Sample Category Title

GBP/CHF – 1.3010

  


 

As sterling found renewed buying interest at 1.2829 late last week and has rebounded again, retaining our bullishness and consolidation with mild upside bias remains for the rebound from 1.2746 low to extend gain to 1.3050-60, however, reckon upside would be limited to 1.3105-10 and price should falter well below said resistance at 1.3197, bring retreat later. In the event sterling is able to penetrate said resistance at 1.3195, this would indicate early erratic rise from 1.1475 has resumed for further gain to 1.3250, then towards 1.3300-10 but overbought condition should prevent sharp move beyond 1.3400 and reckon 1.3526 (previous support) would remain intact. 



To recap the larger degree count, the selloff from 2.4965 (July 2007) is the beginning of wave V with circle and is labeled as 1: 2.3760, 2: 2.4425, wave 3 extension ended at 1.1470, followed by wave 4 at 1.5547, the quick rebound from 0.9106 suggests wave 5 as well as entire circle wave V could have ended there, hence consolidation with mild upside bias is seen for major correction to take place, bring initial test of 1.5547 (previous 4th of a lesser degree).



On the downside, expect pullback to be limited to 1.2930-40 and said support at 1.2829 should remain intact, bring another rebound later. A drop below this level would suggest the rebound from 1.2746 has ended instead, bring retest of this level later. A break below 1.2746 support would signal the fall from 1.3197 top is still in progress for retracement of recent rise to support at 1.2716, a daily close below this level would suggest a temporary top has been formed, bring correction to 1.2650-60 and later towards 1.2600.  


Recommendation: Hold long entered at 1.2800 for 1.3050 with stop below 1.2825.
 


On the Monthly chart, the longer-term count is that major downtrend is under way with circle wave I at 2.8645 (Sep 1.978), then wave II with circle at 4.6175 (Feb 1981), the wave III with circle ended at 1.7425 (Nov 1995) and followed by wave IV with circle at 2.4965 (July 2007 with a short wave C) and wave V with circle has possibly ended at 0.9106. A monthly close above 1.5547 would add credence to this view, bring major correction to 1.7000, then towards psychological level at 2.0000.

GBP/USD – 1.3219





New strategy :

Stand aside

Position: -

Target:  -

Stop:- 



As sterling has rebounded after last week’s anticipated fall to 1.3088, retaining our view that further consolidation would be seen and test of resistance at 1.3229 cannot be ruled out, however, break there is needed to suggest the fall from 1.3338 has ended at 1.3088, then a stronger rebound to 1.3287 resistance cannot be ruled out, having said that, price should falter well below resistance at 1.3338 and bring further choppy trading later.

On the downside, whilst pullback to 1.3155-60 cannot be ruled out, reckon 1.3115-20 would hold and bring further sideways trading. Only a break below said support at 1.3088 would revive bearishness for resumption of recent decline towards recent low at 1.3027. Our preferred count is that (pls see the attached chart) the wave IV is unfolding as a complex double three (ABC-X-ABC) correction with 2nd wave B ended at 1.2774, hence 2nd wave C could have ended at 1.3658.

Our preferred count on the daily chart is that cable's rebound from 1.3500 (wave (A) trough) is unfolding as a wave (B) with A ended at 1.7043, followed by triangle wave B and wave C as well as wave (B) has ended at 1.7192, the subsequent selloff is the larger degree wave (C) which is still unfolding with minor wave (III) of larger degree wave 3 ended at 1.1986, hence wave (IV) correction is in progress which could either be a triangle wave (IV) of a complex formation but upside should be limited to 1.3500 and price should falter well below 1.4000, bring another decline in wave (V) of 3 for weakness to 1.1500, then 1.1200. 


GBP/JPY - 149.85

Original strategy:

Bought at 149.50, Target: 151.50, Stop: 148.90

Position: - Long at 149.50
Target: - 151.50
Stop: - 148.90

New strategy :

Hold long entered at 149.50, Target: 151.50, Stop: 148.90

Position: - Long at 149.50
Target:  - 151.50
Stop:- 148.90

Although sterling has retreated after meeting resistance at 150.50 yesterday and consolidation below this level would be seen, reckon pullback would be limited to previous resistance at 149.40 and bring another rise later, above said resistance would extend the erratic rise from 146.95 for a retracement of the fall from 152.85 to 150.50-55 and possibly 151.00 but still reckon upside would be limited to resistance at 151.60, bring retreat later. 

In view of this, we are holding on to our long position entered at 149.50. Below 148.90-00 would defer and risk weakness to 148.55-60, break there would signal top is formed instead, then weakness to indicated support at 147.80 would follow. Once this level is penetrated, this would signal the rebound from 146.95 has ended, bring weakness to another previous support at 147.30, below would confirm the fall from 152.85 has resumed for retest of 146.95. Looking ahead, below there would extend the fall from 152.85 top for retracement of recent upmove to 146.60-65 and then 146.00 but previous support at 145.25 should remain intact.

Our preferred count is that larger degree wave V with circle is unfolding from 251.12 with wave (I) 219.34, (II): 241.38 and wave (III) is subdivided into 1: 192.60, 2: 215.89 (23 Jul 2008) and wave 3 ended at 118.87 earlier in 2009. The correction from there to 162.60 is wave 4 which itself is a double three and is labeled as first a-b-c ended at 151.53, followed by wave x at 139.03, 2nd a ended at 162.60, 2nd b at 146.75 and 2nd c leg of wave 4 ended at 163.00. Therefore, the decline from 163.00 to 116.85 is now treated as wave 5 which also marked the end of larger degree wave (III), hence wave (IV) major correction has commenced for retracement of the wave (III) from 241.38 and upside target at 183.95-00 (50% Fibonacci retracement of the wave (II) from 241.38) had been met, a drop below 160.00 would suggest wave (IV) has ended at 195.85, bring decline in wave (V) for initial weakness to 130 (already met) and 120.




EUR/JPY - 133.34

Original strategy:

Bought at 133.20, Target: 135.20, Stop: 132.60

Position: - Long at 133.20
Target: - 135.20
Stop: - 132.60

New strategy :

Hold long entered at 133.20, Target: 135.20, Stop: 132.60

Position: - Long at 133.20
Target:  - 135.20
Stop:- 132.60

Although the single currency rose to as high as 134.13, as the retreated after meeting resistance there, suggesting consolidation below this level would be seen, however, reckon 133.00 would limit downside and bring another rise later, above said resistance would bring a retest of recent high at 134.41, break there would confirm early upmove has resumed and extend headway to 135.00-10 and later towards 135.50-60 which is likely to hold from here due to overbought condition.

In view of this, we are holding on to our long position entered at 133.20. Only below said support at 132.47 would abort and prolong choppy trading, risk weakness to 132.00, having said that, strong support at 131.66 should remain intact, bring another rebound later.

Our latest preferred count is that wave (ii) is ABC-X-ABC which ended at 123.33 and wave (iii) is unfolding with wave iii ended at 100.77, followed by wave iv at 111.57 and wave v as well as the wave (iii) has ended at 97.04, followed by wave (iv) at 111.43 and wave (v) has ended at 94.12 which is also the end of the larger degree v, this also implied the major wave (C) has also ended there, hence major correction has commenced from there with (A) leg unfolding in its lower degree wave c which has possibly ended at 145.69. Under this count, A-B-C wave (B) has commenced with A leg ended at 136.23, wave B at 143.79 and wave C has possibly ended at 149.79.

Our larger degree count is that the decline from 139.26 is wave (C) and is sub-divided into a diagonal triangle i-ii-iii-iv-v with wave i - 105.44, wave ii- 123.33, wave iii - 97.03, wave iv - 111.43, followed by the final wave v as well as the end of wave (C) at 94.12, this also mark the bottom of larger degree wave B. Under this count, major rise in wave C has commenced as an impulsive wave with minor wave III ended at 145.69, wave V is still in progress for further gain to 150.00. Having said that, this so-called wave V could well be the first leg of larger degree 5-waver wave C and this wave C should bring at least a retest of wave A top at 169.97 (July 2008).

AUD/USD – 0.7818

Original strategy:

Sold at 0.7875, Target: 0.7700, Stop: 0.7890

Position: - Short at 0.7875
Target:  - 0.7700
Stop:- 0.7935

New strategy :

Hold short entered at 0.7875, Target: 0.7700, Stop: 0.7860

Position: - Short at 0.7875
Target:  - 0.7700
Stop:- 0.7860

Although aussie recovered after finding support at 0.7796 and minor consolidation above this level would be seen, reckon upside would be limited to 0.7840 and bring another decline, below said support would extend the fall from 0.7897 to support at 0.7771, however, break there is needed to signal the rebound from 0.7733 has ended at 0.7897, bring a retest of said support at 0.7733, below there would confirm recent fall from 0.8125 top has resumed for weakness to 0.7700-10 and later towards 0.7660-65. 

In view of this, we are holding on to our short position entered at 0.7875. Only above previous support at 0.7908 (now resistance) would defer and risk a stronger rebound to 0.7950 but resistance at 0.7986 should remain intact and bring another decline later. 

On the 4-hour chart, recent upmove from 0.7329 is unfolding as an impulsive rise with wave 3 as well as smaller degree wave (iii) extending, only minor wave v of (iii) has ended at 0.8125, hence bullishness remains for this move to extend headway to 0.8200, then towards 0.8300, however, reckon upside would be limited to 0.8400 and the final wave 5 should falter below 0.8500, bring correction later.

Weekly
    •    Last Candlesticks pattern: Shooting star
    •    Time of formation: 31 Jul 2017
    •    Trend bias: Down

Daily
    •    Last Candlesticks pattern: Morning star
    •    Time of formation: 25 Aug 2017
    •    Trend bias: Near term up

GBP/USD – 1.3215

Although cable fell marginally to 1.3088 late last week, lack of follow through selling and the subsequent rebound suggest further consolidation would be seen and recovery to 1.3240-45 (61.8% Fibonacci retracement of 1.3338-1.3088), however, resistance at 1.3287 should limit upside and bring another decline later. Below said support at 1.3088 would extend the fall from 1.3388 to 1.3075 but break there is needed to signal decline from 1.3658 top has resumed and bring retest of 1.3027 but only break there would retain bearishness and extend this move to 1.3000, then towards 1.2940-50.

On the upside whilst recovery to 1.3240-45 cannot be ruled out, resistance at 1.3287 should hold and bring another decline. A daily close above said resistance at 1.3287 would suggest the retreat from 1.3338 has ended, bring another test of this level but a daily close above the Kijun-Sen (now at 1.3343) is needed to suggest the fall from 1.3658 has ended, bring a stronger rebound to 1.3400, then test of previous resistance at 1.3455 which is likely to hold on first testing.

Recommendation: Stand aside for this week.  

On the weekly chart, cable remained confined within early established range and further consolidation would be seen and as the pair found support at 1.3088 and recovered, initial bounce to 1.3240-45 and possibly 1.3287 cannot be ruled out, however, reckon upside would be limited to 1.3338 and bring another decline later. Only a sustained breach above this level would suggest the retreat from 1.3658 has ended instead, bring further gain to 1.3400-05 but still reckon upside would be limited to 1.3505-10 and bring another leg of corrective decline later. In the event sterling breaks above 1.3571 resistance, this would signal the pullback from 1.3658 has ended, risk retest of this last month’s high, break there would extend recent erratic rise from 1.1986 low to 1.3750-60 and 1.3800 but overbought condition should prevent sharp move beyond 1.3860 (61.8% Fibonacci retracement of 1.5018-1.1986).

On the downside, expect pullback to be limited to 1.3130-35 and said support at 1.3088 should hold, bring another rebound. A weekly close below 1.3088 support would signal the rebound from 1.3027 low has ended, bring retest of 1.3027, break of this support would add credence to our view that top has been formed at 1.3658, bring further fall to 1.3000, then towards support at 1.2909, however, anticipated near term oversold condition should prevent sharp fall below previous chart support at 1.2774 and price should stay well above another previous chart support at 1.2589, bring rebound later.



Weekly
    •    Last Candlesticks pattern: Shooting star
    •    Time of formation: 7 Mar 2017
    •    Trend bias: Sideways

Daily
    •    Last Candlesticks pattern: Morning star
    •    Time of formation: 9 May 2017
    •    Trend bias: Near term up

USD/CHF – 0.9854

As the greenback has risen again after brief retreat to 0.9737 late last week, suggesting the rise from 0.9421 low is still in progress, hence bullishness remains for this move to extend further gain to 0.9900-10, however, as this move is still viewed as retracement of early decline from 1.0344, reckon upside would be limited to 0.9950-60 and 0.9991-1.0000 (61.8% Fibonacci retracement of 1.0344-0.9421) should hold from here due to near term overbought condition, bring retreat later. 

On the downside, whilst initial pullback to 0.9800-05 cannot be ruled out, reckon downside would be limited to 0.9760-70 and bring another rise later. A daily close below said support at 0.9737 would defer and suggest a temporary top is possibly formed instead, risk weakness to 0.9700, then test of minor support at 0.9670. A drop below this level would suggest the rise from 0.9421 has ended instead, risk further fall to 0.9642 support but reckon downside would be limited to 0.9590-00 and support at 0.9565 should remain intact.

Recommendation: Buy at 0.9770 for 0.9970 with stop below 0.9670.

On the weekly chart, as the greenback has edged higher again after forming a white candlestick last week, adding credence to our near term bullishness for the rebound from 0.9421 low to bring retracement of recent entire decline from 1.0344, hence further gain to the lower Kumo (now at 0.9894), then test of the upper Kumo (now at 0.9970) would be seen, however, near term overbought condition should limit upside to 0.9991-1.0000 (61.8% Fibonacci retracement of 1.0344-0.9421 and psychological resistance) and price should falter well below resistance at 1.0100-08.

On the downside, although initial pullback to 0.9800-05 is likely, support at 0.9737 would contain downside and bring another rise. A weekly close below 0.9737 would defer and suggest first leg of rebound from 0.9737 has ended and bring weakness to 0.9690-00 but reckon support at 0.9642 would limit downside and price should stay above support at 0.9565 and the greenback shall stage another strong rebound later this month or next month.

EURUSD

The EURUSD was indecisive yesterday. The bias is neutral in nearest term probably with a little bullish bias after price bounced-off the lower line of the bearish channel testing the upper line as you can see on my H1 chart below, located around 1.1800/50 area. Immediate support is seen around 1.1725. A clear break below that area could trigger further bearish pressure testing 1.1670 key support which is the “neckline” of the “head and shoulders” formation on daily chart. A clear break below 1.1670 would confirm the bearish reversal scenario with nearest target seen at 1.1450. On the upside, key resistance remains at 1.1900 which need to be clearly broken to the upside to potentially nullify the “head and shoulders” bearish reversal scenario and resume the major bullish trend testing 1.2000 – 1.2090.

GBPUSD

The GBPUSD was indecisive yesterday. The bias is neutral in nearest term probably with a little bullish bias testing 1.3300/30 resistance area. Immediate support is seen around 1.3150. A clear break and daily close below that area could trigger further bearish pressure testing 1.3087/00 region. Overall I remain bullish but need a clear break above 1.3330 key resistance to reactivate my bullish mode targeting 1.3615 region.

USDJPY

The USDJPY closed lower yesterday at 113.43 after gapped higher at 113.86 but still able to stay above 113.20 key support so far. The bias is neutral in nearest term. Immediate resistance is seen around 113.75. A clear break above that area could trigger further bullish pressure testing 114.50 region which is a good place to sell with a tight stop loss as a clear break above that area would expose 115.50 region. On the downside, a clear break back below 1113.20 would expose 112.85 or lower. Overall I remain neutral.

USDCHF

The USDCHF printed a bearish pin bar formation yesterday as you can see on my daily chart below. The bias is neutral in nearest term. I still prefer a bullish scenario at this phase but need a clear break above 0.9881 to nullify the bearish pin bar scenario targeting 0.9950 area. Immediate support is seen around 0.9830. A clear break below that area could trigger further bearish pressure testing 0.9765 area.

STOCKS

Dow (23273.96, -0.23%) saw its first dip of about 95 points since its rally from levels near 22288 seen on 28th Sep’17. In case the correction continues, we could see the current dip extend towards 23200-23000 in the near term.

Dax (13003.14, +0.09%) continues to remain in the 1310-12900 region and is expected to trade in the said region for a few more sessions.

Shanghai (3383.52, +0.08%) could face a small rejection from 3385 and could come off towards 3360 in the near term before bouncing back again towards 3400. Range-bound movement expected in the coming sessions.

Nikkei (21733.10, +0.17%) has tried to move up slightly. Immediate target of 21800-21900 remains intact on the upside for now. A small dip from 21800/900 is possible before the index tries to move higher in the medium term.

Nifty (10184.85, +0.38%) is almost stable within 10250-10100 region and could remain so for some more days. Near term could see some sideways consolidation before deciding on further direction.

COMMODITIES

Gold (1282.52) is trading near immediate support on the daily candles and while that holds, the price could bounce back towards 1300-1310 in the near term. Only a break below 1275, if seen could take it lower to 1260.

Silver (17.11) has some scope of coming down towards 16.80-16.50 in the coming sessions, before bouncing back towards 17.00 and higher. While some room is visible on the downside, near term could be bearish.

Brent (57.49) has immediate support near 57.00-56.65 levels which is likely to hold in the medium term, taking the index to higher levels of 59.00 or even 60.00 in the coming sessions. Note that on a longer term, 61 is a crucial resistance and could eventually push the index to lower levels in the longer term. For now, we prefer a bounce from 56.65 to levels near 59-60.

WTI (52.00) could trade in the 51-53 region in the coming sessions. While immediate support near 51 holds, a rise above 53 is a possible situation for the medium term.

Copper (3.2245) has risen again today and is trading fairly on the upside. Resistance on the 3-day candles look strong just now and while that holds, medium term looks bearish towards 3.10-3.05.

FOREX

The crucial Support at 1.1730-00 on the Euro (1.1760) is holding well enough so far even though the German-US 10Yr Spread (-1.94%) trades a little lower than yesterday's -1.93%.

Looking at the medium term (see Interest Rates below), there should be decent chances of an upmove in the German-US 10Yr Spread and therefore in the Euro.

Dollar-Yen (113.35) rose to 114.07, but has come off from there, perhaps endorsing strength of long-term Resistance at 114.50. The Euro-Yen (133.37) has come off a bit alongwith Dollar-Yen and the dip in the Euro, but has good Support near 132.75-50 now.

The Pound (1.3220) trades stronger than yesterday, but still has another important Resistance overhead at 1.3250, which could still push it down.

The Aussie (0.7823) has medium term Support at 0.7785 and may try to mount a rally towards 0.79+ while the Support holds. The overall shape of the Aussie chart resembles the Euro chart.

Dollar-Yuan trades near 6.6298. Dollar-Rupee (65.0225) may test important Support in the 64.95-90 region today.

INTEREST RATES

The German 10Yr (0.43%) trades 1bp lower than yesterday's 0.44%, but should have Support at 0.40%, with upside open up to 0.70%.

On the other hand, the US 10Yr (2.37%) has immediate Resistance at 2.40% and further Resistance at 2.50%. Similarly, long-term Resistance is seen near 0.08-09% on the 10Yr JGB. Even the UK 10Yr Gilt (1.31%) has Resistance just overhead.

The US Yield Curve (30-10 Spread 0.52%, 30-5 Spread 0.89%) has steepened a wee bit more than yesterday. Some more upside towards 0,54% and 0.92% seems possible.

The Indo-US 10Yr Spread (4.4186%) is trading below important Resistance at 4.45%.

Yesterday we saw USD/JPY approach the top of its range, gap up, and then spend the rest of the day dropping.

A beautiful gap fill if you were looking to short rallies in the pair as we spoke about in yesterday’s blog. Just take a look at the intraday chart here:

USD/JPY 15 Minute:

The gap fill is pretty self explanatory, but look at the way that price has retested the gap fill line and continued lower. There’s definitely a bit of bearish momentum to start the week and when you see these little pullbacks into previous short term support being sold, you know there’s often more to come.