Sample Category Title

GBP/USD – 1.3240





Original strategy :

Sell at 1.3280, Target:1.3080, Stop: 1.3340

Position: -

Target:  -

Stop: - 




New strategy :

Sell at 1.3315, Target:1.3115, Stop: 1.3375

Position: -

Target:  -

Stop:- 



Although cable has eased again after rising to 1.3265, reckon pullback would be limited to 1.3200 and near term upside risk remains for the rebound from 1.3027 (last week’s low) to bring retracement of recent decline, hence gain to resistance at 1.3292 cannot be ruled out, however, reckon upside would be limited to 1.3315-20 and bring retreat later, below support at 1.3175 would signal topic formed, bring weakness to 1.3125-30, break there would suggest the rebound from 1.3027 has ended and bring further fall to 1.3075, then retest of said support at 1.3027, break there would confirm the fall from 1.3658 top has resumed, bring test of psychological support at 1.3000, then towards 1.2970.

In view of this, we are still looking to sell cable on further subsequent recovery as 1.3315-20 should limit upside, bring another decline later. Above previous support at 1.3343 would abort and signal low has been formed instead, bring at least a correction of the fall from 1.3658 top to 1.3390-00 later. 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. 


EUR/USD

Current level - 1.1866

The intraday bias here is positive, for a break through 1.1785 hurdle, for a tight test of 1.1830 major resistance. Crucial on the downside is 1.1720.

USD/JPY

Current level - 112.28

The outlook remains bearish, for a slide towards 111.50 zone. Crucial on the upside is 112.80.

GBP/USD

Current level - 1.3242

The violation of 1.3220 resistance signals a further appreciation towards 1.3340 area. Crucial on the downside is 1.3170.

The common European currency continues to advance against the US Dollar four days in a row, fluctuating in a junior ascending channel. As some of the FOMC members were still uncertain about necessity of interest rate hike in December, the pair gained an impulse to reach the monthly PP at 1.1875. The fact that an average market sentiment became 69% bearish points out on an upcoming turnaround. Similar signal show certain technical indicators suggesting that the rate is overbought. On the other hand, there is a need to take into account that the pair is also moving and tends to reach the upper boundary of a large descending channel. In other words, whether the rate makes a rebound on continues the surge will greatly depend on the US PPI release and reaction on Mario Draghi speech.

In accordance with expectations, the currency exchange rate was consolidating before a release of the Fed meeting minutes. But as soon as this document was released, the pair expectedly sneaked through the 200-hour SMA and started to surge.

The fact that road to the south is obstructed not only by a combination of the 55- and 200-hour SMAs but also by the 100-hour SMA and the weekly PP suggests that the Greenback is unlikely to restore lost positions against the Pound even in case of better than expected US PPI data release. Accordingly, traders with bullish outlook most probably are going to try to push the pair to the area between the 1.3300 mark and the monthly PP at the 1.3320 by the end of the week.

As it was expected, after reaching the weekly S1 at 112.19 traders tried to push the rate to the top. However, a combined resistance formed by the 55-, 100- and 200-hour SMAs in conjunction with the weekly PP at 112.81 expectedly neutralized this attempt. Moreover, the released FOMC meeting minutes showed some uncertainty regarding the need on another interest rate hike this year, which additionally devaluated the buck against all other major currencies. These facts suggest that the pair is unlikely to break in the northern direction today as well even if the US PPI will appear to be better than analysts expected. In support of this scenario speaks the fact that the average market sentiment remains 63% bearish. Plus the pair has formed a new descending channel.

Daily Pivots: (S1) 148.11; (P) 148.48; (R1) 149.12; More

Intraday bias in GBP/JPY remains neutral for consolidation above 146.92 temporary low. Another decline is expected with 149.73 intact. Below 146.92 will target 61.8% retracement of 139.29 to 152.82 at 144.45. Such decline is seen as a correction and we'd look for strong support from 144.45 to bring rebound. On the upside, break of 149.73 support turned resistance will argue that the pull back is completed and turn bias back to the upside for retesting 152.82 high. However, sustained break of 144.45 will put 139.29 key support in focus.

In the bigger picture, medium term rebound from 122.36 is still expected to resume after corrective pull back from 152.82 completes. Firm break of 38.2% retracement of 196.85 to 122.36 at 150.43 will carry long term bullish implications. In that case, GBP/JPY could target 61.8% retracement at 167.78. However, break of 139.29 will indicate rejection from 150.43 key fibonacci level. And the three wave corrective structure of rebound from 122.36 will argue that larger down trend is resuming for a new low below 122.26.

In line with expectations, the pair continued to move in a limbo between the weekly R1 and R2 in anticipation of release of the FOMC meeting minutes. As soon as it became clear that there remains some uncertainty about the upcoming interest rate hike, the buck started to lose value against the gold. As a result, the rate reached and even slightly overstepped the 1,294.86 mark. Accordingly, the pair is likely to continue the surge at least in the first half of the day before the US PPI data release. This assumption is partially based on the 55-hour SMA, which is rising together with the pair, and partially on two recently formed ascending channels. However, the fact that an area near 1,295.50 is blocked by the 55-day SMA suggests that the rate might be actually forced to turnaround.

EUR/USD fell slightly after the weak JOLTS openings report, though the decrease was offset twice as the pair remained in the bullish run, which was confirmed after the FOMC Meeting Minutes' release. Following the second publication, the US Dollar lost against the European single currency 10 base points to return in the area above the 1.8550 mark.

The JOLTS survey showed that the number of the US job openings declined to 6.08M in August, from a downwardly revised figure of 6.14M in the prior month, facing negative impacts coming from the Hurricane Harvey. Subsequent release of the Fed meeting minutes revealed that some central bankers remained concerned on persistently weak inflation growth, which is likely to determine the need of the interest rate hike.

Daily Pivots: (S1) 132.75; (P) 133.12; (R1) 133.79; More...

EUR/JPY is staying in consolidation in range of 131.73/134.39 and intraday bias remains neutral at this point. Near term outlook remains bullish as long as 131.69 holds. Sustained break of 134.20 fibonacci level will extend larger up trend to 141.04 resistance next. However, break of 131.69 will be an early sign of medium term reversal and will target 127.55 key support level instead.

In the bigger picture, medium term rise from 109.03 (2016 low) is seen as at the same degree as the down trend from 149.76 (2014 high) to 109.03 (2016 low). 61.8% retracement of 149.76 to 109.03 at 134.20 is already met. Sustained break there will pave the way to key long term resistance zone at 141.04/149.76. However, break of 127.55 support will argue that the medium term trend has reversal and will turn outlook bearish for deeper fall.

GBP/JPY - 148.65

New strategy :

Stand aside

Position: -
Target:  -
Stop:-

Although sterling edged higher again today and near term upside risk remains for the rebound from this week’s low of 146.95 to extend gain to 149.50-55, as this move is viewed as retracement of recent decline, reckon upside would be limited to 149.90-00 and resistance at 150.25 should hold from here, bring another decline later.

On the downside, below 147.80-85 would suggest top is formed, bring weakness to 147.30-35, break there would signal the rebound from 146.95 has ended, bring retest of this level but break there is needed to confirm the fall from 152.85 top has resumed for retracement of recent upmove to 146.60-65 and then 146.00, having said that, loss of momentum should limit downside and 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.