intraday sellers may look to test the 112.40 and 112.00 technical support levels.
Should price-action on the USDJPY pair move above the 113.10 technical level, buyers may again test demand towards the 113.34 and 113.75 resistance levels.
Trade Idea: USD/CAD – Buy at 1.2765
USD/CAD - 1.2848
Trend: Near term up
Original strategy :
Buy at 1.2765, Target: 1.2915, Stop: 1.2705
Position: -
Target: -
Stop: -
New strategy :
Buy at 1.2765, Target: 1.2915, Stop: 1.2705
Position: -
Target: -
Stop:-
The greenback retreated after meeting resistance at 1.2880 and further consolidation below this level would be seen, however, reckon downside would be limited to 1.2750-60 and bring another rise, above 1.2880 would extend the rebound from 1.2623 towards resistance at 1.2917 but break there is needed to confirm upmove has resumed for headway to 1.2975-80 (61.8% Fibonacci retracement of 1.3547-1.2061), then towards psychological resistance at 1.3000.
In view of this, would not chase this rise here and would be prudent to buy on subsequent pullback as 1.2750-60 should limit downside. Only below 1.2705-10 would abort and prolong choppy trading, bring weakness to 1.2650-55, however, downside should be limited and price should stay above said support at 1.2623, bring another rebound later.
To recap, wave B from 1.3066 is unfolding as an a-b-c and is sub-divided as a: 1.2192, b: 1.2716 and wave c is a 5-waver with i: 1.1983, ii: 1.2506, extended wave iii with minor iii at 1.0206, wave iv ended at 1.0781 and wave v as well as wave iii has ended at 0.9931, hence the subsequent choppy trading is the wave iv which is unfolding as (a)-(b)-(c) with (a) leg of iv ended at 1.0854, followed by (b) leg at 1.0108 and (c) leg as well as the wave iv ended at 1.0674. The wave v is sub-divided by minor wave (i): 0.9980, (ii): 1.0374, (iii): 0.9446, (iv): 0.9913 and (v) as well as v has possibly ended at 0.9407, therefore, consolidation with upside bias is seen for major correction, indicated target at 1.3700 and 1.4000 had been met and further gain to 1.4700 would be seen later.
GBPUSD Still Bullish While Above 1.3400
The British pound has turned lower against the U.S dollar, following the Bank of England monetary policy decision. The GBPUSD pair fell towards the 1.3400 support level, after BOE policy member kept rates unchanged at 0.50 percent, with all MPC members voting to keep rates unchanged. The pair had previously spiked to 1.3466, after UK Retail Sales came in better than expected, rising 1.1 percent in November. Traders now await the release of November Retail Sales data from the American economy.
The GBPUSD pair remains intraday bullish while holding key the 1.3400 technical level. Buyers will likely target the 1.3442 and 1.3470 resistance levels while above 1.3400.
Should price-action on the GBPUSD pair move back below the 1.3400 level, sellers will likely target the 1.3380 and 1.3340 levels.
