Sample Category Title

Price drops further on the short term and should hit the 250% Fibonacci line (ascending dotted line), which represents a strong dynamic support. I’ve said in the previous days that the rate is expected to be attracted also by the median line (ml) of the minor red descending pitchfork, a breakdown below the mentioned support levels will confirm a larger drop.

The USD/CAD increased a little today and continues to stay in the green zone, but needs a bullish spark to be able to climb much higher in the upcoming period. Price decreased a little in the previous days, but this could be only temporary. It could retest also the median line (ml) of the blue ascending pitchfork and could resume the upside movement.

USD/CAD tries to increase a little today as the USDX is fighting hard to stay higher and near the 93.81 horizontal resistance. The US and the Canadian data should bring life on the USD/CAD in the afternoon, the fundamental data will take the lead. The Canadian Trade Balance could increase a little from -3.0B to -2.6B, a lower deficit will lift the Loonie. On the other hand, the US trade deficit could decrease from 43.7B to 42.7B, which is very good for the USD, the Unemployment Claims are expected to drop from 272K to 266K, while the Factory Orders could increase by 1.0% versus a 3.3% drop in the former reading period.

Price decreased a little after the failure to reach and retest the upper median line (uml) of the minor descending pitchfork, but only a valid breakdown below the 1.2460 and below the median line (ml) of the blue ascending pitchfork will confirm a further drop. A valid breakout from the minor descending pitchfork will validate an increase towards the 1.2678 level.

Swiss CPI surprises to the upside

Switzerland's consumer price index rose more than expected during the month of September as it increases 0.7% year-over-year as it reached 100.9 points, beating slightly median expectations of a 0.6% increase. On a month-over-month basis, the headline gauge rose 0.2%, matching expectation. The price increase was mostly driven by a price rise for clothing and footwear (+7.4%y/y).

The Swiss franc held steady following the release of the data. EUR/CHF rose a few pips to 1.1483 before reversing gains. USD/CHF did not react at all as the pair is mostly driven by development in the US, with ongoing speculation regarding Yellen's potential replacement and Nonfarm payroll figures due for release tomorrow.

From our standpoint, the fact that the euro was able to hold recent gains against the Swiss franc suggests that investors are definitely not worried with the Catalan situation. Regarding the upside surprise in inflation reading, it could be tempting to conclude that the SNB will have to adjust its monetary policy as inflation pressures finally pick-up. In addition, we are still far from the SNB's 2% inflation target, there is therefore plenty of room before calling for a tighter monetary policy.

Long USDJPY

Sentiment around the USDJPY remains negative causing the par drift down to 112.35 yesterday. Yet, outlook supports a higher USDJPY. Recent election news has been causing JPY volatility. News that the popular Tokyo governor Koike would not stand as a candidate for PM should have weaken JPY but has a muted effect. There has been a general rise in support for Abe and his LDP party according to polls, shifting away from upstarts and historical opponents. Moving forward we expect the LDP will further strength control of the 465 seat parliament.

The increase probably of Abe remaining to drive Japanese policy suggest that “Abenomics” and the systematic debasing of the JPY will continue. However, given the exhausted tools accessible the BoJ external factors are more likely to drive JPY pricing. In this regard, our base scenario is a USD rally in the short-term. Our thinking based on growing risk in Catalonia Spain and underpricing of Fed policy path (65% probably for a 25bp rate hike in Dec). We remain constructive on USDJPY with expectations for extension of bullish rally to 114.35.

Catalan political crisis weighs on euro bulls

Benoit Coeuré, a ECB member, will speak on Thursday in a panel in Frankfurt and the accounts of the September ECB meeting will be published today. We believe that the panel's discussion will be mostly on the size of the potential reduction of the ECB balance sheet starting in January. We continue to consider that markets are way too optimistic regarding this asset purchase reduction. Markets have sent the euro too high at the moment. Yet, the momentum, which is pausing at the moment, will likely be back on ECB meeting expectations as soon as we get closer to the meeting date which will be held the 26th of October.

The Eurodollar is pausing at the moment below 1.18. Catalonian uncertainties have not clearly weighed on the pair price. We nonetheless believe that bulls have been reduced. Catalonia will declare its independence in a matter of days have declared a Catalan leader. Tensions are then likely to increase and political risks will definitely add downside pressures on the single currency. Markets have not priced in yet any deep consequences of this independence.

Volatility is set to increase, a euro sell-off may be triggered by the Catalonian crisis. Yet, one should not forget the high expectations from the ECB.

The EUR/GBP has recently made an upside breakout from the PPR channel, signalled by a strong Marubozu candle that could provide a continuation of uptrend towards 0.8950 and 0.8980. However, traders need to pay attention towards possible retracement as I showed in High Volatility trading video that is a part of Price Action Trading School. 0.8880-90 is the POC zone (D H4, order block, 61.8, ATR pivot, trend line) but also pay attention to 0.8906 that could reject the price too. As lons as the EUR/GBP is above 0.8850, we have a strong intraday/week uptrend.

W L3 - Weekly Camarilla Pivot (Weekly Interim Support)

W H3 - Weekly Camarilla Pivot (Weekly Interim Resistance)

W H4 - Weekly Camarilla Pivot (Strong Weekly Resistance)

D H4 - Daily Camarilla Pivot (Very Strong Daily Resistance)

D L3 – Daily Camarilla Pivot (Daily Support)

D L4 – Daily H4 Camarilla (Very Strong Daily Support)

PPR - Progressive Polynomial Channel

AP -Andrew's Pitchfork

POC - Point Of Confluence (The zone where we expect price to react aka entry zone)

Daily Pivots: (S1) 132.28; (P) 132.55; (R1) 132.87; More...

Intraday bias in EUR/JPY remains neutral for consolidative trading below 134.39 high. 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, current rise from 109.03 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. On the downside, break of 127.55 support is needed to be the first signal of medium term reversal. Otherwise, outlook will remain bullish.

Spot Gold is in recovery mode for the third straight day after broader bears showed signs of stall ahead of key supports at $1265/63 (daily Ichimoku cloud base/Fibo 61.8% of $1204/$1357 rally). Fresh recovery attempts are under way after rally on Wednesday showed strong rejection at $1281 zone (broken Fibo 50% of $1204/$1357). Sustained break here is needed to signal further recovery and expose key barriers at $1290/93 (daily Tenkan-sen/daily cloud top), which are expected to limit recovery attempts before broader bears resume. The yellow metal is looking for the outcome of US jobs report on Friday, to generate stronger signal for near-term direction.

Res: 1281, 1284, 1290, 1293
Sup: 1272, 1268, 1265, 1263

Daily Pivots: (S1) 148.96; (P) 149.43; (R1) 149.83; More

At this point, we'd still expect strong support from 38.2% retracement of 141.17 to 152.82 at 148.36 to contain downside and bring rebound. Above 150.22 minor resistance will turn bias to the upside for retesting 152.82 high. However, firm break of 148.45 will argue that whole rise from 139.39 is completed. In the case, deeper fall should be seen through 55 day EMA (now at 146.27)

In the bigger picture, medium term rebound from 122.36 is in progress. 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. For now, the bullish scenario is preferred as long as 139.29 support holds.

WTI oil was steady on Thursday and probed above $50 handle after five-day fall found footstep at $49.76 on Wednesday.

Oil prices were supported by larger than expected fall in crude inventories which fell by 6 million barrels last week, EIA report showed on Wednesday.

Oil was also boosted by comments from Russian President Putin who said that OPEC and other main oil producers outside the cartel pledge to extend existing production cut deal to the end of 2018, as the deal expires in March 2018.

Fresh boost to the oil price gives a breather to near-term bears that made a $3 fall in past five days.

The pullback from $52.84 is seen as correction of larger $45.57/$52.84 rally and was so far contained by $50 zone, which is seen as ideal reversal point.

Daily techs remain bullish overall and support scenario of fresh upside, along with deeply oversold slow stochastic.

However, recovery needs to clear important barriers, to generate firmer bullish signals and shift bias higher.

Initial barrier lies at $50.26, provided by 20SMA and base of thick hourly cloud, which so far capped today’s recovery action.

Close above here would open way towards hourly cloud top at $50.75 and next pivot at $51.08 (10SMA) and confirm reversal on sustained break higher.

Res: 50.26, 50.75, 51.08, 51.70
Sup: 49.76, 49.48, 49.20, 48.90

Daily Pivots: (S1) 0.8857; (P) 0.8868; (R1) 0.8887; More...

EUR/GBP's rebound from 0.8745 extends higher today. Break of 0.8998 argues that fall from 0.9305 is already completed. Intraday bias is turned back to the upside. Sustained break of 55 day EMA (now at 0.8941) will pave the way to retest 0.9305 key resistance. On the downside, below 0.8745 will extend the fall from 0.9305. However, as such decline is seen as the third leg of consolidation pattern from 0.9304. We'll look for bottoming signal again at it approaches 0.8303 support.

In the bigger picture, price actions from 0.9304 are viewed as a medium term corrective pattern. It's still in progress with fall from 0.9305 as the third leg. Break of 0.8303 could be seen. But even in that case, we'd expect strong support from 0.8116 cluster support (50% retracement of 0.6935 to 0.9304 at 0.8120) to contain downside. Whole up trend from 0.6935 is expected to resume after consolidation from 0.9304 completes.

Daily Pivots: (S1) 1.4940; (P) 1.4968; (R1) 1.4983; More....

Intraday bias in EUR/UAD remains neutral as consolidation from 1.5173 is still in progress. On the upside, break of 1.5173/5226 resistance zone will finally resume larger rise from 1.3624. In that case, EUR/AUD will target 1.5644 resistance first. On the downside, break of 1.4791 support will turn bias to the downside and extend the fall from 1.5173 to retest 1.4421 support.

In the bigger picture, we're holding on to the view that corrective decline from 1.6587 medium term top has completed at 1.3624. Rise from 1.3624 is expected to extend to retest 1.6587. The corrective structure of the price actions from 1.5226 is affirming this view. Above 1.5226 will target a test on 1.6587 key resistance. However, break of 1.4421 support will dampen our view and would drag EUR/AUD lower to retest key support zone around 1.3624.