Sample Category Title

Cable remains firm and extends bull-leg from 1.3071, testing key near-term barriers at 1.3261/66 (daily cloud top/Fibo 38.2% of 1.3655/1.3026 descend), on fresh acceleration higher on Tuesday. Resistances were cracked on Monday's spike to 1.3279, but bulls failed to sustain break higher and closed well below barriers. Firm bullish setup on lower timeframes favors further upside, however, daily studies are lacking momentum and slow stochastic is overbought which may result in stronger hesitation at 1.3161/66 pivots. Daily cloud base marks key near-term support and should contain dips to keep bullish bias in play. Eventual break above cloud top would open way towards key s/t barriers at 1.3320/37 (01 Nov/13 Oct peaks).

Res: 1.3266, 1.3279, 1.3309, 1.3320
Sup: 1.3246, 1.3214, 1.3180, 1.3125

The Euro is in recovery mode on Tuesday after strong fall on Monday was contained by rising daily Tenkan-sen which formed bullish-cross with Kijun-sen last Friday.

Recovery is underpinned by rising 4-hr cloud and probes above initial barrier at 1.1751 (broken 100SMA).

Bulls may extend towards 1.1785 (55SMA) which marks pivotal point for fresh attempts above psychological 1.1800 barrier and retest of daily cloud base (1.1812).

However, last week's strong upside rejection on probe into daily cloud continues to weigh, along with thickening daily cloud, warning of possible repeated failure.

Downside risk is expected to remain in play while the price stays capped under 55SMA, with loss of lower pivot at 1.1720 (converged 10/30SMA's) expected to generate fresh bearish signal for deeper correction of 1.1553/1.1859 bull-leg.

Weekly cloud twist in early Dec could attract stronger weakness.

Res: 1.1757, 1.1785, 1.1812, 1.1859
Sup: 1.1720, 1.1706, 1.1682, 1.1670

Weekly

    •    Last Candlesticks pattern: Shooting star 
    •    Time of formation: 31 Jul 2017
    •    Trend bias: Near term up

Daily

    •    Last Candlesticks pattern: Shooting star
    •    Time of formation: 2 Aug 2017
    •    Trend bias: Up

EUR/USD – 1.1674

Last week’s stronger-than-expected rebound suggests low has been formed at 1.1554 earlier this month (with a hammer candlestick reversal pattern on the daily chart) and consolidation with upside bias is seen for gain towards resistance at 1.1880, however, a daily close above there is needed to retain bullishness and signal the correction from 1.2093 high has indeed ended at 1.1554, bring further rise to 1.1935-40, then 1.2005. Looking ahead, above there would confirm recent upmove has resumed for retest of 1.2093, break there would extend the rise from 1.0340 low to 1.12150-55 first.

On the downside, whilst initial pullback to 1.1700 cannot be ruled out, reckon downside would be limited to 1.1650-60 and bring another rise later. Below 1.1637 support would defer and risk weakness to 1.1600, then towards said support at 1.1554, once this support is penetrated, this would revive our near term bearishness and signal a temporary op has been formed at 1.2093, bring retracement of early upmove to 1.1500 and later towards 1.1465-66 (50% Fibonacci retracement of 1.0839-1.2093) but reckon 1.1370 support would hold and price should stay above 1.1312-18 (previous support and 61.8% Fibonacci retracement).

Recommendation: Buy at 1.1665 for 1.1865 with stop below 1.1565.

On the weekly chart, last week’s rebound to 1.1861 suggests low has been formed at 1.1554 earlier this month, hence consolidation above this level would be seen with mild upside bias for another test of said resistance at 1.1880, however, only break there would signal the pullback from 1.2093 top has ended at 1.1554, bring further gain to 1.1940-50, then test of 1.2005, once this level is penetrated, this would confirm early rise from 1.0340 low has resumed for retest of 1.2093, above there would extend headway to 1.2150-55, then 1.2200-10 later.

On the downside, although pullback to 1.1700 and possibly 1.1650-60 cannot be ruled out, downside would be limited and bring another rebound. A drop below said support at 1.1554 would signal a temporary top has been formed at 1.2093, bring retracement of recent rise to 1.1500, then 1.1466 (50% Fibonacci retracement of 1.0839-1.2093) but reckon downside would be limited to 1.1400 and 1.1312-18 (previous support and 61.8% Fibonacci retracement) should hold, price should stay above previous minor resistance at 1.1296, bring another rebound.

GBPUSD continues trading within the last few months' range and has been respecting the key 1.3000 support level. The upward trajectory from multi-decade lows is still in progress and there are no signs of a trend reversal yet. The intra-day bias is to the upside.

The short-term neutral trend has been ranging between 1.3026 and 1.3337 following a decline from 1.3656. Recent gains have stalled below the 50-day moving average which is now acting as resistance. Prices have not traded above this level (1.3260) since early November. Breaking above it would target resistance at 1.3300 (round figure) and 1.3318 (38.2% Fibonacci retracement of the latest rally from 1.2773 to 1.3656). This Fibonacci level is near the range-high and if the market rises above it then downside pressure would weaken and shift the focus to the upside for a re-test of the 1.3656 high. From this point GBPUSD would see a resumption of the longer-term uptrend.

Key support is at the psychological level of 1.3000. A move lower would target the 1.2773 low to retrace all of the August to September rise. Any further extension lower would shift the short-term bias from neutral to bearish.

In the bigger picture GBPUSD is slowly tracking higher and the crossover of the 50 and 200-day moving averages back in May gave a bullish signal. The MACD is neutral, suggesting the consolidation phase is incomplete but near-term risk is tilted to the upside as indicated by the rising RSI.

Daily Pivots: (S1) 0.7537; (P) 0.7555; (R1) 0.7567; More...

Intraday bias in AUD/USD remains on the downside for the moment. Current decline from 0.8124 should target next key cluster level at 0.7322/8. On the upside, above 0.7607 minor resistance will turn intraday bias neutral. But outlook will stay bearish as long as 0.7729 resistance holds.

In the bigger picture, corrective rise from 0.6826 medium term bottom is likely completed at 0.8124, after hitting 55 month EMA (now at 0.8049). Decisive break of 0.7328 key cluster support (61.8% retracement 0.6826 to 0.8124 at 0.7322) will confirm. And in that case, long term down trend from 1.1079 (2011 high) will likely be resuming. Break of 0.6826 will target 61.8% projection of 1.1079 to 0.6826 from 0.8124 at 0.5496. This will now be the favored case as long as 0.7729 near term resistance holds.

USD/CHF - 0.9927

Most recent candlesticks pattern : N/A

Trend                                    : Near term down

Tenkan-Sen level                  : 0.9931

Kijun-Sen level                    : 0.9910

Ichimoku cloud top                 : 0.9911

Ichimoku cloud bottom              : 0.9897

Original strategy :

Sold at 0.9935, Target: 0.9835, Stop: 0.9950

Position : - Short at 0.9935

Target :  - 0.9835

Stop : - 0.9950

New strategy  :

Hold short entered at 0.9935, Target: 0.9835, Stop: 0.9950

Position : - Short at 0.9935

Target :  - 0.9835

Stop : - 0.9950

Dollar’s rebound after finding support at 0.9876 suggests further consolidation would be seen, as long as indicated resistance at 0.9946 holds, bearishness remains for another retreat, below said support at 0.9876 would add credence to our view that the rebound from 0.9846 has ended at 0.9946, bring further fall to 0.9860, then retest of 0.9846. Once this level is penetrated, this would signal the erratic decline from 1.0038 top has resumed for at least a retracement of early upmove to previous resistance at 0.9837, break below there would encourage for subsequent decline towards 0.9795-00.

In view of this, we are holding on to our short position entered at 0.9935. Above said resistance at 0.9946 would defer and risk test of 0.9970-75 but price should alter below resistance at 0.9987, bring another decline later. 

Daily Pivots: (S1) 1.2775; (P) 1.2798; (R1) 1.2841; More....

Focus is back on 1.2819 minor resistance. Break will indicate that pull back from 1.2916 is completed. Intraday bias will be turned back to the upside. Further break of 1.2916 will resume whole rally from 1.2061 to 38.2% retracement of 1.4689 to 1.2061 at 1.3065. In case of another fall, we'd expect downside to be contained by 1.2598 resistance turned support and bring rebound.

In the bigger picture, USD/CAD should have defended 50% retracement of 0.9406 (2011 low) to 1.4689 (2016 high) at 1.2048. And with 1.2048 intact, we'd favor the case that fall from 1.4689 is a correction. Rise from 1.2061 medium term bottom should now target 38.2% retracement of 1.4689 to 1.2061 at 1.3065. Firm break there will target 1.3793 key resistance next (61.8% retracement at 1.3685). We'll now hold on to this bullish view as long as 1.2450 support holds.

Sunrise Market Commentary

• Rates: Absence of strong trading themes
  Today's eco calendar is uneventful. The prospects of new German elections could cause an outperformance of Bunds versus US Treasuries. Risk sentiment remains a potential market driver as well. Later this week, EMU eco data will play first fiddle while US trading is expected to slow down to a trickle with Thanksgiving and Black Friday looming.
• Currencies: EUR/USD drifts cautiously lower in technical trade
  Yesterday, EUR/USD declined partially due to uncertainty on German politics. The dollar profited slightly from a growing interest rate support. There are few important data to guide trading today. The dollar might gain slightly further ground against the euro. Sterling rebounds as the UK government might do some further concession in the Brexit negotiations

The Sunrise Headlines

• US stock markets traded with a small upward bias to end the session 0.1% higher with the Dow outperforming (+0.3%). Asian risk sentiment is positive with Japan (+1%) and China (+1.5%) outperforming.
• German Chancellor Merkel said she'd rather face new elections than govern without a majority, betting that voters won't blame her after four-party talks on forming a coalition collapsed.
• Theresa May won ministerial backing for her plan to break the deadlock in Brexit talks next month, but Eurosceptic colleagues warned that any increase in the UK's “divorce bill” offer to at least €40bn must be conditional on it securing a transition deal and a good trade agreement with the EU.
• Paris (European Banking Authority) and Amsterdam (European Medicines Agency) have been chosen as the new homes for two prized EU agencies, after ministers in Brussels resorted to picking names from a hat to decide where the two organisations and their combined 1,000 staff should move after Brexit.
• Australia's central bank warned of 'considerable uncertainty' about how quickly wages growth and inflation might pickup, as it left interest rates at record lows for more than a year.
• The ECB will probably make small tweaks to its guidance on monetary policy next year rather than any major change in language, officials familiar said.
• Today's eco calendar remains thin UK public finance data and US existing home sales. Finland and the US tap the market. ECB Coeuré speaks

Currencies: EUR/USD Drifts Cautiously Lower In Technical Trade

USD profits slightly from rising interest rate support

Yesterday, trading in the major USD cross rates, especially in EUR/USD, was quite volatile. EUR/USD dropped sharply in Asia due to the collapse of the German coalition talks, but the move was undone in early European dealings, as European (equity) markets recouped opening losses. Later, EUR/USD returned south. The risk of new German election still might have played a role, but the move included also USD strength as interest rate differentials widened in favour of the dollar. EUR/USD closed the session at 1.1735 (from 1.1790). The gains in USD/JPY were modest (close: 112.62).

Overnight, risk sentiment turned remarkably positive. Most Asian indices show decent gains, with China outperforming. Even so, the positive risk sentiment had again no positive impact on USD/JPY. The pair trades in the mid 112.50 The dollar is also losing a few ticks against the euro. EUR/USD trades in the 1.1750 area. The Aussie lost slightly, as the RBA sounded quite dovish, worrying about low wage rises. AUD/USD trades at about 0.7545.

Today, eco calendar remains thin. Markets might keep an eye at the US Existing Home sales. Sales are expected to have stabilized in October (5.40 M annual rate), after a sluggish rebound in September. We side with the consensus view. The market impact, if any, will only be second tier.

Yesterday, there was no clear theme/driver to guide trading in the major US cross rates. The impact of the German political crisis on the euro was a bit diffuse. In the end the dollar did win on points, but the gain was mediocre given the high/rising interest rate support. Sentiment on risk and technical considerations will remain the drivers for USD trading in a market were liquidity becomes thinner in the run-up to Thanksgiving. We maintain a cautiously negative bias on EUR/USD and assume that the 1.1861/80 area will be difficult to break. The dollar profited only modestly from the rising interest rate differential of late. At the same time, the high yield spread should at least make investors cautious to be USD short, giving the USD currency downside protection.

From a technical point of view, EUR/USD set a post-ECB low two weeks ago, but the move petered out. EUR/USD last week regained intermediate resistance at 1.1690/1.1837, but the 1.1880 MT correction top was left intact. A break above the latter would suggest a full retracement to the 1.2092 correction top. We don't preposition for such a scenario unless real negative news from the US pops up. On the downside, the 1.1554 reaction low remains the first important reference, but it is still far away. A downside correction within the 1.1554/1.1880 range is favoured. The USD/JPY's momentum was positive in October, but deteriorated this month. The pair tested the 114.49 MT range top, but the attempt failed. Recent price action was unconvincing despite solid US interest rate support. Last week's drop below the 112.96 support reinforces the downside pressure. 111.65 is the next key support. A break would turn the picture outright USD negative.

EUR/USD: Drifting lower within 1.15541.1880 area?

EUR/GBP

Sterling rebounds as UK considers Brexit concessions

Yesterday, sterling ended the session mixed. It rebounded against the euro partially due to overall euro weakness trigger by the German political crisis. Initially the new flow on Brexit remained mixed as EU's Barnier repeated that the UK has to come with workable solutions, including for the issue of the Irish border. The market took comfort as the UK government agreed to double the amount of the Brexit separation bill. EUR/GBP closed the session at 0.8865 (from 0.8923). The gain in cable (close at 1.3235) was modest as the dollar strengthen later on.

Today, the monthly UK public finance data and the CBI trends orders will be published. Order data are expected to improve slightly in November from -2 to 3 after a substantial decline last month. We side with consensus. Yesterday, sterling profited from the UK Brexit concessions (see higher). We don't expect a formal reaction for the EU anytime soon. Evens so, the cautious positive momentum of sterling might continue short-term. EUR/GBP might decline a bit further in the 0.9033/0.8733.

MT technical: Recently, the BoE driven sterling rebound ran into resistance and sterling declined again as markets anticipated that any rate cycle would be very gradual and limited. EUR/GBP trades in a 0.8733/0.9033 consolidation range. Last week, the EUR/GBP rebound ran into resistance just ahead of the 0.9033 range top. We changed our ST bias on EUR/GBP from positive to neutral last week. The 0.9015/33 area might be tough to break short-term.

EUR/GBP: topside test rejected. Room for a further technical rebound of sterling?

Download entire Sunrise Market Commentary

GBP/USD - 1.3261

Most recent candlesticks pattern   : N/A

Trend                                 : Near term up

Tenkan-Sen level                 : 1.3252

Kijun-Sen level                    : 1.3246

Ichimoku cloud top              : 1.3210

Ichimoku cloud bottom        : 1.3198

New strategy  :

Buy at 1.3200, Target: 1.3300, Stop: 1.3165

Position : -

Target :  -

Stop : -

As cable has maintained a firm undertone after yesterday’s anticipated rise to 1.3280, adding credence to our bullish view that recent erratic rise from 1.3039 is still in progress and further gain to 1.3300 is likely, however, as broad outlook remains consolidative, reckon upside would be limited and price should falter below indicated previous resistance area at 1.3321-38, bring another retreat later.

In view of this, would not chase this rise here and would be prudent to buy cable on pullback. Below 1.3210-15 would bring weakness to 1.3180-85 but only break of support at 1.3170 would abort and risk correction to 1.3150, then test of said support at 1.3134, once this level is penetrated, this would signal top has been formed.

EUR/USD

Current level - 1.1737

The failure below 1.1820 shows negative bias, for a slide to 1.1690 support zone and the latter should provide a reliable base for an upswing towards 1.1780.

USD/JPY

Current level - 112.56

My outlook is positive above 112.30, for a rise towards 113.30 zone. 

GBP/USD

Current level - 1.3247

The intraday bias is positive above 1.3220, for a rise towards 1.3340 zone. Crucial on the downside already is 1.3170.