Sample Category Title

EUR/JPY - 130.29

Original strategy:

Bought at 130.30, Target: 132.30, Stop: 129.70

Position: - Long at 130.30
Target: - 132.30
Stop: - 129.70

New strategy :

Hold long entered at 130.30, Target: 132.30, Stop: 129.90

Position: - Long at 130.30
Target:  - 132.30
Stop:- 129.90

As the single currency opened lower after retreating from last week’s high of 131.71, suggesting caution on our bullishness and 129.95-99 needs to hold to retain prospect of another rebound, above 131.35 would signal the pullback from 131.71 has ended and bring retest of this level later, above there would confirm recent upmove has resumed and extend gain to 132.00-10 but reckon upside would be limited to 132.50-60 and 133.00-10 should hold from here, bring retreat later.

In view of this, we are holding on to our long position entered at 130.30. Below 129.95-99 would risk another test of indicated support at 129.66 but only break there would signal top is formed instead, risk correction to 129.10-15 first. 

Our latest preferred count is that wave (ii) is ABC-X-ABC which ended at 123.33 and wave (iii) is unfolding with wave iii ended at 100.77, followed by wave iv at 111.57 and wave v as well as the wave (iii) has ended at 97.04, followed by wave (iv) at 111.43 and wave (v) has ended at 94.12 which is also the end of the larger degree v, this also implied the major wave (C) has also ended there, hence major correction has commenced from there with (A) leg unfolding in its lower degree wave c which has possibly ended at 145.69. Under this count, A-B-C wave (B) has commenced with A leg ended at 136.23, wave B at 143.79 and wave C has possibly ended at 149.79.

Our larger degree count is that the decline from 139.26 is wave (C) and is sub-divided into a diagonal triangle i-ii-iii-iv-v with wave i - 105.44, wave ii- 123.33, wave iii - 97.03, wave iv - 111.43, followed by the final wave v as well as the end of wave (C) at 94.12, this also mark the bottom of larger degree wave B. Under this count, major rise in wave C has commenced as an impulsive wave with minor wave III ended at 145.69, wave V is still in progress for further gain to 150.00. Having said that, this so-called wave V could well be the first leg of larger degree 5-waver wave C and this wave C should bring at least a retest of wave A top at 169.97 (July 2008).

Safe haven assets were back in demand early Monday, following yesterday's announcement that North Korea had tested their most powerful nuclear bomb yet.

Gold, Treasuries, Swiss Franc and the Yen have all outperformed, as investors try to assess the potential impact of North Korea's nuclear test. The markets' reaction seems similar to when missile launches have taken place in the past; investors sell stock, rush to safe havens, assess the situation, and then buy the dips as tension eases. While stocks fell in Asia, the selloff was not massive, mainly because the nuclear test occurred over the weekend and there was enough time to digest the news.

An H-bomb is undeniably different from the previous missile launches or nuclear tests; it's a game changer for North Korea's deterrent strategy. However, the biggest question to investors remains - what's next? Will the tensions lead to negotiations, or war?

It is becoming evident that leaders across the globe are divided about how to deal with the situation. President Trump believes South Korea's talk of appeasement with North Korea will not work, and they "only understand one thing". Although he didn't elaborate on what this "one thing" is, he's plainly referring to a military action, but given that this is not the first time he has threatened such actions, investors do not seem seriously concerned.

China, the closest political and economic ally to the Kim Jong Un regime, also seems to be losing influence, but war is the last thing they want to happen. A military attack on North Korea could mean an unmanageable flow of refugees to China, instability in the region, disruption of trade and of course, no country would desire a war in its backyard. That's why markets aren't yet pricing in the possibility of a war. However, caution should remain at this stage.

Once the tension eases, the focus will shift to monetary policy decisions during the ECB's meeting this Friday, which is the biggest risk event for the week. The crucial question facing the central bank on Thursday is whether Mario Draghi will announce the date of cutting bond purchases. The decision to taper asset purchases was widely expected to occur this week, but given the strength of the Euro and implications on the inflation target, the ECB might push the decision until October. Mario Draghi has refrained from weakening the euro through verbal intervention, although the minutes from July's meeting showed concerns over the single currency's strength. Any verbal intervention will likely lead to a further drop in the euro from its highest levels in 2.5 years.However, if economic data continues to surprise to the upside, even the central bank will find it difficult to control the bulls from buying the currency.

AUD/USD – 0.7948

New strategy :

Stand aside

Position: -
Target:  -
Stop:-

Despite rising to 0.7995 on Friday, as aussie has retreated again after faltering below resistance at 0.7996, suggesting further choppy trading within recent established broad range would take place and weakness to 0.7920-25 cannot be ruled out, however, reckon downside would be limited to 0.7890-00 and support at 0.7871 would remain intact, bring another rebound later. A drop below 0.7871 would suggest the erratic rise from 0.7808 has ended, brig further fall to 0.7850 but price should stay above said support at 0.7808 due to near term oversold condition.

On the upside, expect recovery to be limited to 0.7970 and said resistance at 0.7996 should remain intact, bring another retreat later. Above this level would revive bullishness and signal the pullback from 0.8066 has ended earlier at 0.7808, bring further gain to 0.8040-43, then subsequent retest of this level which is likely to hold from here.

On the 4-hour chart, the move from 0.8066 is the wave 5 with i: 0.8860, ii: 0.8315, wave iii is an extended move ended at 1.0183, iv: 0.9706 and wave v has ended at 1.1081 (also the top of entire wave 5). The subsequent selloff is the major correction which is unfolding as ABC-X-ABC and 2nd A leg has ended at 0.8848, followed by a-b-c wave B which ended at 0.9758, hence, 2nd C wave is now in progress and indicated downside target at 0.7000 and 0.6950 had been met, so further fall to 0.6710-20 cannot be ruled out.

Daily Pivots: (S1) 1.1813; (P) 1.1896 (R1) 1.1944; More...

Intraday bias in EUR/USD remains neutral for the moment. Consolidation from 1.2069 might extend and below 1.1822 will bring deeper fall. But after all, there is no clear sign of trend reversal yet. Outlook will remain bullish as long as 1.1661 holds. Break of 1.2069 will extend larger rise from 1.0339 to next key fibonacci level at 1.2516. Nonetheless, break of 1.1661 will bring much lengthier consolidation first.

In the bigger picture, an important bottom was formed at 1.0339 on bullish convergence condition in weekly MACD. Sustained trading above 55 month EMA (now at 1.1774) will pave the way to key fibonacci level at 38.2% retracement of 1.6039 (2008 high) to 1.0339 (2017 low) at 1.2516. While rise from 1.0339 is strong, there is no confirmation that it's developing into a long term up trend yet. Hence, we'll be cautious on strong resistance from 1.2516 to limit upside. For now, medium term outlook will remain bullish as long as 1.1295 support holds, in case of pull back.

Daily Pivots: (S1) 0.9575; (P) 0.9614; (R1) 0.9682; More....

Intraday bias in USD/CHF remains neutral for the moment. Considering it's close to to 0.9443 key support, consolidation from 0.9427 might extend further. But still, break of 0.9772 resistance is needed to confirm near term reversal. Otherwise, outlook stays bearish for another decline. Below 0.9537 minor support will turn bias back to the downside for retesting 0.9427 first. Break of 0.9427 will resume whole decline from 1.3042.

In the bigger picture, current development suggests that 0.9443 key support (2016 low) could be taken out firmly as down trend form 1.0342 extends. There are various interpretation of the price actions. But in any case, medium term outlook will stay bearish as long as 0.9772 resistance holds. Current down trend could extend to 38.2% retracement of 0.7065 (2011 low) to 1.0342 (2016 high) at 0.9090. However, break of 0.9772 will indicate that USD/CHF has successfully defended 0.9443 again and turn outlook bullish for 1.0099 resistance.

Weekly

    •    Last Candlesticks pattern: Shooting star 
    •    Time of formation: 31 Jul 2017
    •    Trend bias: Near term up

Daily

    •    Last Candlesticks pattern: Shooting star
    •    Time of formation: 2 Aug 2017
    •    Trend bias: Up

EUR/USD – 1.1900

Although the single currency extended recent rise to 1.2070 last week, the quick retreat from there formed a shooting star bearish reversal pattern on the daily chart, suggesting consolidation below this level would be seen and consolidation with mild downside bias is seen for weakness to 1.1770-75, then test of support at 1.1740, however, reckon support at 1.1662 would hold from here, risk from there is seen for a rebound to take place later. Only a daily close below this support would suggest top has possibly been formed, bring correction of recent upmove to 1.1613 support, then test of the upper Kumo (now at 1.1532).

On the upside, expect recovery to be limited to the Tenkan-Sen (now at 1.1905) and resistance at 1.1980 (Friday’s high) would hold, bring another corrective fall later. A daily close above said resistance at 1.1980 would signal the pullback from 1.2070 has ended instead, bring further gain to 1.2000, then retest of 1.2070 and possibly 1.2100-10, however, loss of upward momentum should prevent sharp move beyond dynamic resistance at 1.2165-70 (50% Fibonacci retracement of 1.3993-1.0340) and price should falter below 1.2200-10, bring retreat later.

Recommendation: Exit long entered at 1.1870 and stand aside for this week.

On the weekly chart, despite last week’s initial rise to 1.2070, the subsequent retreat formed a black candlestick with a long upper shadow, suggesting consolidation below this level would be seen and pullback to 1.1770-75 and then 1.1740 is likely, however, reckon downside would be limited to the Tenkan-Sen (now at 1.1691) and support at 1.1662 should hold from here. A weekly close below this support would suggest a temporary top is formed, bring retracement of recent rise to 1.1610-15, then 1.1550-60 and later towards 1.1435, having said that ,downside should be limited to 1.1370 and support at 1.1312 should remain intact, bring rebound later.

On the upside, although initial recovery to 1.1940-45 cannot be ruled out, reckon Friday’s high at 1.1980 would hold from here and bring another retreat later. A weekly close above said resistance at 1.1980 would extend gain towards last week’s high at 1.2070 but break there is needed to confirm recent upmove from 1.0340 low has resumed for headway towards 1.2160-70 (50% Fibonacci retracement of 1.3993-1.0340) but loss of upward momentum should limit upside and reckon 1.2220-30 would hold, price should falter below 1.2300-10, bring another retreat later.

Weekly

    •    Last Candlesticks pattern: Dark cloud cover
    •    Time of formation: 10 Jul 2017
    •    Trend bias: Down

Daily

    •    Last Candlesticks pattern: Evening doji
    •    Time of formation: 7 Aug 2017
    •    Trend bias: Down

USD/JPY – 109.53

Although the greenback extended recent fall from 114.50 to as low as 108.27, as the pair then staged a strong rebound after holding above previous support at 108.13, suggesting medium term downtrend is not ready to resume yet and further consolidation above said 2016 low would take place and another bounce towards resistance at 110.95 cannot be ruled out, however, break there is needed to signal the aforesaid fall from 114.50 has ended at 108.27, bring retracement of this fall to the lower uno (now at 111.66) but reckon the upper Kumo (now at 112.15) would limit upside and resistance at 112.20 should remain intact.

On the downside, expect pullback to be limited to 109.15-20 (61.8% Fibonacci retracement of 108.27-110.67) and bring another rebound. A daily close below 108.95-00 would suggest the rebound from 108.27 has possibly ended, bring weakness to 108.50-55 but said support at 108.27 should hold from here. In the event dollar is able to penetrate said support at 108.13, this would confirm early decline from 118.66 top has resumed and extend weakness to 107.50, then towards 106.50-55 (61.8% Fibonacci retracement of 99.01-118.66).

Recommendation : Hold short entered at 110.55 for 108.55 with stop above 110.50.

On the weekly chart, despite last week’s fall to 108.27, the subsequent rebound after holding above this year’s low at 108.13 formed a white candlestick (first one in 8 weeks), suggesting the fall from 114.50 has formed a temporary low there, hence consolidation above this level is seen for another bounce to resistance at 110.95, then test of the Tenkan-Sen (now at 111.39) and possibly to the Kijun-Sen (now at 111.82), however, reckon resistance at 112.20 would limit upside and price should falter below 112.90-00, bring another decline later.

On the downside, whilst pullback to 109.90 cannot be ruled out, reckon support at 108.50-55 would hold and bring another rebound later. A sustained breach below last week’s low at 108.27 would revive bearishness but dollar needs to penetrate support at 108.13 to confirm early fall from 118.66 top has resumed for weakness to 117.40-50, then 117.00, however, downside should be limited to 106.50-55 (61.8% Fibonacci retracement of 99.01-118.66) and previous resistance at 105.53 would turn into support, price should stay above 105.00, bring rebound later.

Daily Pivots: (S1) 1.2905; (P) 1.2950; (R1) 1.2996; More...

Intraday bias in GBP/USD remains neutral for the moment. Outlook stays bearish with 1.3030 resistance intact. We're favoring the case that correction from 1.1946 is completed at 1.3267. Below 1.2852 minor support will turn intraday bias back to the downside for 1.2588 key near term support first. Decisive break of 1.2588 will confirm our view and target a test on 1.1946 low. Though, break of 1.3030 will dampen this bearish view and turn bias back to the upside for retesting 1.3267.

In the bigger picture, overall, price actions from 1.1946 medium term low are seen as a corrective pattern. While further rise cannot be ruled out, larger outlook remains bearish as long as 1.3444 key resistance holds. Down trend from 1.7190 (2014 high) is expected to resume later after the correction completes. And break of 1.2588 will indicate that such down trend is resuming.

The British pound has opened the new trading week with a bullish trading tone against the U.S dollar, as investors await the release of the United Kingdom construction PMI, for the month of August.

After Friday's weaker than expected U.S Nonfarm payrolls job report, sterling moved to 1.2995, but failed to close price above the 50-day moving average, at 1.2984, and was subsequently rejected towards 1.2955.

Sterling remains bullish on a short and medium-basis, with price now needing to move clearly above the 1.2990 level, to break-away from range bound trading conditions.

Key technical resistance is located at the monthly pivot point, at 1.2990, the 1.3047 level, and the former monthly pivot point, at 1.3082.

Key intraday technical support is located at the weekly pivot point, at 1.2952, and the daily pivot point, at 1.2932. The 100-day moving average is found at 1.2920, with further strong support found at 1.2889.

The U.S dollar has opened the new trading week sharply lower against the Japanese Yen, as risk-off sentiment returned to forex markets after North Korea successfully tested a nuclear capable hydrogen bomb over the weekend.

So far, the USDJPY has fallen as low as 109.50, with the pair opening the week, gap down, on the price charts. Markets are likely to be increasingly driven by headlines, coming from the worsening situation in the Korean peninsula.

The USDJPY pair is currently trading around the 109.80 level, with price trading below daily and weekly 50,100 and 200 period moving averages.

Key intraday technical support is found at the 200-hour moving average, at 109.59, the 109.30 level, and the crucial 108.60 level.

To the upside, resistance is found at the M5 time frame 200 period moving average, at 110.02.

Above 110.02, the top of the weekly price gap is found at 110.24, with further USDJPY resistance found at 110.59 and 110.84.