Sample Category Title

Weekly
    •    Last Candlesticks pattern: Long white candlestick
    •    Time of formation: 10 Jul 2017
    •    Trend bias: Up

Daily
    •    Last Candlesticks pattern: Long white candlestick
    •    Time of formation: 18 Jul 2017
    •    Trend bias: Up



Aussie extended the fall from 0.8125 top in line with our bearish expectation, our short position entered at 0.8060 met downside target at 0.7860 (with 200 points profit), this anticipated selloff adds credence to our view that top has been formed at 0.8125 and downside bias remains for this fall to bring retracement of early upmove to previous resistance at 0.7712, break there would extend weakness to 0.7660-70 and then 0.7620-30 but support at 0.7535-40 should remain intact due to near term oversold condition.

On the upside, whilst initial recovery to 0.7850 cannot be ruled out, reckon resistance at 0.7875 would limit upside and bring another decline later to aforesaid downside targets. Only a daily close above the Kijun-Sen (now at 0.7929) would abort and suggest the fall from 0.8125 has ended instead, bring a strong rebound to 0.7970-75 but still reckon upside would be limited to 0.8000 and price should falter below resistance at 0.8103, bring another decline later. 



Recommendation: Short entered at 0.8060 met target at 0.7860 with 200 points profit and would sell again at 0.7880 for 0.7680 with stop above 0.7980



On the weekly chart, last week’s anticipated decline formed another black candlestick (four in a row), adding credence to our view that top has been formed at 0.8125 earlier and consolidation with mild downside bias remains for this move to bring retracement of recent upmove, below  0.7727 (50% Fibonacci retracement of 0.7329-0.8125 as well as current level of the Kijun-Sen) would extend weakness to 0.7675-80 and possibly 0.7630-35 (61.8% Fibonacci retracement) but reckon support at 0.7535 would hold from here.

On the upside, although recovery to 0.7875-80 cannot be ruled out, reckon the Tenkan-Sen (now at 0.7929) would limit upside and bring another decline later. A weekly close above there would defer and risk a stronger rebound to 0.8020-30 but price should falter below resistance at 0.8103 and bring another decline later. A break of 0.8103 resistance would signal the retreat from 0.8125 top has ended instead, bring retest of this level. Looking ahead, only above there would extend the erratic rise from 0.6827 low to previous resistance at 0.8163, then 0.8200 but loss of upward momentum should limit upside to previous resistance at 0.8295.

OPEC comments unleash pent-up demand in oil overnight with WTI the main beneficiary.

Crude oil prices shot higher overnight with WTI gaining a spectacular 2.80% and Brent a more modest but still respectable 1.55%. The gains left WTI comfortably above $50.00 a barrel closing at 50.80 in New York while Brent regained the 56.00 level to close at 56.70. With the first of the crude inventory repo0rts due tonight in the U.S. from the American Petroleum Institute(API) expected to show a resumption of the drawdowns in inventories, both contracts enter the later part of the week in a healthy state and seemingly poised for more gains.

The OPEC Secretary General got the ball rolling suggesting that world growth and Opec/Non-Opec compliance has the world oil markets rebalancing well underway. He also hinted that the grouping would take any means necessary to ensure this continues at the November 30th meeting. A host of trading houses echoed this view, and Saudi Arabia announced better than expected compliance cutting over 0.5 million barrels a day in September.

Chatter that shale producers are struggling to raise production and dealing with increased costs probably accounted for the WTI outperformance overnight. A return of U.S. traders from Monday's national holiday also helped.

Brent spot is unchanged at 56.75 this morning with resistance just above at 57.00 initially. A break opens a test of the double top at 57.40 which in turn clears the way for a retest of the 58.50/59.00 resistance zone. Support is at 55.80 and then the 55.00 area.

WTI's march higher sees it trading at 50.85 in early Asia, its New York high. There is resistance at 51.00 followed by 51.40, which if broken, clears the way for an advance on last weeks high around 52.50. Support comes in at 49.20, the 200-day moving average, and then 48.80, the lows of Monday and Tuesday.

Cable's strong two-day advance peaked at 1.3225 and is pausing in early Wednesday's trading , as falling 10SMA/Tenkan-sen (1.3230/34) limited rally and weigh on near-term action. Daily studies are mixed but positive sentiment persists after upbeat UK industry data on Tuesday further boosted expectations of BoE's rate hike in November. Lift above 10SMA/Tenkan-sen would face next strong barrier at 1.3266 (Fibo 38.2% of 1.3655/1.3026) break of which is needed for stronger bullish signal. Meanwhile, dips should be contained by 55SMA (1.3134) to keep near-term bulls in play. Overall picture remains overshadowed by political uncertainty over Brexit negotiations and the position of PM May which could limit corrective action off 1.3026 low.

Res: 1.3234, 1.3266, 1.3318, 1.3356
Sup: 1.3181, 1.3134, 1.3110, 1.3074

The Euro moved higher in late Asian trading on Wednesday and hit new 12-day high at 1.1833, following overnight's shallow 1.1825/1.1795 correction. The pair maintains positive sentiment from the previous day, with relief after Catalan leader Puigdemont postponed decision of declaring independence, giving fresh boost to the single currency.

However, no significant upside reaction of Euro was seen after decision, as the pair rallied earlier on Tuesday, boosted by upbeat German data and hawkish comments from ECB official.

Wednesday's brief extension above previous day's high faced headwinds at 1.1830 zone (Fibo 38.2% of 1.2092/1.1669 bear-leg /20/55SMA bear-cross / 29 Sep high) and may pause the rally while the latter caps, as slow stochastic on daily chart is entering overbought territory.

Overall bearish picture on daily chart sees 1.1830 zone as ideal reversal point for corrective rally from 1.1669 (06 Oct low), but recovery may extend on sustained break above 1.1830.

Near-term bulls need lift above daily cloud top (1.1893) to neutralize downside risk and signal bottom at 1.1669.

Broken daily Tenkan-sen marks the lower pivot at 1.1751, loss of which would re-focus lows at 1.1669/62.

Res: 1.1833, 1.1880, 1.1893, 1.1930
Sup: 1.1755, 1.1770, 1.1751, 1.1720

USD/CHF - 0.9745

Most recent candlesticks pattern : N/A

Trend                                    : Near term up

Tenkan-Sen level                  : 0.9752

Kijun-Sen level                    : 0.9763

Ichimoku cloud top                 : 0.9804

Ichimoku cloud bottom              : 0.9789

Original strategy :

Sell at 0.9770, Target: 0.9670, Stop: 0.9805

Position : -

Target :  -

Stop : -

New strategy  :

Sell at 0.9780, Target: 0.9680, Stop: 0.9815

Position : -

Target :  -

Stop : -

As the greenback has remained under pressure, adding credence to our view that top has possibly been formed at 0.9837 last week and consolidation with mild downside bias is seen for weakness to 0.9730-35 (38.2% Fibonacci retracement of 0.9565-0.9837), however, break there is needed to retain bearishness for test of previous support at 0.9710 and later towards 0.9669-70 (61.8% Fibonacci retracement and previous support) which is likely to hold from here.

In view of this, would not chase this fall here and we are looking to sell dollar on recovery as previous support at 0.9771 should turn into resistance and limit upside. Only break of resistance at 0.9808 would signal an intra-day low is formed and indicate the pullback from 0.9837 has ended, bring retest of this level later. 

The Asian session was relatively quiet on Wednesday as economic releases were limited. Following a stressful day in Spain, where Catalonia's independence was put on hold, the euro remained strong above the 1.18-key level overnight, while the dollar was under pressure against its peers amid escalating geopolitical risks and fears of tax overhaul failing to turn into law.

While thousands of people and armed police forces were gathered in front of the Catalan parliament ready to counteract a possible “Yes vote” on Catalonia's separation from Spain, the Catalan leader, Charles Puigdemont, decided to delay a formal declaration of independence and chose instead to initiate a dialogue with the Spanish government, saying that “the only way forward is democracy and peace”. He also suggested that the European Union should be involved in the talks. Still, Puigdemont and other regional leaders signed a divorce from Spain but it is unknown whether the document has a legal value.

The euro picked up after the decision, rising to a two-week high of $1.1833, being 0.18% up on the day. Euro/pound gained 0.23%, climbing to 0.8960, while euro/yen edged up to 132.86.

The dollar index sank to a two-week low of 92.91 before the session-end as two US bombers flew over the Korean peninsula on late Tuesday, joining other South Korean military jets. In addition, the US military announced in a statement that it conducted for the first time an exercise with Japan and South Korea during the night.

Besides geopolitical tensions, traders were also worried about the future of fiscal policy, after officials from Trump's inner cycle expressed yesterday that Trump's feud with Senator Bob Corker would harm tax overhaul plans as Republicans control the Senate with a shade of majority. However, on Tuesday, Trump stated that his dispute with Corker would not affect progress on tax legislation.

Dollar/yen was slightly down at 112.37. Dollar/swissie was steady at 0.9751, while the safe-haven gold remained flat at $1,287.60 per ounce.

Later in the day, the focus will turn on the Fed's September meeting minutes for more details on the path of monetary policy.

In Japan, core machinery orders rose surprisingly by 4.4% y/y in August, after contracting by 7.5% in the previous month, while analysts had projected a soft expansion of 0.8%. This was the highest growth since April.

The pound retreated by 0.13% to $1.3184 as investors doubted whether a rate hike is appropriate given uncertain Brexit negotiations which so far led nowhere.

In other currencies, the aussie reversed earlier gains in the session arising from better-than-expected figures on consumer confidence, standing flat at $0.7778. Particularly, consumer sentiment measured by the Westpac Banking Corporation increased by 1.1 percentage points to 3.6% in October. Its New Zealand cousin weakened moderately to $0.7065 amid political uncertainty in the country.

Dollar/loonie was moving sideways around 1.2521.

Regarding energy markets, oil prices held onto gains after a strong rally on Tuesday. WTI crude was 0.24% up at $51.03 per barrel and Brent picked up by 0.04% on the day to $56.63.

GBP/USD - 1.3196

Most recent candlesticks pattern   : N/A

Trend                                 : Down

Tenkan-Sen level                 : 1.3202

Kijun-Sen level                    : 1.3192

Ichimoku cloud top              : 1.3146

Ichimoku cloud bottom        : 1.3106

New strategy  :

Stand aside

Position : -

Target :  -

Stop : -

As cable has eased after faltering below resistance at 1.3226 (yesterday’s high), suggesting consolidation below this level would be seen and pullback to the upper Kumo (now at 1.3146) cannot be ruled out, however, break of support at 1.3126 is needed to signal the rebound from 1.3027 (last week’s low) has ended, bring weakness towards 1.3070-75 first.

On the upside, above said resistance at 1.3226 would extend the corrective rise from 1.3027 to 1.3240-50 (50% Fibonacci retracement of 1.3455-1.3027 and previous resistance), however, further sharp move beyond 1.3270 should not be repeated and price should falter below 1.3291-92 (61.8% Fibonacci retracement and previous resistance), bring retreat later. As near term outlook is mixed, would be prudent to stand aside for now.

AUDUSD is up 0.8% after reversing on Friday from 3-months lows. The pair still looks bearish in the short term but downside momentum has paused just above the 50% Fibonacci retracement of the upleg from 0.7328 to 0.8124. Strong support is expected at this level at 0.7724.

Resistance levels appear at 0.7818 and 0.7935. Any gains above the key psychological level of 0.8000 would give scope for more near-term strength to test the May high of 0.8124. From here, AUDUSD would be on a path for further gains to resume the May to September uptrend.

Short-term risk is still tilted to the downside since the market has broken below the 50-day moving average. Momentum signals are bearish too. MACD is below zero and RSI is below 50, although the indicator has stopped falling ahead of oversold territory. This points to near-term consolidation or a pull-back in prices.

Break of support at 0.7724 would turn the focus back to the downside to target 0.7630 and then 0.7520 ahead of the May low of 0.7328.

While downside pressure appears to have eased for now following Friday’s reversal, there is no clear indication that the bearish phase has ended. The market would have to reclaim the 0.7900 handle to change this view.

Key Highlights

• The Euro continues to trade above a major support area at 131.75 against the Japanese Yen.
• There are two important bearish trend lines forming with resistance at 132.60-80 on the 4-hours chart of EUR/JPY.
• Japan's New Machinery Orders rose 3.4% in August 2017 (MoM), compared with the forecast +1.1%.
• Today in the US, the FOMC meeting minutes will be published, which might ignite swing moves in the short term.

EURJPY Technical Analysis

The Euro attempted a break below 131.75 against the Japanese Yen on a few occasions, but failed. The EUR/JPY pair is currently consolidating above 131.75 and preparing for the next move.

Looking at the 4-hours chart, there are two important bearish trend lines forming with resistance at 132.60-80. The trend line resistance is also near the 38.2% Fib retracement level of the last decline from the 134.40 high to 131.74 low.

Moreover, the 100 simple moving average (red) on the same chart is at 132.85 to prevent gains above 133.00. As long as the pair is below the 133.00 resistance and the 100 SMA, there are chances of a downside break.

On the downside, the 131.75 area is a crucial support since is coincides with the 200 simple moving average (green). A break and close below 131.75 would call for more losses in EUR/JPY towards the next support at 130.40.

On the flip side, a close above 132.85 and 133.00 could push the pair back in the bullish path for an extension towards the 134.20 level.

Japan's New Machinery Orders

Today in Japan, the Machinery New orders figure for August 2017 was released by the Cabinet Office. The forecast was slated for a rise of 1.1% in orders compared with the previous month.

The actual result above the forecast as there was a rise of 3.4% in orders. In terms of the yearly change, there was a rise of 4.4%, which was a lot more compared with the forecast of +0.8% and the last -7.5%.

To sum up, the EUR/JPY pair is poised for the next move either above 132.70 or below 131.75. The chances of an upside break are high considering the recent price action and H4 RSI moving towards 60.

EUR/USD - 1.1823

Most recent candlesticks pattern   : N/A

Trend                      : Near term up

Tenkan-Sen level              : 1.1815

Kijun-Sen level                  : 1.1798

Ichimoku cloud top             : 1.1756

Ichimoku cloud bottom      : 1.1726

Original strategy  :

Buy at 1.1740, Target: 1.1840, Stop: 1.1705

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 1.1765, Target: 1.1865, Stop: 1.1730

Position : -

Target :  -

Stop : -

As the single currency has risen again today, adding credence to our view that the rise from 1.1669 temporary low (formed last week) is still in progress and mild upside bias remains for this move to bring retracement of recent decline to 1.1850-55 (50% Fibonacci retracement of 1.2035-1.1669), then 1.1861-62, however, reckon upside would be limited to 1.1895-00 (61.8% Fibonacci retracement of 1.2035-1.1669) and bring retreat later.

In view of this, would not chase this rise here and we are still looking to buy euro on subsequent pullback as 1.1760-65 should limit downside and bring another rebound. Only break of indicated support at 1.1719 would abort and signal top is formed, risk weakness to 1.1695-00 first.