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A note on lower timeframe confirming price action...

Waiting for lower timeframe confirmation is our main tool to confirm strength within higher timeframe zones, and has really been the key to our trading success. It takes a little time to understand the subtle nuances, however, as each trade is never the same, but once you master the rhythm so to speak, you will be saved from countless unnecessary losing trades. The following is a list of what we look for:

• A break/retest of supply or demand dependent on which way you're trading.
• A trendline break/retest.
• Buying/selling tails ... essentially we look for a cluster of very obvious spikes off of lower timeframe support and resistance levels within the higher timeframe zone.
• Candlestick patterns. We tend to only stick with pin bars and engulfing bars as these have proven to be the most effective.

We typically search for lower-timeframe confirmation between the M15 and H1 timeframes, since most of our higher-timeframe areas begin with the H4. Stops are usually placed 1-3 pips beyond confirming structures.

EUR/USD

During the course of Wednesday's segment, the pair largely ignored data and was confined to a tight range of 50 pips above the H4 mid-level support at 1.1750.

The single currency is, at least in our technical view, expected to remain bid from 1.1750 today and eventually advance up to the 1.18 handle, followed closely by August's opening level at 1.1830. This is primarily due to weekly price trading within the confines of a demand base coming in at 1.1662-1.1814, along with daily flow showing price hovering above demand at 1.1612-1.1684. What's more, we can also see that there's room for the unit to gravitate north up to daily resistance pegged at 1.1878, which happens to merge nicely with a daily trendline resistance extended from the low 1.0839.

Suggestions: Drill down to the lower timeframes and look for an entry north from 1.1750. When using lower-timeframe action as a means of entry, we typically look for the following to take shape as a way of approving a higher-timeframe area (this will help get you in using a smaller stop loss and ultimately increase risk/reward up to 1.18 [the first take-profit level]):

A break of supply followed up with a retest as demand.

A trendline break/retest.

A collection of well-defined buying tails off of lower-timeframe support.

As highlighted above, we usually search for lower-timeframe confirmation between the M15 and H1 timeframes, since most of our higher-timeframe areas begin with the H4. Stops are typically placed 1-3 pips beyond confirming structures.

Data points to consider: ECB Monetary policy meeting accounts at 12.30pm; US weekly unemployment claims along with trade balance at 1.30pm; FOMC members Powell and Harker take to the stage at 2.10-3pm; US Factory orders m/m at 3pm GMT+1.

Levels to watch/live orders:

• Buys: 1.1750 region ([waiting for lower-timeframe confirming action to take shape from here is advised before pulling the trigger] stop loss: dependent on where one confirms the area).
• Sells: Flat (stop loss: N/A).

GBP/USD

GBP/USD prices are little changed this morning, despite a better-than-expected UK services PMI. As you can see, the H4 candles remain loitering between the 1.33 handle and August's opening level at 1.3201/1.32 handle. A quick look over at the bigger picture shows weekly price recently re-entered the ascending channel formation (1.1986/1.2673). We know there's a lot of ground to cover here but this move could have potentially opened up downside to as low as the demand area positioned at 1.2589-1.2759. On the flip side, daily activity is currently seen trading within the walls of a support area coming in at 1.3268-1.3203, which forced price to chalk up an inverted pin bar yesterday (a bullish candlestick signal). A violation of this area, however, will possibly clear the river south down to as far as the support area positioned at 1.3058-1.2979.

Suggestions: In a similar fashion to Wednesday's analysis, neither a long nor short seems attractive at the moment. No matter which direction one chooses in this market, you'll have to contend with potential higher-timeframe opposition! For that reason, we'll remain on the sidelines for now and wait for further developments.

Data points to consider: MPC members McCafferty and Haldane take the stage at 5/6.30pm; US weekly unemployment claims along with trade balance at 1.30pm; FOMC members Powell and Harker take to the stage at 2.10-3pm; US Factory orders m/m at 3pm GMT+1.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: Flat (stop loss: N/A).

AUD/USD

The commodity currency closed marginally higher on Wednesday, breaching the H4 mid-level resistance at 0.7850 and shortly after retesting it as support. This should not really come as too much of a surprise to tech traders who keep an eye on the bigger picture.

Weekly action is seen finding refuge at a major support area drawn from 0.7849-0.7752. This zone has a strong history and held well as support during the month of August, thus there's a good chance that we may see history repeat itself here. In conjunction with the current weekly zone, a strong daily demand base logged at 0.7786-0.7838 is seen painted within its boundaries. Should the currency remain bid from this demand, the next port of call on the daily scale will likely be the resistance level located at 0.7955.

Technically speaking, we see absolutely no reason why the Aussie will not continue to press north. From a fundamental standpoint, nevertheless, Australian retail and trade balance figures are scheduled to be released in an hour (as of writing), and therefore could alter the technical structure somewhat.

Suggestions: In light of looming Au. News, we'd strongly advise tech traders to stand down for now, and reassess post-news. Getting caught on the wrong side of a high-impacting event will not do your account any favors!

Data points to consider: Australian Retail sales m/m and Trade balance figures at 1.30am; US weekly unemployment claims along with trade balance at 1.30pm; FOMC members Powell and Harker take to the stage at 2.10-3pm; US Factory orders m/m at 3pm GMT+1.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: Flat (stop loss: N/A).

USD/JPY

Since the 27th September, the USD/JPY has been entrenched within a H4 range at 113.21/112.32 (see yellow box). In spite of this, we maintain an optimistic outlook for the pair overall. Our reasoning lies within the higher-timeframe structures. Weekly price shows room to push up to nearby supply coming in at 115.50-113.85, as well as daily price up to a trendline resistance extended from the high 115.50, which happens to merge nicely with the noted weekly supply.

In light of the above, we still have an eyeball on the 112 handle for potential longs due to the following confluence:

Positioned directly above daily support at 111.91.

Located just below July's opening level at 112.09.

Nearby a 61.8% H4 Fib support at 112.16 taken from the low 111.47.

Suggestions: With space seen for both weekly and daily action to push higher, coupled with the 112 handle's surrounding confluence mentioned above, a long from the green H4 buy zone is still worthy of attention. As psychological levels are prone to fakeouts, however, you may want to wait for H4 price to confirm buyer intent before pulling the trigger. For us, this would simply be a full or near-full-bodied bullish candle formed within the green zone, which would, in our view, provide enough evidence to hold the position up to at least 113/H4 supply at 113.57-113.38.

Data points to consider: US weekly unemployment claims along with trade balance at 1.30pm; FOMC members Powell and Harker take to the stage at 2.10-3pm; US Factory orders m/m at 3pm GMT+1.

Levels to watch/live orders:

• Buys: 111.91/112.16 ([waiting for a reasonably sized H4 bullish candle to form – preferably a full, or near-full-bodied candle – is advised] stop loss: ideally beyond the candle's tail).
• Sells: Flat (stop loss: N/A).

USD/CAD

For those who read Wednesday's report you may recall our desk mentioning that if a full or near-full-bodied H4 bearish candle closed below September's open level at 1.2481, this would be considered a strong sell signal to short down to at least 1.24. We entered at 1.2468 shortly after we wrote this report, and placed a stop-loss order a few pips above the 1.25 handle at 1.2503. As you can see, the trade is still active but looks vulnerable to the upside at the moment.

Despite our sell trade struggling, our overall bias remains focused to the downside. A strong underlying downtrend, coupled with weekly price kissing the underside of a trendline resistance taken from the low 0.9633 and the daily candles loitering at the underside of supply carved from 1.2663-1.2511, echoes overbought conditions, in our view.

Suggestions: In the event that our short trade turns lower, we will have to contend with the nearby H4 channel support etched from the low 1.2118. Ultimately, we want to see this line engulfed and price head on to the 1.24 handle where we'll look to begin taking profits.

Data points to consider: US weekly unemployment claims along with trade balance at 1.30pm; FOMC members Powell and Harker take to the stage at 2.10-3pm; US Factory orders m/m at 3pm; Canadian Trade balance at 1.30pm GMT+1.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: 1.2468 ([live] stop loss: 1.2503).

USD/CHF:  

Influenced by Wednesday's better-than-expected US ISM non-manufacturing print, the USD/CHF managed to print a nice-looking daily buying tail and erase Tuesday's losses. While the bulls look to reassert their dominance, we maintain a fairly pessimistic outlook for the Swissie pair at the moment, due to the following reasons:

High on the curve, the weekly candles are seen bumping heads with the underside of a trendline resistance extended from the low 0.9257.

A closer look at price action on the daily timeframe shows the unit trading within striking distance of resistance coming in at 0.9770.

Over on the H4 timeframe, supply at 0.9808-0.9787 is seen lurking nearby, along with the 0.98 handle and two converging channel resistances etched from highs of 0.9705/0.9746.

Suggestions: Owing to the collective resistances seen on the weekly, daily and H4 timeframes, a short from the H4 supply could be an option today (pending sell order at 0.9790 – stop loss at 0.9810).

Data points to consider: US weekly unemployment claims along with trade balance at 1.30pm; FOMC members Powell and Harker take to the stage at 2.10-3pm; US Factory orders m/m at 3pm GMT+1.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: 0.9790 ([pending order] stop loss: 0.9810).

DOW 30:  

Wall Street, as you can see, took a breather on Wednesday, following two record-hitting days. The H4 candles were confined to a tight range of 50 points, hovering just above a recently broken H4 channel resistance extended from the high 22431 (now acting support). In a similar fashion to yesterday's report, we see little reason why the index will not continue to punch higher given the strength of the underlying trend – just look at the weekly chart!

Suggestions: With H4 price now trading proud above the channel support, this is, in our view, an ideal line to buy from should the unit dip lower (see black arrows). Nevertheless, we would strongly recommend waiting for a reasonably sized H4 bull candle (a full or near-full-bodied candle) to form following the retest, before pulling the trigger. This is simply to help avoid any fakeout that may take place.

Data points to consider: US weekly unemployment claims along with trade balance at 1.30pm; FOMC members Powell and Harker take to the stage at 2.10-3pm; US Factory orders m/m at 3pm GMT+1

Levels to watch/live orders:

• Buys: Watch for H4 price to retest channel support ([waiting for a reasonably sized H4 bullish candle to form – preferably a full, or near-full-bodied candle – following the retest is advised] stop loss: ideally beyond the candle's tail).
• Sells: Flat (stop loss: N/A).

GOLD

In recent trading, we can see that gold aggressively challenged the H4 resistance at 1280.4 going into the early hours of the US segment. In our previous report, we highlighted this level, along with the H4 channel resistance extended from the high 1357.5 (yellow marker), as being a potential sell zone. Given 1280.4 effectively proved itself as a worthy resistance yesterday, the yellow area now carries more weight, in our humble view. Alongside this, we also have the following in favor:

Weekly price showing little support in view until we reach channel support extended from the low 1122.8.

Daily action continuing to chomp at the underside of a resistance area pegged at 1275.3-1291.2.

Steep downtrend.

Suggestions: On account of the above, we would be surprised to see H4 price trade beyond the noted channel resistance. With that being the case, the yellow marker on the H4 timeframe remains the place to be for shorts!

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: 1280.4 region ([waiting for a reasonably sized H4 bearish candle to form – preferably a full, or near-full-bodied candle – following the retest is advised] stop loss: ideally beyond the candle's wick).

Global Markets:

• Asian stock markets: Nikkei up 0.01 %, Shanghai Composite rose 0.28 %, Hang Seng gained 0.73 %, ASX 200 up 0.10 %
• Commodities: Gold at $1277.67 (+0.07 %), Silver at $16.62 (+0.02 %), WTI Oil at $49.92 (-0.12 %), Brent Oil at $55.81 (+0.02 %)
• Rates: US 10-year yield at 2.32, UK 10-year yield at 1.37, German 10-year yield at 0.45

News & Data:

• (AUD) Retail Sales m/m -0.6 % vs 0.3 % expected
• (AUD) Trade Balance 0.99 B vs 0.88 B expected
• (GBP) Services PMI 53.6 vs 53.2 expected
• (USD) ADP Non-Farm Employment Change 135 K vs 131 K expected
• (USD) Final Services PMI 55.3 vs 55.1 expected
• (USD) ISM Non-Manufacturing PMI 59.8 vs 55.5 expected
• (USD) Crude Oil Inventories -6.0 M vs -0.5 M expected
• Hurricanes hit U.S. hiring in September, services sector resilient- RTRS

Markets Update:

Asia-Pacific markets opened a tad firmer on Thursday, following cues from strong U.S. data. Bonds, equities and the dollar were all steady after U.S. data did little to change views on the timing or pace for monetary tightening. Japanese equities struggled for direction early Thursday despite a weaker yen, even as other markets in the region were broadly higher

USDJPY is seen trading flat at 112.75. Price popped early (around the Tokyo fix) to test its overnight high around 112.90 but has since slipped back and consolidating for the remainder of the session. Meanwhile, Japan’s Nikkei Stock Average Nikkei 225 was nearly unchanged in morning trade with the market facing more resistance as the benchmark index nears its 2015 peak, which was the highest since 1996.

EURUSD was seen consolidating within a 10 pip range around 1.1755 for most of the Asian session today after the Euro rose 0.1 percent against the US Dollar on Wednesday. The dollar index, which tracks the dollar against a basket of currencies added 0.1 percent and is currently valued at 93.50

AUDUSD lost over 40 pips from session highs of 0.7865 and is currently seen trading around 0.7830 after the AUD saw its worst m/m sales results ( -0.6 % vs 0.3 % expected) in 4+ years in addition to slow wage growth, high debt and rising utility bills being the other negative factors. The Newzealand Dolalr slipped a little earlier in the session reaching lows of around 0.7145 before recovering partially to current levels of around 0.7160.

Upcoming Events:

• All Day – (CNY) Chinese Bank Holiday
• 11:30 GMT – (EUR) ECB Monetary Policy Meeting Accounts
• 12:30 GMT – (CAD) Trade Balance
• 12:30 GMT – (USD) Unemployment Claims
• 12:30 GMT – (USD) Trade Balance
• 13:10 GMT – (USD) FOMC Member Powell Speaks
• 14:00 GMT – (USD) FOMC Member Harker Speaks
• 14:00 GMT – (USD) Factory Orders m/m
• 16:00 GMT – (GBP) MPC Member McCafferty Speaks
• 17:30 GMT – (GBP) MPC Member Haldane Speaks

Asia Summary

Equities markets in China and South Korea have continued their holidays. Hong Kong markets are also closed today in observance of a national holiday. In New Zealand, the NZX-50 index has traded at a fresh record high.

Large Japanese retailer Aeon has opened higher on its better than expected H1 operating profit.

In Australia, retail sales unexpectedly declined in August, and this has put downward pressure on the Aussie and bond yields, despite better than expected monthly trade surplus figures. With the downward revision in retail sales, the data has now declined for 2 straight months.

Meanwhile, former RBA official Edwards said the central bank could hike rates even if inflation remains below its 2-3% target, as he said very low rates during times when growth is firm invites trouble. The RBA last raised rates in Nov of 2010.

Key economic data

(AU) AUSTRALIA AUG RETAIL SALES M/M: -0.6% V +0.3%E

(AU) AUSTRALIA AUG TRADE BALANCE (A$) 989M V 850ME

(JP) Foreigners Buy net of ¥953.3B in Japan stocks (highest weekly purchase since 2015) v ¥923.9B in net sales prior week

(PH) Philippines Sept CPI M/M: 0.5% v 0.2%e; Y/Y: 3.4% v 3.1%e (highest since April); Core Y/Y: 3.3% v 3.1%e (highest since Sept 2014)

(NZ) New Zealand FY17 Budget Surplus NZ$4.07B v NZ$1.83B y/y (NZ$363M above forecast); Core Crown Tax Revenue NZ$75.6B, +NZ$5.2B y/y

Speakers and Press

(AU) Former RBA Official John Edwards: RBA could raise rates even if inflation remains below 2-3% target; very low rates during times when growth is firm invites trouble.

(JP) Japan PM Abe said to pledge to 'speed up' Abenomics - Japanese Press

Asian Equity Indices/Futures (00:30ET)

Nikkei +0.1%, Hang Seng closed, Shanghai Composite closed, ASX200 +0.2%, Kospi closed

Equity Futures: S&P500 flat ; Nasdaq flat , Dax +0.1% , FTSE100 +0.1%

FX ranges/Commodities/Fixed Income (00:30ET)

EUR 1.1751-1.1763; JPY 112.70-112.91; AUD 0.7824-0.7865; NZD 0.7147-0.7168

Aug Gold flat at 1,277/oz; Aug Crude Oil flat at $49.98/brl; Sept Copper +0.3% at $2.964/lb

GLD SPDR Gold Trust ETF daily holdings flat at 854.3 metric tons

Equities notable movers

Australia

Topbetta Holdings, TBH.AU Q1 Rev up over 170% y/y; +4.1%

Japan

Aeon, 8267.JP H1 Operating profit above expectations; +1.7%

US markets on close: Dow +0.1%, S&P500 +0.1%, Nasdaq flat, Russell -0.3%

Best Sector in S&P500: Utilities +1%

Worst Sector in S&P500: Financials -0.5%

At the close: VIX 9.63 (+0.10 pts); Treasuries: 2-yr 1.475% (flat), 10-yr 2.330% (flat), 30-yr 2.874% (+1bp)

US Market Summary

US stocks ended mostly higher after the strongest ISM services reading in more than a decade, though the Russell 2000 broke an 8-day streak of gains. US Sec of State Tillerson, responding to an NBC News report that he had called Pres Trump a 'moron' and sought to resign his post, held a press conference to pledge his continued commitment to the Trump administration. The Spanish IBEX finished down 3% as Catalonia headlines continue to weigh on risk sentiment. US Treasury prices declined following the strong US data, pushing up yields. Healthcare names outperformed, with Mylan a leader for the day, while IT, energy and financial names were the laggards.

US Afterhours Movers

ACAD Initiates Phase III Study of Pimavanserin in Dementia-Related Psychosis; +5.3% afterhours

ZUMZ Reports Sept SSS +9.3% y/y; Raises Q3 $0.45-0.48 v $0.47e, Rev $241-243M v $237Me (prior $0.43-0.48, Rev $236-241M), SSS +6-7% y/y; +4.5% afterhours

SEAS Reportedly has hired advisors to consider a sale; +3.5% afterhours

GNW North Carolina regulator approves proposed Oceanwide acquisition of Genworth's NC-domiciled insurance companies; +2.9% afterhours

CAFD Reports Q3 $0.27 v $0.65e, Rev $27.7M v $25.8Me; Guides Q4 Rev $12-15M v $14.8Me, adj EBITDA $22-25M; -1.5% afterhours

IMGN Files to offer 13M shares via Jefferies, Leerink and RBC (12% of shares outstanding); -8.1% afterhours

For the 24 hours to 23:00 GMT, the AUD rose 0.34% against the USD and closed at 0.7861.

LME Copper prices rose 0.1% or $6.0/MT to $6453.0/MT. Aluminium prices rose 1.2% or $25.0/MT to $2139.5/MT.

In the Asian session, at GMT0300, the pair is trading at 0.7832, with the AUD trading 0.37% lower against the USD from yesterday's close, following downbeat Australian retail sales data.

Overnight data indicated that Australia's seasonally adjusted retail sales unexpectedly dipped 0.6% on a monthly basis in August, declining by the most in more than four years, offering further signs of a slowdown in the nation's consumer spending. Markets had expected for an advance of 0.3%, after recording a revised drop of 0.2% in the prior month.

On the other hand, the nation's trade surplus widened more-than-anticipated to A$989.0 million in August, following a revised surplus of A$808.0 million in the previous month, while markets had expected for the nation's trade surplus to widen to A$850.0 million.

The pair is expected to find support at 0.7812, and a fall through could take it to the next support level of 0.7793. The pair is expected to find its first resistance at 0.7863, and a rise through could take it to the next resistance level of 0.7895.

Going ahead, traders will eye the release of Australia's AiG performance of construction index for September, slated overnight.

The currency pair is trading below its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the EUR rose 0.15% against the USD and closed at 1.1760, after the Euro-zone's final Markit services PMI was surprisingly revised up to a level of 55.8 in September, while the preliminary print had indicated an advance to a level of 55.6, suggesting that manufacturing sector will remain a key pillar of growth in the common currency region. In the prior month, the PMI had registered a level of 54.7.

On the contrary, the region's seasonally adjusted retail sales recorded an unexpected drop of 0.5% on a monthly basis in August, declining for the second straight month and confounding market consensus for a gain of 0.3%. In the prior month, retail sales had dropped 0.3%.

Separately, Germany's final Markit services PMI climbed to a level of 55.6 in September, confirming the flash estimate. The PMI had registered a reading of 53.5 in the previous month.

The US Dollar recouped some of its earlier losses against a basket of major currencies, following an upbeat report on the US services sector.

Data showed that the US ISM non-manufacturing activity index jumped more-than-anticipated to a level of 59.8 in September, accelerating at its fastest clip in 12 years, thus indicating that the sector has shown strong resilience to last month's hurricane disruptions. The PMI had recorded a level of 55.3 in the prior month, while market participants had envisaged for a rise to a level of 55.5.

Other data showed that ADP's private sector employment in the US climbed by 135.0K in September, at par with market expectations. However, it was the weakest reading in thirteen months as distortions caused by a pair of hurricanes weighed on the nation's job market. The private sector employment had registered a revised increase of 228.0K in the prior month. Further, the nation's final Markit services PMI eased more than initially estimated to a level of 55.3 in September, compared to a drop to a level of 55.1 recorded in the preliminary figures. In the previous month, the PMI had recorded a level of 56.0. Also, the nation's mortgage applications eased 0.4% in the week ended 29 September, after recording a fall of 0.5% in the prior week.

In the Asian session, at GMT0300, the pair is trading at 1.1758, with the EUR trading a tad lower against the USD from yesterday's close.

The pair is expected to find support at 1.1741, and a fall through could take it to the next support level of 1.1723. The pair is expected to find its first resistance at 1.1782, and a rise through could take it to the next resistance level of 1.1805.

Looking forward, investors will keep a close watch on the minutes of the European Central Bank's September policy meeting, due to release later in the day. Moreover, the US initial jobless claims data followed by the nation's trade balance, factory orders and final durable goods orders, all for August, set to release later today, will keep investors on their toes.

The currency pair is showing convergence with its 20 Hr moving average and trading above its 50 Hr moving average.

For the 24 hours to 23:00 GMT, the GBP slightly rose against the USD and closed at 1.3242.

Macroeconomic data revealed that Britain's Markit services PMI surprisingly advanced to a level of 53.6 in September, soothing worries about a Brexit-induced economic slowdown. Markets were anticipating the PMI to remain steady at a level of 53.2 recorded in the prior month.

In the Asian session, at GMT0300, the pair is trading at 1.3239, with the GBP trading marginally lower against the USD from yesterday's close.

The pair is expected to find support at 1.3215, and a fall through could take it to the next support level of 1.319. The pair is expected to find its first resistance at 1.3278, and a rise through could take it to the next resistance level of 1.3316.

In absence of any macroeconomic releases in the UK today, investor sentiment would be governed by global macroeconomic events.

The currency pair is trading below its 20 Hr and 50 Hr moving averages.

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For the 24 hours to 23:00 GMT, the USD marginally declined against the JPY and closed at 112.77.

In the Asian session, at GMT0300, the pair is trading at 112.75, with the USD trading a tad lower against the JPY from yesterday’s close.

The pair is expected to find support at 112.40, and a fall through could take it to the next support level of 112.05. The pair is expected to find its first resistance at 113.02, and a rise through could take it to the next resistance level of 113.29.

Moving ahead, Japan’s flash leading economic and coincident indices, both for August, due to release tomorrow, will be on investors’ radar.

The currency pair is trading above its 20 Hr moving average and showing convergence with its 50 Hr moving average.

For the 24 hours to 23:00 GMT, the USD rose 0.18% against the CHF and closed at 0.9752.

In the Asian session, at GMT0300, the pair is trading at 0.9748, with the USD trading slightly lower against the CHF from yesterday's close.

The pair is expected to find support at 0.9719, and a fall through could take it to the next support level of 0.9691. The pair is expected to find its first resistance at 0.9769, and a rise through could take it to the next resistance level of 0.9791.

Looking ahead, market participants will focus on Switzerland's inflation numbers for September, scheduled to release in a few hours.

The currency pair is trading above its 20 Hr moving average and showing convergence with its 50 Hr moving average.

For the 24 hours to 23:00 GMT, the USD declined 0.11% against the CAD and closed at 1.2477.

In the Asian session, at GMT0300, the pair is trading at 1.2479, with the USD trading a tad higher against the CAD from yesterday’s close.

The pair is expected to find support at 1.2453, and a fall through could take it to the next support level of 1.2426. The pair is expected to find its first resistance at 1.2502, and a rise through could take it to the next resistance level of 1.2524.

Ahead in the day, market participants will focus on Canada’s international merchandise trade balance for August.

The currency pair is showing convergence with its 20 Hr moving average and trading below its 50 Hr moving average.

EURUSD Short Term Elliott Wave structure suggests the decline from 9/8 peak is in progress as an expanded Flat Elliott Wave structure. From 9/8 high (1.2094), pair declined to 1.837 and ended Intermediate wave (A). Pair then bounced to 1.2034 and ended Intermediate wave (B). At present, Intermediate wave (C) remains in progress as 5 waves impulse. Minor wave 1 of (C) ended at 1.186 and Minor wave 2 of (C) ended at 1.2. Decline to 1.1716 ended Minor wave 3 of (C), and Minor wave 4 of (C) bounce ended at 1.1832.

While near term bounce stays below 1.18329, pair can extend lower in Minor wave 5 of (C) and reach as low as 1.16207. This move lower will also end cycle from 9/8 peak and complete Primary wave ((W)). Pair should then bounce in Primary wave ((X)) to correct cycle from 9/8 peak in 3, 7, or 11 swing at least. If pair breaks above 1.1832 from here, it could be in Minor wave 4 as a flat before turning lower again in Minor wave 5. As the minimum target and swing have been met, pair may have also ended Primary wave ((W)) already if it breaks above 1.1832 from here without making a new low.

EURUSD 1 Hour Elliott Wave Chart

Expanded Flat is a 3 waves corrective pattern, and the inner subdivision is labeled as A,B,C with 3,3,5 structure. That means waves A and B are always corrective structures i.e. could be WXY, WXYXZ, Zigzag or any 3 waves corrective pattern. Wave C is either 5 waves impulse or ending diagonal pattern. In the graphic below, we can see what Expanded Flat structure looks like. Inner structure has ABC labeling, where wave B can complete below or above the starting point of wave A. Wave C should complete below the end point of wave A (usually at 1.236-1.618 fibonacci extension A related to B).