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EUR/USD short-term bullish pressures are increasing. 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 holding at 1.1871 (24/08/2015 high) has been broken while strong support lies at 1.0341 (03/01/2017 low).

USD/JPY - 109.15

USD/JPY – Wave V of larger degree circle V has possibly ended at 75.31 and major correction has commenced and already met indicated target at 125.00.

Although the greenback fell briefly to 108.60, lack of follow through selling on break of previous support at 108.83 and the subsequent recovery suggest consolidation would be seen and another bounce to 109.85 cannot be ruled out, however, still reckon upside would be limited to 110.35-40 and renewed selling interest should emerge around resistance at 110.95, bring another selloff later. Below 108.60 would bring retest of 108.13 (this year’s low) but break there is needed to extend early decline to 107.50, then 107.00, having said that, reckon 106.50-55 (61.8% Fibonacci retracement of 99.01-118.66) would limit downside and price should stay above 105.00 psychological level. 

Our preferred count is that, triangle wave IV (with circle) ended at 101.45 and the circle wave V brought dollar down to the record low of 75.31 in 2011 and the subsequent rebound signal major correction has commenced with A leg ended at 84.19, followed by wave B at 77.14 and impulsive wave C is now unfolding (indicated upside target at 125.00 had been met) for gain towards 127.00 level. In the event dollar drops below support at 99.01, this would confirm medium term decline from 125.86 top (2015 high) has resumed for subsequent weakness to 98.00 and possibly 97.00.

Under this count, this wave C is unfolding as impulsive waves with (1) (2), 1 2 ended at 80.67, 79.07, 82.84 and 81.69 respectively, hence the extended wave 3 has ended at 103.74 and wave 4 correction of recent upmove should bring weakness to 92.57, then towards 90.88 but psychological support at 90.00 should limit downside and bring another rally later in wave 5, indicated target at 125.00 had been met and gain to 127.00 cannot be ruled out but reckon price would falter below 130.00.

On the upside, whilst initial recovery to 109.85 and 110.30-35 cannot be ruled out, reckon upside would be limited to resistance at 110.95 and bring another decline. Above 111.70-75 would defer and suggest the fall from 114.50 has formed a temporary low instead, bring retracement of recent decline to 112.00, then test of resistance at 112.20 , however, still reckon upside would be limited to 112.85-90 and price should falter below resistance at 113.58, bring another selloff later.

Recommendation: Sell again at 110.90 for 108.90 with stop above 111.90.

On the monthly chart, we have changed our preferred count that an impulsive wave is unfolding with major wave III with circle ended at 79.75, then followed by wave IV with circle and is labeled as a triangle with A: 147.64 (11 August, 1998), B: 101.25, C: 135.20, D: 101.67 and E leg ended at 124.14 to end the wave IV with circle. Hence, wave V with circle commenced from there and hit a record low of 75.31, however, the subsequent strong rebound signals this circle wave V has possibly ended there, hence gain to (indicated upside target at 122.00 and 125.00 had been met), the retreat from 125.86 suggests wave A of major correction has ended there and wave B correction back to 99.00, then 95.00 would be seen, however, reckon downside would be limited to 90.00, bring another rebound in wave C next year.

GBP/USD – 1.2900





Original strategy :

Sold at 1.2910, Target: 1.2710, Stop: 1.2970

Position: - Short at 1.2910

Target:  - 1.2710

Stop: - 1.2970




New strategy :

Hold short entered at 1.2910, Target: 1.2710, Stop: 1.2940

Position: - Short at 1.2910

Target:  - 1.2710

Stop:- 1.2940



As cable opened higher earlier today, lack of follow through buying and the subsequent retreat from 1.2939 has retained our bearishness and as long as this level holds, bearishness remains for another retreat to 128.10-20, then retest of last week’s low at 1.2774, break there would extend recent selloff from 1.3269 top to 1.2750 but loss of downward momentum should prevent sharp fall below 1.2730-35 and previous support at 1.2706 should remain intact, bring rebound later,

In view of this, we are holding on to our short position entered at 1.2910. Above said resistance at 1.2939 would defer and risk a stronger rebound to 1.3000 and possibly test of resistance at 1.3032, however, only break of latter level would abort and signal the fall from 1.3269 has ended instead, bring a stronger rebound to 1.3059 and possibly towards 1.3100 but previous support at 1.3112 (now resistance) should remain intact.

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. 


GBP/JPY - 140.92

Original strategy:

Sell at 141.40, Target: 139.40, Stop: 142.00

Position: -
Target: -
Stop: -

New strategy :

Sell at 142.00, Target: 140.00, Stop: 142.60

Position: -
Target:  -
Stop:-

Although the British pound retreated after meeting resistance at 141.35, reckon downside would be limited to 140.35-40 and near term upside risk remains for another corrective rebound, above 141.35 would extend the rebound from 139.35 (last week’s low) to 141.90-00 where renewed selling interest should emerge and bring another decline later, below 140.35-40 would bring weakness towards 139.80-85, break there 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.


Gasoline was the top winner in early Monday's trading. Contract for September delivery surged to the highest levels since July 2015 after opening with gap higher of 5.3% on Monday (1.6721 Fri close/1.7611 Mon open). Gasoline hit session high at 1.7783, before easing to 1.7232 in late Asian/early European trading. The price soared after markets started to digest the impact o hurricane Harvey on the US Gulf coast. This was the most powerful hurricane that hit the state of Texas in more than 50 years which caused a big damage, casualties and prompted the closure of several refineries. Gasoline ended Friday's trading in red after wide-amplitude trading action showed strong hesitation at 1.6835 barrier (former high of 01 Aug) but closed positively for the second consecutive week. Firmly bullish daily studies are supportive for clear break above dented key med-term barrier at 1.7697 (12 Apr high) to signal resumption of broader recovery rally from 0.8975 (Feb 2016 low). Meanwhile, deeper correction before fresh rally could be anticipated. Thick hourly cloud (spanned between 1.6993 and 1.6583) is expected to contain extended dips.

Res: 1.7697, 1.7783, 1.8000, 1.8306
Sup: 1.7223, 1.7000, 1.6993, 1.6835

Key Highlights

• The Euro surged higher this past week and traded towards 1.1960 against the US Dollar.
• The EUR/USD pair broke a couple of important bearish trend lines near 1.1800 on the 4-hours chart.
• Euro Zone's M3 Money Supply for July 2017 was up by 4.5%, compared with the forecast of +4.9% (YoY).
• The Dallas Fed Manufacturing Business Index for August 2017 will be released today, which is forecasted to decline from 16.8 to around 15.5.

EUR/USD Technical Analysis

The Euro is an excellent bullish run from the 1.1650 swing low against the US Dollar. The EUR/USD pair recently traded to a new 2-year high and eyes more gains towards 1.2000 in the near term.

The pair started a strong uptrend from the 1.1650 low and traded above the 100 simple moving average (H4). During the upside move, there was a break above a couple of important bearish trend lines near 1.1800 on the 4-hours chart.

A new monthly high was formed at 1.1959 before the pair started a short-term correction. It already tested the 23.6% Fib retracement level of the last wave from the 1.1773 low to 1.1959 high.

Downsides remain supported by the 1.1900 level and any further declines would face strong buying interest near 1.1850.

Euro Zone's M3 Money Supply

Today in the Euro Zone, the M3 Money Supply report for July 2017 was released by the European Central Bank. The forecast was slated for a rise of 4.9% in the supply compared with the same month a year ago.

The actual result was on the lower side, as there was an increase of 4.5% in the M3 Money Supply. Looking at the narrower aggregate M1, comprising currency in circulation and overnight deposits, it was up by more than 9% July 2017 compared with the same month a year ago.

Referring to the 3-month change, the M3 Money Supply rose 4.8%, less than the last 4.9%. Private loans were up by 2.4% in July 2017 (YoY), more than the last reading of 2.1%.

To sum up, the overall trend for EUR/USD is bullish and any dips towards 1.1860 or 1.1820 remains supported.

EURUSD

As expected, the EURUSD had a bullish momentum last week topped at 1.1941 and hit 1.1959 earlier today in Asian session. As you can see on my daily chart below, price breaks above the bullish flag and the inside bar formation, suggests a bullish continuation scenario. The bias is bullish in nearest term testing 1.2000 level. Immediate support is seen around 1.1875. A clear break below that area could lead price to neutral zone in nearest term testing 1.1830 region but overall I remain bullish and any downside pullback should be seen as a good opportunity to buy. On the upside, a clear break and daily close above 1.2000 would expose 1.2100 – 1.2175 region.

GBPUSD

The GBPUSD was indecisive last week. The pair attempted to push lower, bottomed at 1.2773 but closed higher at 1.2876. Price gapped higher earlier today, opened at 1.2923 but traded lower around 1.2885 at the time I wrote this comment. As you can see on my daily chart below, price retreat from the violated trend line support and 1.2915 key resistance, which keeps the bearish phase intact. The bias is neutral in nearest term. Immediate support is seen around 1.2830. A clear break and daily close below that area could trigger further bearish pressure testing 1.2700 region. On the upside, a clear break and daily close above 1.2915 would interrupt the current bearish phase testing 1.3000 – 1.3030 resistance area. Overall I remain neutral.

USDJPY

The USDJPY was indecisive last week formed a Doji formation on weekly chart. The bias is neutral in nearest term. As long as stay below 109.85 I still prefer a bearish scenario at this phase but need a clear break below 108.70 key support area to continue the bearish scenario testing 108.00 – 107.50 as nearest bearish target. On the upside, a clear break and daily close above 109.85 key resistance would expose 111.00 region or higher.

USDCHF

The USDCHF attempted to push higher last week topped at 0.9697 but whipsawed to the downside and closed below 0.9580 support area. The bias is bearish in nearest term testing 0.9500 – 0.9450 key support. Immediate resistance is seen around 0.9600. A clear break above that area could lead price to neutral zone in nearest term testing 0.9650 region or higher. I prefer a bearish scenario at this phase but 0.9450 key support should remain a good place to buy with a tight stop loss.

EUR/JPY - 130.38

New strategy :

Buy at 129.70, Target: 131.70, Stop: 129.10

Position: -
Target:  -
Stop:-

Last week’s rally above previous resistance at 130.40 signals early fall from 131.40 has ended at 127.56 and mild upside bias is seen for further gain to 131.10-15, however, break there is needed to retain bullishness for retest of said recent high at 131.40, once this level is penetrated, this would extend early upmove to 131.90-00 but near term overbought condition should prevent sharp move beyond 132.50-60.

On the downside, whilst pullback to 130.00 cannot be ruled out, reckon 129.60-70 would limit downside and bring another rise. Below 129.10-15 would defer and suggest top is formed instead, risk weakness to 128.75-80  but still reckon 128.30-35 support would remain intact and bring another rise later this week. 

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).

Draghi was more optimistic than anticipated during the Jackson Hole Meeting
Brexit negotiations moves towards a third round

The euro is showing bullish momentum and it is extending its bullish move to a 2-1/2 year high. The number which everyone is looking at is 1.20 although the resistance is at 1.2040. Thanks to the president of the European central bank who instigated this rally with his comments at the Jackson Hole meeting last week. The general perception among traders was that the president will talk down the currency.

However, his optimism about the economic growth in the Eurozone and the recovery has sparked the rally in the euro. We do think that the path of the least resistance for the EUR/USD remain skewed to the upside. Going forward, the focus would be towards the most important upcoming- the ECB meeting in September. Investors are expecting that the ECB will announce the process of tapering during this event and that has the ability to push the euro even higher.

The sterling is strong against the dollar not because of its own strength but because of the weakness in the dollar. The negotiation process around Brexit talks is reaching to a third round between the UK and the EU’s leaders. The discussions are not yielding any favourable results and despite the fact, whatever the leaders of both sides may say, but the actual results do not show any sign of flexibility and imagination. There is no resolution in sight around the issue of Northern Ireland’s citizen’s right and for the exit bill. Labour party has also made a dramatic move and they would like to keep Britain in the EU single market during the transition period and this is more likely to push the entire process towards the softer Brexit.

Following what was effective 'no comment' speeches from Yellen and Draghi at Jackson Hole, U.S. dollars bears had the green light to keep selling dollars. Combined with a potential stand-off between the White House and Congress over the Mexican Wall being tied to extending the debt limit, the street needed no more excuses to move back into precious metals.

Both Gold and Silver's price action was constructive to finish the week, a trend that has continued in Asia today, with Gold up 0.45% and Silver up 0.65% as we head into the European session. Trading may be muted, however, as London is on holiday today. Gold has risen five dollars to 1296.50, trading through its 1296.00 resistance. Silver has risen 14 cents, trading at 17.1500 as we head into Europe.

GOLD

A break of 1296.00 is technically significant if we can close above here today. This opens up an attack on the 18th August spike high at 1301.00. A close above this level presents a lot of clear air on the chart with the next resistance being at 1337.50, the November 2016 high. A close above 1296.00 today would also imply we are seeing a breakout of the ascending wedge formation dating back to early July as per the chart below.

Support is at the ascending trend line, today being at 1279.00. Behind this level, next support is at 1267.50, the 15th August low and then the 100-day moving average at 1258.00.

SILVER

Silver has underperformed relative to gold in August, having run into a brick wall above 17.2000 all month. I have attributed this to traders preferring to express their position in the more liquid gold contract, having been whipsawed and burnt by aggressive price action in silver this year, much like platinum.

Having tested support at 16.7200 on Friday, silver produced a very nice rally to close just above its 200-day moving average at 17.0675. It appears to be consolidating those gains today.

Resistance will appear at the 17.3900 regions followed by the early June highs around 17.7600. A daily close above the latter is implying a test of 18.0000 awaits.

Silver has support at the 200-day average at 17.0375 followed by the rising support line, today at 16.7600. Only a break of the latter would jeopardise the bullish technical picture.

Silver Daily

The Silver weekly chart provides some interesting insight as well. With the previous rally topping at 17.7600 also being the 200-week moving average at the time. Today the average lies at 17.3960, very close to the daily resistance at 17.3900. Thus a break and close above the former would imply silver has chopped a lot of wood and could be set for a meaningful catch-up rally with gold.