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EUR/JPY - 134.15





The single currency opened higher again this week and we were unable to enter long at recommended entry at 132.00 as euro rallied from 132.38 (this week’s low), adding credence to our bullish view that the major rise from 109.49 low (2016 low) is still in progress, indicated upside targets at 133.50-60 and 134.00-10 had been met, upside bias remains for further gain to 134.59 (previous chart resistance), then 135.00-10 but overbought condition should prevent sharp move beyond 136.00-10 and reckon 136.95-00 would hold, price should falter well below 138.45-50 (1.618 times extension of 109.49-124.10 measuring from 114.85), risk has increased for a retreat to take place later.

The daily chart is labeled as attached, early selloff from 169.97 (July 2008) to 112.08 is wave (A) of B instead of end of entire wave B and then the rebound from there to 139.26 is wave (B), hence, wave (C) has possibly ended at 94.12 with a diagonal triangle as labeled in the daily chart, hence upside bias is seen for further gain. Recent rally above indicated retracement level at 116.69 (50% Fibonacci retracement of the intermediate fall from 139.26-94.12) adds credence to this view and signal major reversal has commenced but first leg of this wave C has possibly ended at 149.79, hence wave 2 has commenced with wave A ended at 126.09, followed by wave B at 141.06, wave C commenced and could have ended at 109.49, indicated upside targets at 126.00 and 130.00 had been met and further gain to 135.00 would follow. 



On the downside, whilst initial pullback to 133.50-60 is likely, reckon downside would be limited to 132.90-00 and bring another upmove later. Below this week’s low at 132.38 would bring test of previous resistance at 131.71 (now support) but a daily close below there is needed to signal a temporary top is possibly formed, bring retracement of recent rise to 131.00 and possibly test of support at 130.62 but downside should be limited to 130.00 and strong support at 129.37 should remain intact, bring another upmove later.


Recommendation: Buy at 132.70 for 135.00 with stop below 131.70.

To re-cap the corrective upmove from the record low of 88.93 (18 Oct 2000), the wave A from there is subdivided as: 1:88.93-113.72, 2:99.88 (1 Jun 2001), 3:140.91 (30 May 2003), 4:124.17 (10 Nov 2003) and 5 ended at record high of 169.97 (21 Jul 2008). The brief but sharp selloff to 112.08 is viewed as a-b-c x a-b-c wave (A) of B. The subsequent rebound to 139.26 is (B) of B and (C) of (B) has possibly ended at 94.12 and in any case price should stay well above previous chart support at 88.93, bring rally in larger degree wave C towards 150.00.

USD/CHF –  0.9696

 
The greenback only retreated to 0.9565 (we recommended in our previous update to buy at 0.9550 and missed the entry) before staging the anticipated rally, this move adds credence to our view that low has been formed at 0.9421, hence consolidation with upside bias remains for test of previous resistance at 0.9774, a sustained breach above this level would confirm and bring retracement of early decline to resistance at 0.9808, then test of previous support at 0.9859, having said that, near term overbought condition should limit upside to 0.9900 and price should falter well below psychological resistance at 1.0000, bring another decline later.

Our preferred count on the daily chart is that early selloff to 0.9630 is an end of the larger degree wave III and major correction is unfolding from there with a leg ended at 1.2298 (Nov 2008 with (a): 1.0625, (b):1.0011 and (c):1.2298), wave b ended at 0.9910 with (a): 1.0370, (b): 1.1967, (c): 0.9910. The rise from there to 1.1730 is the wave c which also marked the end of wave IV and wave V has possibly ended at 0.7068.


On the downside, whilst initial pullback to 0.9650 is likely, reckon downside would be limited to said support at 0.9565 and bring another rise later. Below 0.9525-30 would risk weakness to 0.9490-00 but still reckon downside would be limited to 0.9455-60 and said support at 0.9421 should remain intact, bring another rebound later. A drop below said support at 0.9421 would extend recent decline from 1.0344 top (formed back in late 2016) to 0.9350 and possibly 0.9300, however, loss of downward momentum should prevent sharp fall below 0.9250-60 and 0.9200-10 should hold.

 
Recommendation: Buy at 0.9575 for 0.9775 with stop below 0.9475.

Dollar's long-term downtrend started from 2.9343 (Feb 1995) and it was unfolding as a (A)-(B)-(C) with (A): 1.1100, (B): 1.8310 (26 Oct 2000), then followed by another impulsive wave (C) with wave III ended at 0.9630 (Mar 2008). Under this count, correction in wave IV has possibly ended at 1.1730 and wave V already broke below support at 0.9630 and met indicated downside target at 0.7500 and 0.7400. The reversal from 0.7068 suggests the wave V has possibly ended and the breach of resistance at 0.9595 add credence to this view and indicated upside target at 1.0000 had been met, however, the sharp retreat from 1.0296 to 0.7401 suggests choppy trading would be seen but price should stay above said record low at 0.7068.

EURJPY - The pair continues to hold on to its broader medium term uptrend though facing price hesitation. On the downside, support comes in at the 133.50 level where a break if seen will aim at the 133.00 level. A cut through here will turn focus to the 132.50 level and possibly lower towards the 132.00 level. On the upside, resistance resides at the 134.50 level. Further out, we envisage a possible move towards the 135.00 level. Further out, resistance resides at the 135.50 level with a turn above here aiming at the 136.00 level. On the whole, EURJPY faces further bull pressure in the medium term.

GBP/USD – 1.3547





Original strategy :

Sell at 1.3600, Target:1.3400, Stop: 1.3660

Position: -

Target:  -

Stop: - 




New strategy :

Sell at 1.3620, Target:1.3420, Stop: 1.3680

Position: -

Target:  -

Stop:- 



Although cable found support at 1.3452 and has rebounded, if our view that top has possibly been formed at 1.3658 earlier this week is correct, upside would be limited to 1.3615-20 and bring retreat later, below 1.3500 would bring test of said support at 1.3452, break there would add credence to this view, bring weakness to 1.3380-85, however, break there would bring retracement of recent rally to 1.3350, then towards 1.3300-10 which is likely to hold form here.

In view of this, we are looking to turn short on further recovery as 1.3615-20 should limit upside. Above said resistance at 1.3658 (this week’s post-Fed high) would signal recent upmove is still in progress and may extend headway to 1.3700. 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 is unfolding and may extend further gain to 1.3650, then 1.3700, however, overbought condition should limit upside to 1.3770-75 and reckon 1.3800-10 would hold from here, bring retreat later.

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. 


Trump Lashed More Sanctions On Korea
Dust Settled And US Indices Reacted To Fed’s Decision
German Election Would Be The Focus For The Weekend

Trump Lashed More Sanctions On Korea

The Asian markets are focused on the geopolitical tensions because the ongoing war of words between Trump and Kim Jong-un could explode.

Donald Trump announced some new tighter and tougher sanctions on North Korea. The sanctions will involve individuals, companies and banks which have anything to do with North Korea in terms of business. He has also asked Theresa May to join him to add more pressure on North Korea. He has called Kim Jong-un a 'rocket man' and the war of words between the two leaders has no sign of cooling off. Jim Jong has called President Trump 'mentally deranged'.

After these new sanctions, North Korea is not going to sit quiet. We do expect a reaction and it may be another nasty surprise for President Trump. If there is any kind of reaction from North Korea, the gold price could easily jump above the 1300 mark.

Dust Settled And US Indices Reacted To Fed’s Decision

The bears had it their way finally as the US markets closed in a negative territory for the first time in the last 10 days. The dust from the Fed meeting has finally settled and traders are showing some nervousness ahead of the potential upcoming rate hike. The US Jobless claims data came much better than the forecast and this reinforced the Fed outlook about the labour market. The Philadelphia Fed’s business outlook was also strong and came ahead of the expectations. If the Fed continues its rate hike glide path, repositioning in some portfolio rearrangement would be inevitable. The US financial sector is one of the most loved sectors by investors because higher rates would benefit the banking stocks.

German Election Would Be The Focus For The Weekend

Going into the weekend, a lot of attention will remain on the main event which will be unfolding on Sunday - the German elections. The German Chancellor is poised to win this election for the fourth time but the focus would be on whether she can secure the majority. Investors will be looking at her and they will be highly interested in the new form of collation which she is going to put together.

Sterling Traders To Focus On May

Another important event on Friday is the speech by the UK prime minister. The sterling has been roaring and literally paying no attention to how the Brexit negotiations have been choking off. For traders it is all about the BOE and when they will be increasing the interest rate. It is highly likely that the BOE may actually increase the interest rate in November but that doesn’t mean that the BOE will be on a rate hike glide path. The Brexit negations and the final outcome are both very significant. In her speech, May is expected to outline her new vision of Brexit. There are certainly chances that her new vision creates more political turmoil in the UK’s political system because the foreign secretary of the country has already made it clear that it is his way or the high way. So we would expect some major mover for the sterling

GBP/JPY - 151.80

New strategy :

Stand aside

Position: -
Target:  -
Stop:-

Despite rising to 152.85 yesterday, the subsequent retreat suggests consolidation below this level would be seen and test of support at 150.15 is likely, however, a firm break below there is needed to suggest a temporary top is possibly formed, bring further fall to 149.70-80, then towards 148.90-00, only a drop below there would add credence to this view, bring retracement of recent rise to 148.50 and then 148.00 later.

In view of this, would be prudent to stand aside in the meantime. Above 152.35-40 would bring another test of said resistance at 152.85 but break there is needed to signal upmove has once again resumed and extend headway to 153.00-10 and possibly towards 153.50-60, however, 154.00 should hold, risk from there has increased for a retreat to take place later. 

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.


Crude oil is edging higher above the $50 level. Key support is given at 45.40 (17/08/2017 high). Strong resistance found at 50.43 (31/07/2017) has been broken. Expected to show another leg higher.

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

Silver has reversed and has broken uptrend channel by breaking support implied by its lower bound. Strong resistance is given at 18.65 (17/04/2017 high) while support can be found at 16.58 (15/08/2017 high). Expected to show further bearish move.

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 is consolidating below 1300. Hourly support is now given at 1288 (21/08/2017 low). Hourly resistance is located at 1357 (08/09/2016). Stronger support lies at 1204 (10/07/2017 high). Expected to show further bearish move.

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)

Bitcoin has taken a dive after strong interest over the summer. The digital currency has set up a new support at 2975 (22/08/2017 low). Hourly resistance is given at 4121 (18/09/2017 low). Key resistance can be located at 4921 (01/09/2017 high). The road is wide open for further shortterm decline.

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