Sample Category Title

EUR/USD – 1.1751

EUR/USD:   Wave (c) of 2 ended at 1.3993 and wave 3 of III has commenced for weakness to 1.0411 (1.236 of wave 1), then 1.0000.

Although the single currency rebounded to 1.1858 last week, as the pair has retreated after faltering below resistance at 1.1880, suggesting further consolidation would take place, however, still reckon support at 1.1730 (last week’s low) would limit downside and bring another rebound later. Above 1.1858 would bring test of 1.1880 resistance, a daily close above there would suggest the pullback from 1.2093 has ended at 1.1669, bring further gain to 1.1950-60, then towards 1.2000-05. Only a break of resistance at 1.2034 would confirm and bring retest of 1.2093, break there would signal recent upmove from 1.0340 low has resumed for headway to 1.2150-55 (61.8% projection of 1.1119-1.1910 measuring from 1.1662), having said that, loss of upward momentum should prevent sharp move beyond 1.2200-10 and price should falter below 1.2255-60, risk from there remains for a much-needed correction to take place later.

Our preferred count on the daily chart remains that a wave (II) from 1.2329 ended at 1.5145 with A-leg ended at 1.4720, followed by wave B at 1.2457, the wave C from there was also a 3 legged move and is labeled as (a): 1.3739, (b): 1.2885, the wave iii of the 5-waver (c) from 1.2885 has ended at 1.4339 and wave iv is a triangle ended at 1.3878 and wave v formed a top at 1.5145. The decline from there is a 5-waver (C) with minor wave (i) of I of (C) ended at 1.4218 with wave (ii) ended at 1.4580, wave (iii) ended at 1.3267 and wave (iv) ended at 1.3692 and wave (v) ended at 1.1876, this is also the low of wave I of (C) and wave II ended at 1.4940, hence wave III is now in progress with a diagonal wave 1 ended at 1.2042, the breach of previous support at 1.1876 (wave I trough) adds credence to our view that the wave 2 has ended at 1.3993, wave 3 has commenced for further weakness to 1.0411, then towards 1.0000.

On the downside, a drop below said support at 1.1730 would risk another fall to 1.1669 but only a sustained breach below this level would signal the leg of corrective fall from 1.2093 top is underway for retracement of early upmove to previous support at 1.1662 (previous 4th of a lesser degree), break there would extend weakness to 1.1600-10 and possibly 1.1550-60 but reckon downside would be limited to 1.1500 and support at 1.1479 should remain intact, bring rebound later. 

Recommendation: Hold long entered at 1.1765 for 1.1965 with stop below 1.1665.

Euro's long-term uptrend started from 0.8228 (26 Oct 2000) with an impulsive structure. The rise from 0.8228 to 0.9593 (5 Jan 2001) is labeled as wave I, the retreat to 0.8352 (6 Jul 2001) is wave II and the rally to 1.3670 (31 Dec 2004) is wave III. Wave IV from there ended at 1.1640 (15 Nov 2005), the subsequent upmove to 1.6040 (July 15, 2008) is treated as wave V, the major selloff from the record high of 1.6040 to 1.2329 (October 27, 2008) signals a reversal has taken place with (I) leg ended at 1.2329 and once (II) ended at 1.5145, wave (III) itself is an extended move with I: 1.1876 and complex wave II ended at 1.4902, wave III has commenced with wave 1 and 2 ended at 1.2042 and 1.3993 respectively, wave 3 of III is now unfolding for weakness towards parity.

USD/JPY - 113.52

USD/JPY – Wave V of larger degree circle V has possibly ended at 75.31 and major correction has commenced and already met indicated target at 125.00.

The greenback found renewed buying interest at 111.65 early last week and has rallied, adding credence to our bullishness that the rise from 107.32 is still in progress and upside bias remains for further gain to 114.00, then 114.30-35 (61.8% Fibonacci retracement of 118.66-107.32) but a daily close above this level is needed to suggest recent fall from 118.66 has ended at 107.32, bring headway to 115.00, then test of another previous resistance at 115.51. Looking ahead, a sustained breach above this level at 115.51 would provide confirmation, then further subsequent gain to 116.00-10 and possibly 116.50-60 would follow.

Our preferred count is that, triangle wave IV (with circle) ended at 101.45 and the circle wave V brought dollar down to the record low of 75.31 in 2011 and the subsequent rebound signal major correction has commenced with A leg ended at 84.19, followed by wave B at 77.14 and impulsive wave C is now unfolding (indicated upside target at 125.00 had been met) for gain towards 127.00 level. In the event dollar drops below support at 99.01, this would confirm medium term decline from 125.86 top (2015 high) has resumed for subsequent weakness to 98.00 and possibly 97.00.

Under this count, this wave C is unfolding as impulsive waves with (1) (2), 1 2 ended at 80.67, 79.07, 82.84 and 81.69 respectively, hence the extended wave 3 has ended at 103.74 and wave 4 correction of recent upmove should bring weakness to 92.57, then towards 90.88 but psychological support at 90.00 should limit downside and bring another rally later in wave 5, indicated target at 125.00 had been met and gain to 127.00 cannot be ruled out but reckon price would falter below 130.00.

On the downside, whilst pullback to 112.50-60 cannot be ruled out, reckon 112.00-05 would contain downside and bring another rise later. Only a drop below last week’s low at 111.65 would suggest a temporary top is formed instead, bring weakness to 111.00 but downside should be limited to 110.40-50 and support at 109.55 should remain intact. Only a drop below strong support at 109.55 would abort and suggest the rebound from 107.32 has ended instead, risk weakness to 109.00 and possibly 108.50-60 but price should stay well above said support at 107.32 and bring another rebound later. 

Recommendation: Buy at 112.70 for 114.70 with stop below 111.70.

On the monthly chart, we have changed our preferred count that an impulsive wave is unfolding with major wave III with circle ended at 79.75, then followed by wave IV with circle and is labeled as a triangle with A: 147.64 (11 August, 1998), B: 101.25, C: 135.20, D: 101.67 and E leg ended at 124.14 to end the wave IV with circle. Hence, wave V with circle commenced from there and hit a record low of 75.31, however, the subsequent strong rebound signals this circle wave V has possibly ended there, hence gain to (indicated upside target at 122.00 and 125.00 had been met), the retreat from 125.86 suggests wave A of major correction has ended there and wave B correction back to 99.00, then 95.00 would be seen, however, reckon downside would be limited to 90.00, bring another rebound in wave C next year.

It was a rather busy week for China as the currency battled to remain in the headlines amid political developments from New Zealand and Spain. Looking at an economical data heavy week, China report on its inflation and GDP figures against the backdrop of the twice a decade Communist party congress meet.

Although not all eyes were on China, investors were no doubt paying attention.

China CPI slows in September but PPI beats estimates

China's inflation data was the first report to be released alongside the producer price index data. According to official data, consumer prices were seen rising 1.6% on the year in September, matching forecasts.

China Inflation Rate, September: 1.6%

Producer prices index rose 6.9%, beating estimates of a 6.3% increase on the year, according to data from China's National Bureau of Statistics (NBS).

Inflation was forecast to rise 1.6% according to the economists' poll. Consumer prices rose 1.6% as expected in September. But this was slower than the 1.8% increase that was registered in August.

In contract, PPI was forecast to rise just 6.3% with actual data crushing the estimates by a strong margin. The higher than expected price increase at factory gate showed that economic activity among China's trade partners continued to grow; especially demand for raw materials.

The PPI data suggested that imported inflation is likely to rub off on the consumer side as well.

China GDP growth in line with estimates

Later in the week, on Wednesday, the NBS released the monthly GDP report. Official figures put China's third quarter GDP at 6.8%. This was slightly slower than the 6.9% GDP expansion seen in the previous quarter.

China Annual GDP Growth Rate: 6.8% (Q3 2017).

The NBS said that growth was steady and positive economic developments were seen in the first three quarters. The current global economic recovery was also said to have contributed to the economic expansion.

The GDP figures came about as earlier in the week, the People's Bank of China (PBoC) governor, Zhou Xiaochuan was quoted by the wires saying that the economy could post a 7% growth in the second half of the year. Zhou also said that he might retire after being at the helm of the PBoC for nearly fifteen years, although he refused to give out more details.

Overall, China grew at a pace of 6.9% in the first six months of the year. The PBoC governor's projections were seen to be slightly hawkish compared to the projections given by the government earlier this year. On a quarterly basis, the third quarter GDP was seen rising 1.7% from the second quarter with revisions made to the previous quarterly GDP data.

Consumption, including government spending, was said to have contributed nearly 64% to the GDP activity from January through September months.

Retail sales were also stronger, rising 10.3% in September compared to a year ago.

The PBoC governor was also quoted by the media stating that he would work towards making the yuan a more freely convertible currency. However, the yuan is expected to maintain its trading band.

The broadly positive economic data was welcome news as the party congress event was underway. The GDP numbers especially beneficial for President Xi as he said that China was moving from a rapid growth model to being focused more on development.

Xi said that his country would continue to welcome foreign businesses and defend against any systemic risks and continue to strengthen the financial sector. The strong economic performance so far is expected to validate Xi’s view on the economy and is likely to provide theimpetus for the President to push forth with further economic reforms.

Bitcoin has bounced strongly suggesting a near term test of 5866 (all-time high). Strong support stands very far at 2975 (22/08/2017 low). Bitcoin si ready to set up new all-time high. The road is wide open for further increase. In the short-term, the digital currency should monitor $6000.

In the long-term, the digital currency has had an exponential growth. There are decent likelihood that the asset will reach $10'000.

EUR/CHF recovery bounce continues testing 1.1623 (15/09/2017 high). Support is given at 1.1388 (02/09/2017 low). Rising channel suggest further bullish momentum.

In the longer term, the technical structure has reversed. Strong resistance is given at 1.20 (level before the unpeg). Yet, the ECB's QE programme is likely to cause persistent selling pressures on the euro, which should weigh on EUR/CHF. Supports can be found at 1.0184 (28/01/2015 low) and 1.0082 (27/01/2015 low).

EUR/GBP continues to bounce higher yet not important resistances have been broken (quick test). The pair is back below former resistance at 0.8899 (19/09/2017 low). Hourly support is given at a distance at 0.8746 (27/09/2017 low).

In the long-term, the pair has largely recovered from recent lows in 2015. The technical structure suggests a growing upside momentum. The pair is trading above from its 200 DMA. Strong resistance can be found at 0.9500 (psychological level).

Crude oil bounced hard back within range defined by support at 50.43 and the strong resistance lies at 52.86 (28/09/2017). Expected to show continued increase within this range.

In the long-term, crude oil has recovered after its sharp decline last year. However, we consider that further weakness are very likely. For the time being the pair lies in an upside momentum. Strong support lies at 35.24 (05/04/2016) while resistance can now be found at 55.24 (03/01/2017 high).

Silver is again weakening and is now resting on support at 16.94. Hourly resistance is given at 17.46 (13/10/2017 high). Additional support can be found at 16.13 (06/10/2017 low). Hourly resistance can be found at 17.10 (intraday high).

In the long-term, the trend is rater negative. Further downsides are very likely. Resistance is located at 25.11 (28/08/2013 high). Strong support can be found at 11.75 (20/04/2009).

Gold remains weak as broken the support at 1284 confirms an underlying bearish trend. Strong support lies at a distance at 11267 then 1204 (10/07/2017 high). Resistance is located at 1288 (20/10/2017).

In the long-term, the technical structure suggests that there is a growing upside momentum. A break of 1392 (17/03/2014) is necessary ton confirm it, A major support can be found at 1045 (05/02/2010 low).

AUD/USD broke out of sideways range by moving below support at 0.7821. Fading supply indicated a weak test of support at 0.7786. Hourly resistance is given at 0.7897 (13/10/2017 high). Key support lies at at 0.7733 (06/10/2017 low). Expected to show continued consolidation.

In the long-term, the trend is turning positive. Key supports stands at 0.6009 (31/10/2008 low) . A break of the key resistance at 0.8164 (14/05/2015 high) is needed to invalidate our long-term bearish view.