Sample Category Title

GBP/USD – 1.2963





Original strategy :

Sold at 1.2910, stopped at 1.2970

Position: - Short at 1.2910

Target:  - 1.2710

Stop: - 1.2970




New strategy :

Stand aside

Position: -

Target:  -

Stop:- 



As cable found renewed buying interest at 1.2873 yesterday and staged a stronger-than-expected rebound, suggesting a temporary low has been formed at 1.2774 last week and consolidation with upside bias is seen for this rebound to bring retracement of recent decline from 1.3269, hence further gain to 1.3000 and possibly towards resistance at 1.3032 would be seen, however, near term overbought condition should limit upside to 1.3080, bring retreat later.

In view of this, would not chase this rise here and would be prudent to stand aside in the meantime. Below 1.2900-10 would bring pullback to 1.2870-75, however, reckon downside would be limited and if our new that temporary low has been formed at 1.2774 is correct, downside should be limited to 1.2820-30 and bring another rebound 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. 


AUD/USD has broken downtrend channel. Hourly support can be found at 0.7786 (18/07/2017 low). Hourly resistance is given at 0.8066 (27/07/2017 high). Expected to further consolidate.

In the long-term, we are waiting for further signs that the current downtrend is ending. Key supports stand at 0.6009 (31/10/2008 low) . A break of the key resistance at 0.8295 (15/01/2015 high) is needed to invalidate our long-term bearish view.

USD/CAD selling continues. Hourly support is given at a distance at 1.2414 (27/07/2017 low) while resistance is now given at a distance at 1.2778 (15/08/2017 low). Expected to show continued short-term bearish move.

In the longer term, the pair has broken longterm support that can be found at 1.2461 (16/03/2015 low) before bouncing back. Strong resistance is given at 1.4690 (22/01/2016 high). The pair should head further lower.

USD/CHF is heading lower. Strong resistance is given at 0.9771 (15/06/2017 high). Hourly support at 0.9584 (08/11/2017 low) has been broken. Expected to show growing continued bearish pressures.

In the long-term, the pair is still trading in range since 2011 despite some turmoil when the SNB unpegged the CHF. Key support can be found 0.8986 (30/01/2015 low). The technical structure favours nonetheless a long term bullish bias since the unpeg in January 2015

USD/JPY is now monitoring support at 108.13 (17/04/2017 low). Expected to show another leg lower.

We favor a long-term bearish bias. Support is now given at 96.57 (10/08/2013 low). A gradual rise towards the major resistance at 135.15 (01/02/2002 high) seems absolutely unlikely. Expected to decline further support at 93.79 (13/06/2013 low).

GBP/USD bearish momentum has bounced around support given at 1.2774 (24/08/2017 high). Hourly resistance is given at 1.3031 (11/08/2017 high). Expected to show short-term bullish pressures.

The long-term technical pattern is even more negative since the Brexit vote has paved the way for further decline. Long-term support given at 1.0520 (01/03/85) represents a decent target. Long-term resistance is given at 1.5018 (24/06/2015) and would indicate a long-term reversal in the negative trend. Yet, it is very unlikely at the moment.

EUR/USD bullish pressures are strong. The pair has broken hourly resistance at 1.1910 (02/08/2017 high) while hourly support lies at 1.1662 (17/08/2017 low). Expected to show increasing bullish pressures.

In the longer term, the momentum is now turning largely positive. We favour a continued bullish bias. Key resistance is holding at 1.2252 (25/12/2014 high) while strong support lies at 1.0341 (03/01/2017 low).

We're seeing significant risk aversion in the markets on Tuesday, with European indices heavily in the red, US futures indicating a similar open on Wall Street, Gold at near-10 month highs and the yen making steady gains.

A ramp up in tensions between North Korea and the US, South Korea and Japan overnight has raised geopolitical risk once again, with Kim Jong Un showing no signs of ceding to international pressures. The missile launch comes as no surprise given proximity to the annual military exercises between the US and South Korea, but the fact that the missile was shot over Northern Japan and prompted warning sirens encouraging people to take cover is a concern.

The distressing impact of Hurricane Harvey in Houston is also weighing heavily on sentiment this morning. From a markets perspective, the uncertainty surrounding the cost and the economic implications of the storm is going to be a concern for investors, although it is difficult to look past the sheer devastation it has caused at the moment.

The dollar is coming under significant pressure in the aftermath of the storm, which has taken the dollar index to its lowest since the start of 2015 and below the 92-93 support zone that has held firmly since then. This move has coincided with the euro trading at its highest against the greenback since the first trading day of 2015, which will be a blow to the ECB which has tried to repeatedly talk down the currency as it prepares to further reduce its quantitative easing program.

Draghi's comments at Jackson Hole did little to halt the charge higher, with the ECB President keen to stress that “a significant degree of monetary accommodation” is still warranted, a statement which doesn't suggest the current level will remain. He's doing his best to talk down the currency but the fact of the matter is that he'd going against the tide, the ECB wants to taper and it looks as though it's going to happen. Traders hear his words and are look past the dovish filler and instead focus on what he isn't saying.

Gold is trading higher again on Tuesday, having finally broken through $1,300 on Monday driven by safe haven demand. The next test for the yellow metal should come around the November high around $1,337.40 but I think further gains could be in store.

GBP/JPY - 140.75

Trend: Near term down

Original strategy:

Sell at 142.00, Target: 140.00, Stop: 142.60

Position: -
Target: -
Stop: -

New strategy :

Sell at 142.00, Target: 140.00, Stop: 142.60

Position: -
Target:  -
Stop:-

Although the British pound retreated after marginal rise to 141.40 yesterday, as sterling found good support just above 140.00 level and has rebounded, retaining our view that further consolidation would take place and another bounce to 141.40 is likely, however, still reckon upside would be limited to 141.90-00 and bring another decline later. A break of said support at 140.00-05 would suggest top is possibly formed, break of 139.80-85 would signal the rebound from 139.35 has ended, bring retest of this level, below would extend recent decline to 138.70 (previous support) but loss of downward momentum should prevent sharp fall below 138.30 and 138.00 should hold.

In view of this, we are looking to sell sterling on subsequent recovery as 141.90-00 should limit upside and bring such a decline. A firm break above resistance at 142.05 would suggest low is possibly formed instead, bring a stronger rebound to 142.50-60 but resistance at 143.20 should remain intact and bring another decline 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.


Rush for safe-haven as North Korea fires missiles

Investors piled into safe havens on Tuesday morning amid rising global uncertainties. Firstly, last week comments from Donald Trump have heightened concerned about a potential government shutdown should the Congress keeps refusing to fund the wall along the southern border with Mexico. Even the arrival of Hurricane Harvey in Texas wasn’t enough to make Trump back off on his threat. Against such a backdrop, the US dollar extended losses with the dollar index breaking the 91.91 support (low from May 2016) to the downside. Normally, the greenback is considered as a “light” safe haven asset meaning that when uncertainty rises, the dollar depreciates against the Japanese yen and the Swiss franc at most. It seems now that Trump punches its weights on the USD.

The launching of ballistic missiles over Japan by North Korea also helped the CHF and the JPY to rise across the board. So far investors wrongly assumed that the North Korean situation was under control and that some negotiations were taking place behind closed door. The Swiss franc and the Japanese yen rose 0.90% and 0.75% against the USD. The yellow metal was also better bid as it climbed to $1,325 per ounce, up 1.15% on the day.

Despite the fact that the Trump and Kim Jong-un are keeping investors on their toes for longer than expected, we maintain our view that the USD is oversold. The question now is to determine how long this spike in uncertainty will last. Therefore investors will need to have patience and let the storm go by.

Gold bounces back

For the first time this year, gold has broken the strong resistance at $1300 and the precious metal is now standing around 1317$, its highest level since 2016. The summer was quiet but volatility is back due to the escalating tensions between the US and North Korea. We also believe that those tensions are not the only reasons for the gold surge. Economic reasons are also important. The US S&P 500 index went from 2480 to 2440 and it seems that investors become more reluctant to buy stocks at those elevated prices.

On top of that, we consider that the Fed made a clear U-turn by raising rates twice this year before stating that it was almost done with rate hikes. The US central bank went from hawkish to dovish. We recall that the Fed was expected to raise rates at least 3-4 times this year. Markets are now ruling out a rate hike before year-end.