Sample Category Title

AUD/USD – 0.7925

Original strategy:

Sell at 0.8040, Target: 0.7840, Stop: 0.8100

Position: -
Target:  -
Stop:-

New strategy :

Sell at 0.8040, Target: 0.7840, Stop: 0.8100

Position: -
Target:  -
Stop:-

As aussie has remained under pressure after dropping sharply to 0.7908 late last week, retaining our bearishness for the corrective fall from 0l8125 top to bring retracement of recent upmove, below said support at 0.7908 would extend weakness to support at 0.7967-71, having said that, break there is needed to confirm temporary top has been formed at 0.8125 earlier this month, bring retracement of recent rise to 0.7800 first.

In view of this, we are looking to sell aussie again on recovery as 0.8040-50 should limit upside. Above said resistance at 0.8103 would abort and risk retest of 0.8125 but break of latter level is needed to confirm upmove has resumed and extend gain to 0.8150-60, then towards 0.8200 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.

NZD slides as business confidence falls

The New Zealand dollar extended losses on Tuesday amid a massive in business confidence. During the Asian session, the Kiwi fell 0.60% against the greenback as it reached $0.7215. Business confidence tumbled to zero, the lowest level since September 2015, compared to 18.3 in August. The drop came amid a significant deterioration of expected business conditions, especially in the manufacturing industry. In addition, the uncertainty stemming from Saturday’s election as there was no clear winner. The ruling National Party got only 46% of the vote, while the opposition (composed of the Labour party and the Green) acquired roughly 42% of the vote. The Kiwi is ahead of a difficult periods as the uncertainty will last several weeks. Indeed, both sides will try to get the support of the NZ First Party to build a coalition government.

Investors, and especially leveraged speculators, already started to reduce their long speculative positions. Net long non-commercial futures positions accounted for roughly 63% of total open interest in early August. As of last week, this number decrease to 18%, suggesting that the Kiwi is running out of steam.

From a technical standpoint, a key support can be found at $0.7146 (200-dma), while on the upside the 0.73 area will act as main short-term resistance (50-dma and 38.2% Fibonacci level on July - August retracement). On the medium-term, NZD/USD continues to trade within its downtrend channel. A return towards $0.70 cannot be ruled, especially now that the Federal Reserve in the US is set to tighten monetary policy further in December, while having already announced the beginning of its balance unwinding for October.

Fed Speakers up next

For those in the small minority that enjoys Fed speak, then today is the day for you. For the rest of us we will have to suffer through the microanalysis of language and rogue volatility. The question of the day is where US inflation is. By all accounts, inflation should be significantly higher which makes trading precarious since a reflection point could be anytime. Friday PCE read, or a year from now. A repricing of the Fed shallow curve has plenty of room to run, sending yields and therefore USD higher. In our view, there is growing superficial evidence and general improvement in consumer inflation that suggests we are near to the event. There are six fed speakers today, making expectations for market driving headlines high.

New York Fed President Dudley started the precession sounding hawkish attributing recent inflation weakness to “temporary, idiosyncratic factors” Markets focus will be on Fed Chair Yellen’s speech, which is specifically on inflation and monetary policy (“Inflation, Uncertainty, and Monetary Policy”) in Cleveland Ohio. We anticipate her to reiterate comments at the FOMC press conference last week. Yellen’s comments at the September FOMC meeting were deemed hawkish, causing market to re-price in a December rate hike at 60%.

We suspect there is stillroom for markets to push Fed pricing higher yet unlikely that any of Yellen’s comments will move the needle. With year of discounting the Fed overly, optimistic projections, markets need to see a solid inflation data trend (which makes Friday PCE read so important). Governor Brainard speaking on “Labor Market Disparities” will also have the markets attention. US front-end rally has stalled with 2yr yields stuck at 1.40% yet US/EU rate spread continue to tick higher creating headwinds from EURUSD. Should Yellen increase the hawkish amplitude or we get Core PCE at 1.5% (or higher), trader should watch out for a sudden and sharp USD recovery.

WTI oil futures turned sharply bullish in the short term after surging from the 50-handle to hit a high of 52.40, a level not seen since April 19. The upward trajectory lost steam and the market is now capped at this 5-month high.

The broader trend is bullish ever since prices bounced off the 47 area on September 11. The market entered a consolidation phase on September 15 and traded in a range between 49.65 and 51.09 until the break out yesterday. The market is neutral again after becoming overbought, as indicated by the RSI rising above 70 on the 4-hour chart.

While upside momentum has weakened, the underlying trend higher has potential to extend since momentum oscillators are in bullish territory and the short-term moving averages are positively aligned after the 20-period MA crossed above the 50-period MA.

Support is expected at yesterday’s low of 51.18 ahead of the key 50-level and range-low of 49.65. A deeper extension lower would shift the bias to the downside to target the September 14 low of 49.13 and then 48.11 (20 MA support). From here the key 47-level comes into view as major support.

Resistance at 52.40 will likely be challenging to break. If successful, there is scope to rise towards the 53 level and reach the next major peak at 53.73 (April 12 high).

In the near term, WTI oil is expected to trade in a choppy range. The bullish trend from the end of August is expected to remain intact. Only a drop below 49 would end the short-term bullish outlook.

The recent 'war of words' between the US and North Korea escalated further yesterday, after the regime's foreign minister said that a tweet from US President Trump over the weekend amounted to a 'declaration of war'. Given this declaration, North Korea has the right to shoot down US bombers even outside of its own airspace, the minister added. Even though this is not the first time North Korea has made war claims, the continued intensification in rhetoric may have put the prospect of military conflict back on the investors' radar.

Markets reacted in a classic risk-off manner. Safe haven assets such as the JPY, CHF, and gold, all spiked higher on the news, while equity indices tumbled. Focus now turns back to Trump. If his response is along the same 'fire and fury' wavelength, the latest price action could continue. We could see another round of risk aversion that benefits haven assets and weighs on riskier ones. On the other hand, a more diplomatic approach, such as an official statement from the White House instead of a tweet, could lower the likelihood of armed conflict and thereby reverse some of the latest market moves.

Looking at the big picture, although another round of fiery rhetoric could keep safe havens supported for a while, we maintain our view that as long as this does not translate into actual war, investors are likely to place less and less emphasis on this crisis moving forward. Rhetoric alone is unlikely to continue driving markets for long.

USD/JPY traded lower yesterday following North Korea's rhetoric. The pair fell below the support (now turned into resistance) of 111.80 (R1) and now looks to be headed for a test near the key territory of 111.00 (S1). That hurdle acted as the upper bound of the prior sideways range that's been in place from the 28th of July until the 18th of September. As such, as long as the rate is trading above that level, we consider the short-term outlook to still be cautiously positive. If the bulls manage to take charge near 111.00 (S1), we would expect them to aim for another test near 111.80 (R1). If they overcome it, then they may target our next resistance of 112.70 (R2).

As for the bigger picture, we still see a longer-term sideways range between 108.70 and 114.30. The fact that the latest recovery started from near the lower bound of the range enhances our view that the pair may rebound again and trade higher, perhaps aiming for the upper bound in the foreseeable future.

Oil prices edge higher as Erdogan threatens the Kurds

Oil surged yesterday, after Turkish President Erdogan threatened to 'close the tap' and cut oil flows from Iraq's Kurdish region to the rest of the world. These remarks followed an independence referendum by Iraqi Kurds on Monday. Given this fresh risk of supply disruptions, we see the case for oil to remain supported for a few days, especially considering that Erdogan could follow-up his threat and push prices even higher. Looking further ahead, the next major theme in the oil market will probably be the OPEC meeting in late-November. Even though there are still eight weeks left until that gathering, speculation for a potential extension or expansion of the current deal could begin well ahead of that time.

WTI surged yesterday on Erdogan's threats. The price emerged above the key resistance (now turned into support) of 51.50 (S2) and subsequently, it broke above 52.00 (S1). The price structure on the 4-hour chart suggests a short-term uptrend and thus, there is the possibility for crude oil to challenge the 53.00 (R1) territory soon. Having said that though, even if WTI continues to trade north for a while, we remain skeptical on whether a healthy long-term uptrend can be established. The price has entered the longer-term sideways range, between 51.50 (S2) and 55.30 (R3), where we believe US shale producers may be attracted to increase production. Something like that may put a lid on any future gains.

Today's highlights:

We only get second-tier indicators from the US today. The Case-Shiller house price index for July is forecast to have accelerated somewhat in yearly terms, while new home sales are expected to have risen in August. We also get the Conference Board consumer confidence index and the Richmond Fed composite index, both for September.

We have five speakers on the agenda. From the Fed, Chair Yellen, Cleveland President Mester, Atlanta President Bostic, and Board Governor Brainard, will all speak. We will also hear from ECB Executive Board member Praet. Markets may focus mainly on Yellen, but since we already heard from her last week, any reaction may be limited.

USD/JPY

Support: 111.00 (S1), 110.60 (S2), 110.00 (S3)

Resistance: 111.80 (R1), 112.70 (R2), 113.60 (R3)

WTI

Support: 52.00 (S1), 51.50 (S2), 51.00 (S3)

Resistance: 53.00 (R1), 54.00 (R2), 55.30 (R3)

The downside remains at risk after Tuesday's recovery attempts were limited, as long red candle from last Friday and Monday's bearish daily candle with long upper shadow continue to weigh.

The pair hit fresh marginally lower low at 1.3430 on Monday, but dip was short-lived, as higher base at 1.3450, despite being under pressure, holds dips for now.

Prolonged sideways mode could be expected while the latter holds, as daily techs remain in firm bullish setup and overall bulls are still intact.

Today's speech of Fed Chief Yellen could spark fresh action, with dovish tone from Fed to boost pound while hawkish stance would put the pair under pressure for final break below 1.3450 base and bearish acceleration towards 1.3402 (daily Tenkan-sen) and 1.3318 (Fibo 38.2% of 1.2773/1.3655 ascend).

Res: 1.3514, 1.3570, 1.3595, 1.3618
Sup: 1.3450, 1.3430, 1.3402, 1.3318

Brent Oil drops after the impressive rally failing to stabilize above the $59.00 per barrel. The minor correction is natural, it could come to retest the 250% Fibonacci line and the median line (ML) of the major ascending pitchfork before will resume the upside journey.

Price increased today, but it seems like is losing the bullish momentum. USD/CAD is still trading below the 1.2389 Wednesday’s high. The next upside target will be at the median line (ml) of the blue ascending pitchfork. USD/CAD is still under pressure as long a is trading within the descending pitchfork’s body.

We’ll have a broader increase only after a valid breakout from the minor descending pitchfork’s body.

The currency pair has dropped sharply today and resumes the bearish momentum. It seems too heavy to be stopped right now even if the USDX is bloodless. The USDX drags the pair down, but remains to see what will happen because has reached a dynamic support. Technically, it should take out the downside obstacle after the false breakout above a strong dynamic resistance.

Price is trading in the red and seems unstoppable, a further USDX’s increase will force the pair to hit fresh new lows in the upcoming period.

The USDX has managed to jump above the 92.49 static resistance, but we still need a confirmation that will really climb towards fresh new highs. USDX move sideways on the short term, this could be an accumulation and could bring us a larger rebound.

Price is pressuring the sliding parallel line (sl), which represents an important dynamic support. NZD/USD is trading in the red and is expected to ignore the mentioned support level and to approach and reach the 50% retracement level. We have an important downside target at the fifth warning line (wl5) as well.

Actually, it could be attracted by the confluence area formed between the 50% Fibonacci line with the fifth warning line (wl5).

Now is trapped within an ascending channel, but a breakdown below the sliding line (sl) will confirm a further drop in the upcoming period.

The euro continues to slip lower against the U.S dollar, hitting 1.1832 in late Monday trading, with the pair now closing price-action under major weekly support and trading at its lowest level, since August 31st.

Technically, the EURUSD is set for a deeper correction lower, as the pair performed a higher time-frame and daily price-close below 1.1885, and also broke beneath important former weekly price lows.

The euro currency hates uncertainty, and the EURUSD may be further pressured lower as the German CDU party seeks a coalition, and tensions remain in Spain over Catalonia's bid for independence.

Key technical intraday support for the EURUSD is found at 1.1823 and 1.1773, with the pairs 200-week moving average critical monthly support, at 1.1716.

Key intraday resistance comes from the pairs 50-day moving average at 1.1870, and the key 1.1885 level. Should the euro trade above 1.1885, further resistance is found at the 50-hour moving average, at 1.1913 and the weekly pivot point, at 1.1948.

.

EUR/USD

The common currency had a rough day, falling down to 1.1832 against the greenback, to end the day not far above the level. The EUR was hit at the beginning of the week by the outcome of German's election, as Merkel's party got a minor victory, with 33% of the votes, while the far-right AfD got 12.6%, making it to the Parliament for the first time since WWII. Merkel, will now to have to form a coalition to govern Germany, particularly after the SPD leader, Martin Schulz who came in second with a 20.5%, ruled out the possibility of a coalition with Merkel's CDU party. Also, the German IFO survey showed that German manufacturers ramped up their investment in September, but not to the extent originally planned. Business climate was down to 115.2 in September, from a previously revised 115.7 and against the 116.00 expected. There were no big headlines coming from the US, but escalating tensions between the country and North Korea triggered demand for safe-haven assets in the US afternoon, dragging the pair further lower, after North Korean foreign minister Ri Yong Ho said that US Trump's comments over the weekend were clearly a declaration of war.

This Tuesday, US Fed Yellen is due to deliver a speech titled "Inflation, Uncertainty, and Monetary Policy" at the National Association for Business Economics Annual Meeting, in Cleveland, but seems unlikely she would offer something that can surprise market players, after last week's statement. Technically, the pair is poised to extend its decline, back near the key support around 1.1820/30, where the pair bottomed these last few weeks. The 4 hours chart shows that the price broke below a daily ascendant trend line coming from mid August, which converges with the 200 SMA around 1.1885, making of the level a strong intraday resistance for the upcoming sessions, whilst in the same chart, technical indicators maintain a strong bearish momentum near oversold territory, supporting a bearish breakout of the August/September range.

Support levels: 1.1820 1.1775 1.1730

Resistance levels: 1.1885 1.1930 1.1965

USD/JPY

The Japanese yen retakes the upside against its American rival during the last session, following comments coming from North Korean foreign minister, Ri Yong Ho, who said that US President Donald Trump's comments over the weekend were clearly a declaration of war and therefore, they have every right to take countermeasures, including the right to shoot down strategic US bombers even if they are not in North Korean airspace. US equities, which were off to a soft start, fell further, whilst US Treasury yields trimmed most of last week's gains. The 10-year note benchmark is down to 2.22%, after closing last Friday at 2.26%. The pair fell down to 111.46 before bouncing modestly, holding into the red for the day, and close to trim all of the Fed-related gains triggered last week. The 4 hours chart indicates that the pair bounced from near a critical support, the 23.6% retracement of the 107.31/112.71 rally around 111.40, now the immediate support. The same chart shows that technical indicators gained downward momentum within bearish territory, but also that the price remains well above its 100 and 200 SMAs. In the 111.40 area, the pair also has its 200 DMA, reinforcing the strength of the level, and giving stronger implications to a bearish breakout of such level.

Support levels: 111.75 111.40 111.00

Resistance levels: 112.10 112.40 112.85

GBP/USD

The GBP/USD pair ended the day marginally lower, undermined by broad dollar's strength. The pair extended last week's slide by a couple of pips, printing 1.3430 before recovering to settle above a major Fibonacci support at 1.3450, the 23.6% retracement of 1.2773/1.3553 rally. The UK had nothing to offer from the macroeconomic front, although the fourth round of Brexit negotiations began in Brussels. UK's Brexit minister, David Davis, said that there could be "no excuses" to progress within negotiations, but once again insisted that the divorce-bill should be linked to a deal on future ties, against EU's negotiators stance, which want to settle the bill before moving forward. The pair is slowly gaining downward traction according to intraday readings, although a clear break of the mentioned support is still required, to anticipate further slides towards the 1.3320 region, where the pair has the 38.2% retracement of the same rally. In the hours chart, the price has now extended below its 20 SMA that slowly turned lower, whilst technical indicators accelerated south within bearish territory, in line with a bearish extension during the upcoming sessions.

Support levels: 1.3450 1.3410 1.3370

Resistance levels: 1.3490 1.3535 1.3560

GOLD

Gold prices skyrocketed through the 1,300.00 level, with spot trading as high as $1310.19 a troy ounce, its highest since last Wednesday, when Fed's monetary policy announcement sent it sharply lower. The commodity settled a few cents above 1,308.00, rallying as a result of renewed geopolitical jitters between the US and North Korea, after the N. Korean foreign minister said that the latest US Trump comments were a declaration of war. The commodity started the day with a soft tone, following EUR's lead which plunged following German's election outcome, trading as low as $1,289.49 a troy ounce before turning sharply up on risk aversion. Technically, the daily chart shows that the current recovery is not enough to revert the bearish tone, but at least took off some of the downward pressure, and left doors open for further recoveries, as technical indicators are recovering from oversold levels, whilst the price recovered above the 38.2% retracement of its latest bullish run at 1,299.00. Nevertheless and in the same chart, the price remains well below a still bearish 20 SMA, now converging with the 23.6% retracement of the same rally at 1,321.44. Shorter term, and according to the 4 hours chart, the commodity is poised to recover further, now trading above its 20 and 200 SMAs, and with technical indicators heading sharply higher above their mid-lines.

Support levels: 1,299.00 1,288.10 1,280.45

Resistance levels: 1,311.60 1,321.45 1,334.20

WTI CRUDE OIL

Crude oil prices rallied to fresh multi-month highs, with WTI futures ending the US session around $52.20 a barrel, adding roughly 3% on the day. The commodity found support on speculation the OPEC and non-OPEC producers who signed a pact to cut output last November, will extend its past its expiration date in March next year, alongside with hopes of increased demand, which will help the market rebalance. The US benchmark trades at its highest since last April, when it topped at 53.74, and technical readings in the daily chart support some further gains ahead, as the 20 SMA has overcome the 200 SMA, while technical indicators entered overbought territory with almost vertical bullish slopes. In the shorter term, and according to the 4 hours chart, the risk is also towards the upside, as technical indicators hold within overbought territory, losing upward strength amid decreasing volume at this time of the day, rather than signaling upward exhaustion. Also, the price has accelerated far above all of its moving averages, further supporting additional gains ahead for oil, moreover on an extension above52.26, the daily high and the immediate resistance.

Support levels: 51.65 50.90 50.40

Resistance levels: 52.25 52.90 53.70

DJIA

Wall Street closed in the red at the beginning of the week, as risk aversion, alongside with falling tech equities, undermined US indexes. The DJIA lost 53 points, to end at 22,296.09, while the Nasdaq composite shed 0.88% to end at 6,370.59. The S&P closed at 2,496.66 down 0.22%. Within the Dow, Exxon Mobil was the best performer, adding 1.34% amid a sharp advance in oil prices, followed by General Electric that gained 1.05%. Visa led decliners shedding 2.44%, followed by McDonald's that closed 1.64% lower. The Dow, however, ended the day well -off its daily low of 22,217, and the daily chart shows that the downward potential remains limited, given that technical indicators are barely retreating from overbought levels, as the price remains well above all of its moving averages. Shorter term, and according to the 4 hours chart, the index is still below its 20 SMA, while technical indicators have managed to recover partially within negative territory, reflecting the latest intraday bounce rather than suggesting further gains ahead.

Support levels: 22,297 22,258 22,216

Resistance levels: 22,370 22,424 22,475

FTSE100

The FTSE 100 shed some ground this Monday, down 9 points or 0.13% to close at 7,301.29, affected by Pound's strength, early London and falling metal prices, weighing on mining-related currencies. Also, a report from the BOE warning about risks for credit growth hurt banking-related equities. Mediclinic International was the worst performer, down 5.14%, followed by Antofagasta and Anglo American, down over 3% each. ConvaTec led gainers, up 1.50%, followed by BT Group, which added 1.47%. The technical outlook for the index is little changed from Friday's view, as the index remains well below a bearish 20 SMA, also below the 100 SMA, while technical indicators remain within bearish territory, and particularly the RSI gains favors the downside, currently around 45. Shorter term, and according to the 4 hours chart, the index continues consolidating above a bullish 20 SMA, whilst technical indicators keep hovering above their mid-lines, with limited upward strength.

Support levels :7,280 7,236 7,195

Resistance levels: 7,344 7,381 7,422

DAX

The German DAX added 2 points, to end the day at 12,594.81, as despite the EUR plunged, a decline in banking and mining-related equities dragged European indexes lower. Most members were down within the DAX, with RWE AG leading decliners, down 5.65%, followed by Commerzbank that lost 2.79%. The best performer was Merck, which added 1.97%, followed by Bayer up at the end of the day by 1.14%. The index remains within a consolidative stage, with no upward strength but with the downside potential limited, as the index holds far above all of its moving averages, whilst technical indicators are barely losing upward momentum holding near overbought levels. In the 4 hours chart, the index is neutral, but with an increased bearish potential, as the index closed below a horizontal 20 SMA, while the Momentum indicator holds flat around its 100 level, and the RSI indicator gains bearish traction, but currently at 49.

Support levels: 12,537 12,489 12,439

Resistance levels: 12,584 12,630 12,677