Sample Category Title

EUR/USD

The EUR/USD broke above the resistance (dotted red) of the continuation chart pattern and is continuing with the uptrend. The first target is at 1.20 which could cause a retracement, at least on lower time frames, within the uptrend.

Daily chart:

The EUR/USD bullish price action is probably part of a wave 3 (blue) momentum.

Weekly chart:

The EUR/USD bullish momentum could be part of a wave A (brown). The strong bullish momentum seems to indicate that the bearish wave 5 (blue) of wave C (brown) is most likely completed.

Monthly chart:

USD/JPY

The USD/JPY is caught in between a support zone (green) and resistance trend line (orange).

Daily chart:

The USD/JPY is also in a larger triangle chart pattern with support (blue) and resistance (red) nearby.

Weekly chart:

The USD/JPY is most likely in a wave B (green) correction at the moment. Price could test lower Fibs like the 50%-61.8% Fib or show a break above resistance (red) and start wave C.

Monthly chart:

GBP/USD

The GBP/USD is probably building a wave 1-2 (red) wave structure and could complete a potential head and shoulders chart pattern at the resistance zone (orange).

Daily chart:

The GBP/USD seems to be completing an ABC (brown) correction at the resistance trend lines (brown/red). This could be part of a larger wave 4 (purple) correction unless price breaks above the resistance trend line (brown).

Weekly chart:

The GBP/USD could be in a wave 4 (purple) if price manages to break below support and stay below the 61.8% Fibonacci level of wave 4 vs 3.

Monthly chart:

What do we see when we look at the chart with the price behavior of one or another trading instrument? We see the result of several decisions and actions. But decisions aren't made without reason. They are made under the influence of expectations, opinions, and analytical conclusions from observations and calculations. But in addition to that, the chart may show the general feeling of market players.

So, what can the chart with the Brent price dynamics over the last four years tell us? The decline started in February 2013 and stopped in January 2015. Since then, the market has been correcting the previous decline. If the first year of the correction looked like an uptrend, then this year it looks more like a downtrend.

However, inside this descending correctional structure, we can see a local ascending tendency. As a result, we can see the situation, when the newly-formed rising impulse may break the descending tendency on the more global scale. The only deterrent is the level of 54.90 (the high reached on May 25th 2015). It means that after reaching this level, the market may be slightly corrected, but then continue its growth. In this situation, one of the most difficult tasks is to predict upside targets, because this growth is likely to be only mid-term. The closest upside target might be the high reached on January 3rd 2017 at 58.50.

So, what can influence the development of the uptrend in the short-term? According to the EIA (the US Energy Information Administration), the Crude Oil Inventories in the USA lost almost 13%. Also, they reported on the US Oil Rig Count, which reduced as well. May be the decline in the oil prices forced American drilling companies to slow down a bit. In addition to that, there were some speculations that Exxon Mobil Corp. Would close one of its largest oil refineries in the USA. Some political issues in Venezuela, which may result in the oil delivery interruptions, probably supported the growth of the prices. Reports of the oil extraction suspension in the largest fields of Libya, the Sharara field, affected traders and investors as well. The Crude Oil Inventories in the USA are steadily decreasing and it probably means that there is some kind of balance on the market. If this dynamics continues, the outlook for the oil will be "bullish", taking into account the decrease of the oil extraction by Russia and the OPEC countries. The Afghanistan strategy, presented by Donald Trump, the US president, was due in no small part to that. The strategy implied that the American soldiers would stay in the country, but at the same time Trump promised to implement a heavy-handed and pragmatic approach to support the government in Kabul. In the wake of the above-said, one may assume that market players, traders and investors snatched at every opportunity to benefit from the oil process increase.

Also, we may assume that the OPEC's comments about the oil extraction suspension due to the excessive supply on the market are not taken seriously. And the fulfillment of obligations relating to the oil production decrease by the members of the organization leaves a lot to be desired. However, in the short-term it might serve as a deterrent. In the long-term, the oil market will reduce under the influence of progressing technologies and less expensive energy resources.

WTI Oil edged lower on Wednesday, after limited upside action in early Asian trading stalled under strong barrier provided by 20SMA at $48.29.

Oil price showed no impact from hurricane Harvey that hit Texas over the weekend and caused disruption of oil production in a number of refineries.

Persisting concerns about global oversupply keep oil price under pressure, as rising US shale oil production offsets attempts of OPEC and non-OPEC oil producers to stabilize oil prices by slashing the oil production by 1.8 million barrels per day until March 2018.

Near-term outlook is turning negative and shifting focus towards strong support at $47.01 (daily cloud top) which contained two attacks last week.

Cloud is also twisting this week and may attract for fresh weakness.

Penetration into daily cloud would expose key n/t support at $46.44 (17 Aug trough).

Broken Tenkan-sen and Kijun-sen lines now act as resistances at $47.58 and $47.90 respectively, guarding south-turning 20SMA at $48.29.

Res: 47.58, 47.90, 48.15, 48.29
Sup: 47.22, 47.01, 46.44, 46.22

Spot Gold extended rally in the second straight day on Monday, responding to weaker dollar and pressures former spike high of 18 Aug at $1300 on fresh acceleration higher.

Fresh bullish sentiment on weaker dollar that was strongly disappointed after Fed Yellen did not mention monetary policy or unwinding a massive portfolio, maintains strong demand for the yellow metal.

Scenario of firm break above $1300 pivot is becoming more realistic, with lift above it to open way towards $1315 (Fibo 76.4% of larger $1375/$1122 descend) and $1331 (Fibo 138.2% projection of the upleg from $1204).

Rising bull-channel trendline offers solid support at $1288 which should contain corrective dips.

Res: 1298, 1300, 1310, 1315
Sup: 1293, 1291, 1288, 1280

EUR/GBP has managed to break through the confluence area formed at the intersection between the upper median line (UML) of the ascending pitchfork with the 0.9226 long term resistance. Breakout still needs confirmation, a retest of the broken levels will attract more buyers, which should lead the rate towards the fourth warning line (wl4).

USD/CHF decreased sharply on Friday and now is located in the seller’s territory. Price opened with a gap down, has come back to close it, but failed to stay near today’s 0.9578. Technically, should drop much deeper in the upcoming days, is attracted by the confluence area formed at the intersection between the lower median line (lml) with the 0.9498 static support. The breakdown has invalidated a potential Inverse Head and Shoulders.

Price rallied aggressively on Friday after the Yellen's speech, has touched fresh new highs and looks determined to approach new peaks in the upcoming period. Has opened with a gap up in the morning, but failed to stay near the 1.1959 today's high and now is trying to close the morning gap. The pair remains bullish on the short term, right now we don't have any reversal sign.

The EUR/USD could climb much higher as the USDX is under massive selling pressure. USDX plunged on Friday and closed below the 92.55 previous low, the index is pressuring the 92.49 long term horizontal support. A valid breakdown below the 92.49 critical support will confirm a further drop and a USD's depreciation.

Euro should climb much higher even if the Euro-zone data have failed to impress earlier, the Private Loans increased by 2.6% in July, less versus the 2.7% estimate, while the M3 Money Supply rose by 4.5%, less compared to the 4.9% estimate and compared to the 5.0% in the former reading period.

Technically, should resume the upside movement if it will stabilize above the upper median line (uml) of the ascending pitchfork. Only a failure to stabilize above this level will signal an exhaustion and a potential downside movement. The next upside target will be at the 50% Fibonacci line (ascending dotted line), remains to see how will react when will hit this level. Should retest also the outside sliding line (sl) of the minor ascending pitchfork, a failure to reach this dynamic resistance will signal a reversal.

Notes/Observations

Price action subdued in Europe with London closed for banking holiday

US and European central bankers didn't offer fresh policy guidance at the Jackson Hole central bankers meeting

Markets assessing the economic-impacting damage Hurricane Harvey as storm caused catastrophic flooding in Texas

Euro at 2 ½ highs against USD after Draghi failed to issue any concern over its appreciation during his Jackson Hole speech

North Korea launched three short-range missiles on Saturday as US/South Korea continued joint military drills

key week for US economic releases highlighted by Non-farm payrolls on Friday

Overnight/Weekend

Jackson Hole:

ECB Draghi: Global recovery was firming up. Without stronger potential growth, the cyclical recovery we see now globally will ultimately converge downwards to slower growth rates. Reiterated Council view that significant monetary accommodation is still needed, inflation has yet to converge to target; (**Note: did not comment on ECB policy directly or foreign exchange)

BoJ Gov Kuroda: Reiterated policy to stay very accommodative; Does not think Q2 GDP growth rate of 4% can be sustained

Fed's Kaplan (moderate, voter): we are closer to Neutral rate than some people believe. Reiterated Fed may raise rates one more time this year, but can afford to be patient; want to see how inflation goes before making rate decision. A stock market or real estate correction would not necessarily hurt the economy

Fed's Powell (moderate; voter: eagerly watching Washington but no ready to add fiscal stimulus measures into our forecast. We have a balance sheet plan; will normalize policy soon

Asia:

North Korea said to have fired several short range missiles into the waters off of its east coast on Sat, Aug 26th. US analysts say all of three of the short range ballistic missiles launches failed as they were fired over a period of 20 minutes (**Reminder: US and South Korean troops are currently conducting their annual joint military exercises)

China July Industrial Profits Y/Y: 16.5% v 19.1% prior (3-month low)

China approves Guodia, Shenhua group to merge into a new energy company

Europe:

France could be willing to begin Brexit trade talks by Oct. Under France's proposal, the UK would seek a 3-year transitional agreement and continue to pay into the EU's budget of €10B/year

Brexit Min Davis: Will call on EU to be more flexible in its approach ahead of 3rd round of talks. Both sides must be flexible and willing to compromise when it comes to solving areas where we disagree. EU itself has said, the clock is ticking so neither side should drag its feet

EU Brexit Negotiator Verhofstadt: UK must make concrete Brexit proposals, must address key elements of Brexit deal; EU Citizens’ rights most important Brexit issue

Americas:

President Trump reiterated "we are in the NAFTA renegotiation process with Mexico, and Canada. Both being very difficult, may have to terminate?"

Trump administration mulling reduction in certain summer work visas. plan is said to focus on 5 jobs programs under the J-1 visa exchange visitor program, including the summer work travel program.

Energy:

Hurricane Harvey pounds Houston Texas with “catastrophic floods” with National Weather Service saying conditions are unprecedented

Houston Port Spokeswoman: All port facilities to be closed on Monday due to continued weather threat

US Dept of Interior Bureau of Safety and Environmental Enforcement: Approx 22% of current oil production in US Gulf of Mexico is offline due to Tropical Storm Harvey (equates to ~379k bpd)

Economic data

(FI) Finland Aug Business Confidence: 7 v 8 prior; Consumer Confidence: 23.5 v 22.8 prior

(SE) Sweden July Retail Sales M/M: +0.9% v -0.1%e; Y/Y: 3.7% v 3.3%e

(SE) Sweden July Trade Balance (SEK): -0.5B v 5.4B prior

(EU) Euro Zone July M3 Money Supply Y/Y: 4.5% v 4.9%e

(IT) Italy Aug Consumer Confidence: 110.8 v 106.9e; Manufacturing Confidence: 108.1 v 108.0e

Fixed Income Issuance:

(IT) Italy Debt Agency (Tesoro) sold €2.0B vs. €1.5-2.0B indicated in CTZ bonds; Avg Yield: -0.139% v -0.160% prior; Bid-to-cover: 1.68x v 1.64x prior

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

Indices [Stoxx50 -0.5% at 3,425, FTSE -0.1% at 7,401, DAX -0.6% at 12,098, CAC-40 -0.3% at 5,087, IBEX-35 -0.2% at 10,322, FTSE MIB -0.1% at 21,727, SMI -0.3% at 8,876, S&P 500 Futures -0.2%]

Market Focal Points/Key Themes: European stocks open lower and continue momentum; stocks under pressure following ECB President Draghi's speech in Jackson Hole in which he didn't show concern over rising Euro; all sectors moving lower, technology most affected; export companies underperforming, putting pressure on DAX; insurers underperforming as fallout from Hurricane Harvey is assessed; UK closed for bank holiday

Equities

Consumer discretionary: Aryzta ARYN.CH +1.0% (new CEO)

Materials: SGL Carbon SGL.DE +3.4% (analyst action)

Industrials: EMS-Chemie EMSN.CH -2.0% (earnings)

Financials: Zurich Insurance ZURN.CH -0.6% (Hurricane Harvey), Conwert Immobilien CWI.AT +3.3% (earnings)

Telecom: Altice ATC.NL +0.8% (buyback)

Healthcare: Novartis NOVN.CH -0.8% (study results disappoint), Bayer BAYN.DE +0.3% (study results),

Poxel POXEL.FR +1.8% (clinical data presentation)

Speakers

France Fin Min Le Maire: Polls show that French people impatient to see reforms. Govt will hold firm on labor law reform

Greece PM Tsipras: Aim to cut tax rates further after 2019. Improvement in economy expected to be confirmed in growth rates for Q2 and Q3

Russia Dep Fin Min Moiseev: reiterates view that banking sector is stable; no immediate threats seen

Japan Cabinet Office Monthly Economic Report: Maintain overall economic assessement; Economy is experiencing a moderate recovery (**Note: Japanese government has not used the term "expansion" in 25 years; (last used in Jan 1992)

Bank of Korea (BOK) Gov Lee: Govt has not requested any hike in Key interest rate. monetary policy is decided by the the central bank’s board

Thailand Commerce Min Tantaporn: Raises 2017 Export growth target to from 2.5% to 7% as global economic conditions look good

Venezuela Oil Min Del Pino said to plan visit to Russia Energy Min Novak in Moscow ahead of planned Joint OPEC-Non-OPEC Ministerial Monitoring Committee (JMMC) monitoring committee on Friday, Sept 22nd

Fixed Income

Bund futures trades at 164.66 down 6 ticks stuck in a tight range with future volumes falling as a UK bank holiday halts activity. Downside targets 163.50 followed by 162.56. To the upside the 164.50 to 165.20 remains key resistance.

Gilt futures and UK markets were closed for holiday.

Monday's liquidity report showed Friday’s excess liquidity fell to €1.701T from €1.703T and use of the marginal lending facility rose to €310M from €131M prior.

Corporate issuance saw $3.8B last week as we enter the end of earning season.

Looking Ahead

06:00 (IE) Ireland July Retail Sales Volume M/M: No est v -4.8% prior; Y/Y: No est v 4.1% prior

06:00 (DE) German Chancellor Merkel meets France President Macron, Italy PM Gentiloni and Spain PM Rajoy in Paris

06:45 (US) Daily Libor Fixing

07:00 (IN) India announces details of upcoming bond sale (held on Fridays)

07:00 (BR) Brazil Aug FGV Construction Costs M/M: 0.3%e v 0.2% prior

07:25 (BR) Brazil Central Bank Weekly Economists Survey

08:05 (UK) Baltic Dry Bulk Index

08:30 (US) July Advance Goods Trade Balance: -$64.5Be v -$63.9B prior

08:30 (US) July Preliminary Wholesale Inventories M/M: No est v 0.7% prior, Retail Inventories M/M: No est v 0.6% prior

09:00 (MX) Mexico July Trade Balance: -$1.0Be v $0.1B prior

09:00 (FR) France Debt Agency (AFT) to sell combined €4.6-5.8B in 3-month, 6-month and 12-month Bills

09:30 (EU) ECB announces Covered-Bond Purchases

09:35 (EU) ECB calls for bids in 7-Day Main Refinancing Tender

10:30 (US) Aug Dallas Fed Manufacturing Activity: 16.8e v 16.8 prior

11:30 (US) Treasury to sell 3-Month and 6-Month Bills

13:00 (US) Treasury to sell 2-Year Notes

13:00 (US) Treasury to sell 5-Year Notes

16:00 (US) Weekly Crop Progress Report

Crude Oil is trading lower. Hourly support is given at 46.46 (17/08/2017 high). Strong resistance can be found at 50.41 (31/07/2017). Expected to show continued short-term sideways move.

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's bullish pressures remain despite ongoing consolidation. Hourly resistance is given at 17.32 (18/08/2017 high) while support can be found at 16.58 (15/08/2017 high). The commodity lies in a short-term uptrend channel. Expected to show another leg higher.

In the long-term, the death cross indicates that 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).