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The dollar maintained its strength against its rivals during the Asian trading hours as experts downgraded the impact of Hurricane Irma, while the UN Security Council approved a lighter package of sanctions on North Korea. Meanwhile, the British government won the vote on the EU withdrawal bill, lifting the pound to a one-month high versus the euro.

With the economic calendar lacking significant releases, the greenback continued its uptrend in Asia as, for the moment, investors ruled out extreme weather in the US and fresh tensions in the Korean peninsula.

Florida's residents were on the way back home after two days since Hurricane Irma hit the area with powerful winds, turning roads into rivers and causing destructive damage. However, Irma's impact was downgraded on Monday, supporting US economic growth a week before Fed policymakers meet to decide on interest rates.

In the meantime, the 15-member UN Security Council, which held an anonymous vote yesterday, decided to impose a softer punishment to North Korea, which has so far defied global calls for termination of its aggressive nuclear program. Particularly, the council approved a draft resolution in which it added restrictions to the regime's textile exports and fuel supplies, while it also withdrew an oil embargo and entirely relaxed restrictions on Kim Jong-Un's assets.

Following the aforementioned news, the dollar index climbed near the 92 key level, before edging down to 91.80. Dollar/yen was up by 0.16% on the day at 109.57, while dollar/swissie was trading mainly flat in Asia around 0.9554.

The safe-haven gold lost ground for the third consecutive day, falling close to a two-week low of $1,323.15 per ounce.

In the UK, the Parliament welcomed the vote on the EU repeal bill overnight after eight hours of debating, driving sterling to a one-month relative to the euro as euro/pound fell to 0.9063. Pound/dollar was up by 0.24% at 1.3195. The UK prime minister, Theresa May, commenting on the vote, which aimed to attach the EU laws on the British legislative framework and thus facilitate business activities, said that now the bill could move to the next level with “solid foundations”.

Later in the day, investors will keep a close eye on inflation figures out of the UK which come before the Bank of England's policy meeting on Thursday. Expectations are for the yearly CPI reading to increase by 0.2 percentage points in August to 2.8%.

Regarding energy markets, oil rebounded as fears over a slowdown in demand receded and more US refineries along the Texas Gulf Coast restarted their operations. WTI crude oil jumped to $48.09 per barrel after it sank slightly below the $47 key level on Monday. London-based Brent rose to $53.71 per barrel.

Due to increasing oil prices, the commodity-linked loonie gained against the dollar, leading dollar/loonie down by 0.12% to 1.2094.

EUR/JPY - 131.25

Original strategy:

Sold at 130.20, stopped at 130.80

Position: - Short at 130.20
Target: -
Stop: - 130.80

New strategy :

Stand aside

Position: -
Target:  -
Stop:-

Euro’s rebound from 129.46 turned out to be much stronger-than-expected, dampening our bearishness and the breach of previous resistance at 131.09 suggests the retreat from 131.71 has possibly ended and gain to 131.55-60 is likely, however, break of said resistance at 131.71 is needed to revive bullishness and confirm recent upmove has resumed and extend further gain to 132.40-50 later.

In view of this, would not chase this rise here and would be prudent to stand aside for now, Below 130.65-70 would bring pullback to 130.25-30, break there would suggest the rebound from 129.37 has ended and prolong choppy trading, risk weakness to 129.95 and possibly 129.60 but said support at 129.37 should remain intact.

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).

On the bigger picture, we are treating the rally to 169.97 as end of wave A, then selloff from 169.97 (July 2008) to 112.08 is wave (A) of B instead of end of entire wave B and then the rebound from there to 139.26 is wave (B), then wave (C) decline bought euro to as low as 94.12 and the strong rebound from there suggest this wave (C) as well as larger degree wave B has ended and major correction in larger degree wave C has commended for headway to 147.00 and possibly test of psychological resistance at 150.00. 

AUD/USD – 0.8041

Original strategy:

Exit long entered at 0.8050,

Position: - Long at 0.8050
Target:  -
Stop:-

New strategy :

Sell at 0.8090, Target: 0.7900, Stop: 0.8150

Position: -
Target:  -
Stop:-

Aussie’s retreat after rising to 0.8125 last week suggests a minor top has possibly been formed there and consolidation below this level would be seen with mild downside bias, below 0.7995-00 would bring test of previous support at 0.7963, break there would add credence to this view, bring retracement of recent rise to 0.7920-25 and later 0.7890-00 but support at 0.7867-71 should remain intact.

In view of this, we are looking to sell aussie on recovery as 0.8090-00 should limit upside. Above said resistance at 0.8125 would (last week’s high) would extend recent upmove in wave v of (iii) to 0.8150, then towards 0.8200, however, loss of upward momentum should prevent sharp move beyond 0.8225-30 and price should falter below 0.8250-60, risk from there is seen for a retreat later.

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.

EUR/USD

Current level - 1.1976

The failure at 1.1950 signals another possible rise towards 1.2090 peak. Minor intraday resistance lies at 1.2000.

USD/JPY

Current level - 109.52

The uptrend is intact heading towards 109.80, en route to 110.60 crucial high. Initial minor support lies at 109.20 and crucial on the downside is 108.50.

GBP/USD

Current level - 1.3204

The slide to 1.3157 should be considered corrective and the risk of a tight test at 1.3260 is still vivid. The mentioned peak should be able to provoke a reversal for a deeper consolidation towards 1.3000 area.

Today, GBP traders will have their gaze locked on the UK CPI data for August. Expectations are for both the headline and core rates to have risen, something we agree with, given that the nation’s services PMI for the month showed that firms increased their prices charged at the highest rate since April. The recent depreciation of the pound against the euro supports further the case for accelerating inflation.

Even though a rebound in the CPI rates could support the pound and revive some speculation with regards to a BoE rate hike in the near term, we remain skeptical on that prospect. A few months ago, BoE Governor Mark Carney made it clear that a rate hike may depend mainly on firming wages and improving business investment. Given that business investment for Q2 was stagnant, we doubt that an actual rate hike is looming for now. However, if inflation indeed accelerates today and wages also accelerate tomorrow as anticipated, we would not rule out a slightly more hawkish tone from the BoE when it meets on Thursday.

GBP/USD traded lower yesterday after it hit again resistance at 1.3225 (R1). Nevertheless, the slide was stopped by the 1.3160 (S1) level. The price structure on the 4-hour chart suggests a short-term uptrend as marked by the short-term uptrend line drawn from the low of the 24th of August. As such, we expect the bulls to take the reins again soon and aim for another test near the 1.3225 (R1) line. The catalyst for such a rebound may be accelerating UK CPIs today. If the rebound is strong enough to overcome the 1.3225 (R1) resistance, then we may experience extensions towards our next obstacle of 1.3270 (R2).

Dollar stages a minor comeback as risks recede

The US dollar came under buying interest yesterday, reversing some of its recent losses, while US equity indices surged to close at, or near, all time high levels. We see two likely explanations for these market moves. Firstly, geopolitical risk receded somewhat after North Korea did not launch a missile for its anniversary over the weekend, as many may have expected. This seemingly drove investors out of the safety of US bonds, evident by the rise in Treasury yields, something that likely supported the dollar. In addition, the fact that Hurricane Irma has been less severe than anticipated so far, at least in terms of damage caused, may be another factor that supported the flight out of Treasuries and into equities.

In our view, the dollar’s broader outlook remains cautiously negative, amid an uncertain geopolitical outlook that frequently drives flows into Treasuries, relatively uninspiring US economic data, and subdued expectations for Fed rate hikes in the near-term. That said, we have to note that the pace of the currency’s depreciation has slowed substantially compared to recent months, which could be a preliminary sign that the greenback is trying to carve out a bottom. The US CPI data that are coming out on Thursday could play a critical role for the currency’s forthcoming direction.

USD/JPY surged yesterday, breaking back above the important resistance (now turned into support) barrier of 108.70 (S2). The rate is back within the sideways range that’s been in place since the 28th of July, between that barrier and the resistance zone of 111.00. Thus, we believe that the short-term outlook has turned back to neutral. Having said that though, we wouldn’t rule out further advances within the aforementioned range. At the time of writing, the pair is trading fractionally above the 109.25 (S1) line, and further advances could aim for the 109.85 (R1) resistance. A break above that zone could open the way for the 110.20 (R2) obstacle.

As for the rest of today’s highlights:

Besides the UK CPIs, we get inflation data for August from Sweden as well. The forecast is for the headline CPI rate to have remained unchanged, while the CPIF rate is forecast to have ticked down, something that could weigh on SEK. In the US, the JOLTS job openings for July are coming out.
We have only one speaker on the agenda: ECB Vice President Vitor Constancio. Following President Draghi’s remarks at the press conference after last week’s ECB policy meeting that the Bank should be ready to take the bulk of a decision on QE in October, we will monitor the Vice President’s comments for more clues on that front.

GBP/USD

Support: 1.3160 (S1), 1.3120 (S2), 1.3060 (S3)

Resistance: 1.3225 (R1), 1.3270 (R2), 1.3360 (R3)

USD/JPY

Support: 109.25 (S1), 108.70 (S2), 108.10 (S3)

Resistance: 109.85 (R1), 110.20 (R2), 110.65 (R3)

U.N Voted In Favour Of Stepping Sanctions on North Korea
Higher Call Premium Suggests Higher Euro
OPEC Considers To Extend Production Cut While US Refineries Resuming Operation Gradually
UK' CPI Data Influenced By Higher Fuel Price

European markets are continuing their ascent and picking up their momentum from Wall Street. The S&P500 index closed at a record high yesterday demolishing any resistance in its way. Investors are surely feeling less concerned about the potential hurricane damage costs. This has brought back the traditional risk-on trade.

U.N Voted In Favour Of Stepping Sanctions on North Korea

The risk-on trade is also influenced by the subdued North Korean situation. Having said that, the UN has decided to vote in favour of stepping up the sanctions on the country. Although, the approved sanctions by the U.N are toned down versions of what was discussed before. A reaction to this action should not be underestimated. This new situation has taken some steam out of the dollar rally. The dollar bounced from its two and half years low, but the lingering geopolitical situation shows we are not out of the woods yet. The element which could provide oxygen for the dollar rally would be a stellar reading of the US inflation number (due on Thursday).

Higher Call Premium Suggests Higher Euro

The euro-dollar has also retraced from its highs, the ECB president, Mario Draghi and other members of the governing council are using vigorous verbal intervention to keep the currency at a more reasonable level. However, the devil is in the detail and investors cannot ignore the fact that the minimal reduction in the inflation forecast paints a very bullish picture. In simple words, the ECB is confident that the domestic demand would be strong to offset the drag from the higher currency. Therefore, it confirms that there is still more upside for the Euro. The higher premium on calls of all tenors up to nine months is pretty much supporting this view.

OPEC Considers To Extend Production Cut While US Refineries Resuming Operation Gradually

Oil prices have shown a very much muted reaction to the news that the biggest oil player in the OPEC is open to extending the oil production cut. Russia is also on board along with other OPEC producer on this idea, however, if that will become a reality would be a different situation. The reason is that from the previous similar situations we have learned that this kind optimism changes to a more conflicting information as you move closer to the time. The US gulf coast refineries are gradually resuming their operations and this should support the oil price. The industry is still not back to its normal level after being hit by the worst hurricane since 2005 and nearly 12.5% refineries are still shut.

UK CPI Data Influenced By Higher Fuel Price

As for Sterling, it is the CPI data which is going to be under focus. It would provide the guidance and more daylight for traders in relation to the next move by the Bank of England. We do not expect the overall story to change which is that inflation is overshooting the bank's target thanks to a lower sterling. The bank would only change its stance on its monetary policy if inflation is supported by higher wages, not due to the lower currency. Another significant support for inflation is coming from higher fuel prices as the cost of filling up the tank at the gas station has increased nearly by 1.6%. Thus, the annual rate could see an uptick reading. Traders would take that as a signal that this is going to increase the pressure on the BOE to increase their interest rate.

The pair extends recovery above 109.38 (Fibo 61.8% of 110.66/107.31 downleg) on Tuesday, following strong bullish acceleration on Monday (the biggest one-day gain since 03 July) as dollar rallied on relief after eased tensions on North Korea and lower than expected impact from Hurricane Irma.

Studies show more room at the upside, with strong barrier at 110.00 zone (weekly Tenkan-sen / Fibo 38.2% of 114.49/107.31 descend), expected to ideally cap, as overall picture is bearish.

Conversely, sustained break above 110.00 would generate strong bullish signal for recovery extension towards key near-term barrier at 110.66 (31 Aug high) and sideline near-term bears.

Res: 110.00, 110.66, 110.90, 111.48
Sup: 109.23, 108.99, 108.60, 108.12

Weekly
    •    Last Candlesticks pattern: Shooting star
    •    Time of formation: 31 Jul 2017
    •    Trend bias: Down

Daily
    •    Last Candlesticks pattern: Morning star
    •    Time of formation: 25 Aug 2017
    •    Trend bias: Near term up

GBP/USD – 1.3172

As cable found decent demand just above 1.2900 last week and has rallied in part due to active cross-buying in sterling, suggesting recent rise from 1.2774 is still in progress and upside bias remains for further gain to1.3225-30, however, break of previous chart resistance at 1.3269 is needed to retain bullishness and signal medium term erratic rise from 1.1986 low has resumed for headway to 1.3300-10, then towards 1.3390-00 but price should falter well below 1.3500-05 (50% Fibonacci retracement of 1.5018-1.1986), bring retreat later.

On the downside, whilst initial pullback to 1.3095-00 cannot be ruled out, reckon the upper Kumo (now at 1.3087) would limit downside and bring another rise later. A daily close below the Tenkan-Sen (now at 1.3038) would defer and suggest top is possibly formed, bring test of 1.2996-99 (previous resistance and current level of the Kijun-Sen), however, break there is needed to provide confirmation, bring further fall to 1.2940-45 but support at 1.2909 should remain intact, bring rebound later.

Recommendation: Long entered at 1.2875 met upside target at 1.3020 with 145 points profit and would buy again at 1.3090 for 1.3290 with stop below 1.2990.  

On the weekly chart, although last week’s rally formed a long white candlestick and gain to 1.3225-30 cannot be ruled out, break of recent high at 1.3269 is needed to retain bullishness and signal the erratic rise from 1.1986 low has finally resumed and extend gain to 1.3330-40, then towards 1.3400-10, however, near term overbought condition should prevent sharp move beyond 1.3500-05 (50% Fibonacci retracement of 1.5018-1.1986) and reckon 1.3600-10 would hold from here, risk from there is seen for a retreat later.

On the downside, expect pullback to be limited to 1.3090-00 and the Tenkan-Sen (now at 1.3022) should limit downside and bring another rise later to aforesaid upside targets. Below last week’s low at 1.2909 would defer and prolong choppy trading below said resistance at 1.3269, bring weakness to 1.2850-55 but break there is needed to signal the rebound from 1.2774 has ended, bring further fall to 1.2800, break there would indicate another leg of fall from 1.3269 top is still in progress and bring test of 1.2774, below there would extend this decline for retracement of recent upmove to 1.2685-90, however, reckon downside would be limited to previous support at 1.2589 and bring rebound later. .



EUR/USD

The greenback edged higher against most of its major rivals in dull Monday trading, leading to a EUR/USD decline down to 1.1956, its lowest since last Thursday, when ECB's Draghi failed to down talk the common currency. The rally was driven my resurgent optimism among investors, as Hurricane Irma´s damages Florida will be far less than initially feared, and as North Korea decided to throw a party on Saturday for the 69th anniversary of the regimen, rather than launching more missiles. Equities edged higher worldwide, while the yen, and gold were the biggest losers of the day.

The macroeconomic calendar was quite scarce, with no major releases in Europe and the US, although the week has plenty to offer, starting for this particular pair next Wednesday, with the release of German inflation, EU Industrial Production and US August inflation.

The EUR/USD pair 4 hours chart shows that the decline may extend this Tuesday, as the price has broken below its 20 SMA that lost upward strength, whilst technical indicators entered negative territory, maintaining their strong downward slopes. The decline, however, remains corrective long term, as the price would need at least to break below the 1.1800 level to be at risk of a steeper decline, something quite unlikely unless the US Federal Reserve pulls the trigger by surprise this month, which has almost null chances of happening.

Support levels: 1.2010 1.1975 1.1940

Resistance levels: 1.2070 1.2105 1.2150

USD/JPY

The USD/JPY pair challenged last Thursday's high in the US afternoon, surging past 109.30 amid a sharp advance in Wall Street and a solid bounce in US Treasury yields. Risk aversion eased over the weekend, with the pair gapping higher at the weekly opening, and leaving that gap unfilled at the end of the day. The yield for the 10-year government note surged to 2.12%, bouncing from 2.06%, while for the 30-year note, yields surged to 2.74% from 2.68%. There are no big news scheduled in Japan for the upcoming session, which means that the pair may keep on advancing should Asian equities follow the lead of the their overseas counterparts. The 4 hours chart for the pair shows that the price is currently advancing above its 100 SMA, while technical indicators head strongly higher within positive territory. In the same chart, the 200 SMA is the next probable bullish target and the immediate resistance at 109.70, with gains beyond the level probably resulting on an extension up to 110.25, where the pair also has an unfilled gap from two weeks ago.

Support levels: 107.65 107.30 106.90

Resistance levels: 108.10 108.45 108.90

GBP/USD

The GBP/USD closes the day marginally lower after a failed attempt to surpass Friday's high of 1.3223 early London, as dollar's recovery extended all through the day. The greenback benefited from improved risk sentiment, and a scarce macroeconomic calendar, but the Pound was among the best performers, holding on to gains ahead of the UK's Parliament key Brexit vote. Policymakers will have to decide over the EU withdrawal bill by the end of the day, but given that the government has secured a deal to get the majority in the Commons House, seems there won't be big surprises at this stage. This Tuesday, attention will center on UK's August CPI and PPI data, more relevant ahead of Thursday ECB's meeting. From a technical point of view, the 4 hours chart shows that the price is holding above a still bullish 20 SMA, but also that technical indicators have retreated from overbought territory, with the Momentum nearing its 100 level, and the RSI currently at 61, suggesting the decline could extend further, but as corrective. Beyond the mentioned Friday's high, the next big hurdle comes at 1.3266, August monthly high, with a break above this last probably triggering stops and fueling the advance.

Support levels: 1.3180 1.3130 1.3090

Resistance levels: 1.3225 1.3265 1.3300

GOLD

Gold prices came under strong selling pressure this Monday as risk aversion eased, with the commodity trading at its lowest in almost a week by the end of the day, around $1,326.60 a troy ounce. A stronger dollar amid easing geopolitical tensions and a strong bounce in equities pushed the commodity lower, also dumped for the sake of riskier, and more profitable assets. Curiously spot gapped lower at the weekly opening, and seems poised to fill another gap, left at the beginning of the previous week, when a North Korean nuclear test pushed the commodity higher, at 1,325.90. The daily chart for gold shows that technical indicators have begun correcting extreme overbought conditions, whilst the price remains far above all of its moving averages, in line with further downward corrections ahead. The 20 DMA particularly, stands now at 1,315.30, providing a dynamic support in the case of further dollar gains. In the 4 hours chart, the commodity is biased lower, trading below a bearish 20 SMA and with technical indicators heading sharply lower within negative territory, also leaning the scale towards the downside for the upcoming sessions.

Support levels: 1,325.90 1,315.30 1,306.60

Resistance levels: 1,337.80 1,346.30 1,355.10

WTI CRUDE OIL

West Texas Intermediate crude futures reversed an early slide and closed the day with gains at $48.10 a barrel. Oil prices were quite volatile, as investor assessed the impact of Hurricane Irma in the US Florida. The initial decline came as a consequence of fears of diminishing demand for the black gold, but as the day went by, risk of a downturn in crude demand lessened, resulting in the late recovery. Further supporting the commodity were comments from Saudi Arabia officers, which talked about a three-month extension of the ongoing output cut deal. The daily chart presents a neutral stance, as the price remains trapped between horizontal 100 and 200 DMAs, although a brief dip below the shortest was quickly reverted, somehow indicating limited selling interest at this point. Technical indicators in the mentioned chart hold flat around their mid-lines, giving no clues on what's next for oil. In the 4 hours chart, the price is also trapped between horizontal moving averages, with selling interest containing advances around the 200 SMA, and while technical indicators resume their declines after correcting oversold conditions, leaning the scale towards the downside.

Support levels: 47.90 47.20 46.60

Resistance levels: 48.70 49.40 50.00

DJIA

Wall Street ended the day with strong gains, as risk appetite returned after a quieter-than-expected weekend. The DJIA regained the 22,000 level, to end the day 259 higher at 22,057.37, while the Nasdaq Composite added 72 points, to 6,432.26. The S&P surged to a fresh 2017 record high after advancing 1.08%, ending the day at 2,488.11. Insurers companies followed the lead of their European counterparts, posting strong gains on Hurricane Irma consequences' relief. DowDuPont was the best performer, gaining 2.88%, followed by Travelers that advanced 2.21%. Only three members closed down, with Home Depot losing 0.91% and General Electric shedding 0.71%. The index is at its highest in 4-weeks, and technical readings in the daily chart support additional gains ahead, as the index gained upward momentum after breaking above its 20 DMA, whilst technical indicators aim north well above their mid-lines. Shorter term, and according to the 4 hours chart, the index is far above all of its moving averages, whilst technical indicators maintain their upward strength, despite being in overbought territory, also favoring a new leg higher for this Tuesday.

Support levels: 22,005 21,970 21,928

Resistance levels: 22,086 22,137 22,179

FTSE100

London equities ended mostly higher this Monday, with the FTSE 100 settling at 7,413.59, up by 0.49% or 36 points. Risk appetite was behind the advance after Hurricane Irma was downgraded to a tropical storm, with insurers companies surging by the most on speculation of lesser damages from the Hurricane than previously estimated. Within the Footsie, Provident Financial was the best performer, adding 3.77%, followed by EasyJet that added 3.37%. Mining-related equities edged lower, as gold fell to its lowest in over a week, resulting in Randgold Resources losing 1.54%. The worst performer was Associated British Foods that lost 4.96%. The index remains within its latest range, with a slightly positive tone in the daily chart, as technical indicators aim modestly higher above their mid-lines, whilst the index settled above its anyway directionless moving averages. In the 4 hours chart, the early gap sent the index above a congestion of moving averages, a sign of lack of directional strength, whilst technical indicators lost their upward potential, but hold within positive territory anyway.

Support levels: 7,400 7,376 7,333

Resistance levels: 7,444 7,482 7,515

DAX

European equities edged higher, advancing by the most in almost a month, on improved market's mood. The German DAX closed at 12,475.24, up 173 points, on easing concerns over Hurricane Irma economic consequences, and a quiet North Korea celebration over the weekend, with no missiles involved. Financials were the best performers in Europe, and within the DAX, Muenchener led advancers, ending the day up 4.36%, followed by Commerzbank and Deutsche Bank, up 3.36% and 2.86% respectively. Daimler was the only one to close in the red, down by 0.07%. The daily chart for the benchmark shows that it settled above its 100 DMA for the first time since July 24th, while technical indicators keep heading higher within positive territory with uneven strength, but still favoring additional advances for this Tuesday. In the 4 hours chart, the index settled far above all of its moving averages, with the 20 SMA accelerating above the 100 and 200 SMAs, but technical indicators easing from extreme overbought readings, anticipating at least some consolidation ahead and before the next directional move.

Support levels: 12,462 12,424 12,372

Resistance levels: 12,532 12,576 12,612

Weekly
    •    Last Candlesticks pattern: Shooting star
    •    Time of formation: 7 Mar 2017
    •    Trend bias: Sideways

Daily
    •    Last Candlesticks pattern: Morning star
    •    Time of formation: 9 May 2017
    •    Trend bias: Near term up

USD/CHF – 0.9548

Although the greenback broke below previous support at 0.9428, lack of follow through selling and the subsequent rebound from last week’s low of 0.9421 suggest consolidation above this level would be seen and initial upside risk is for corrective bounce to the Kijun-Sen (now at 0.9597 but reckon the upper Kumo (now at 0.9623) would limit upside and bring another decline later. Below 0.9455-60 would bring a retest of said support at 0.9421, however, break there is needed to confirm recent decline from 1.0344 (2016 top) has resumed and extend weakness to 0.9390-00, then towards 0.9330-35, having said that, oversold condition should prevent sharp fall below previous support at 0.9259 and reckon 0.9220 (38.2% Fibonacci retracement of entire rise from 0.7401-1.0344) would hold.

On the upside, whilst recovery to the Kijun-Sen (now at 0.9597) cannot be ruled out, reckon the upper Kumo (now at 0.9623) would limit upside and bring another decline. Only a daily close above indicated resistance at 0.9680 would signal low has been formed instead, b bring further subsequent gain to 0.9698-99 resistance but price should falter well below another previous resistance at 0.9773.

Recommendation: Sell dollar at 0.9640 for 0.9400 with stop above 0.9740.

On the weekly chart, although the greenback fell briefly below previous support at 0.9428, the subsequent bounce from 0.9421 suggests consolidation above this level would be seen and corrective bounce to the Tenkan-Sen (now at 0.9597) cannot be ruled out, however, reckon upside would be limited to 0.9660-66 and bring another decline later. Below said support at 0.9421 would signal the decline from 1.0344 top is still in progress and may extend weakness to 0.9350, then towards previous support at 0.9259, however, oversold condition should prevent sharp fall below 0.9220 (38.2% Fibonacci retracement of 0.7401-1.0344) and reckon 0.9150 would hold from here, risk from there is seen for a rebound later.

On the upside, expect recovery to be limited to the Tenkan-Sen (now at 0.9597) and resistance at 0.9680 should remain intact, bring another decline later. A break of this level would risk test of 0.9765-73 (current level of the Kijun-Sen and previous resistance), however, only a sustained breach above this level would signal low is formed instead, bring a stronger rebound for retracement of recent decline to 0.9805-10, then test of the lower Kumo (now at 0.9894) but upside should be limited to the upper Kumo (now at 0.9982), price should falter well below resistance at 1.0100.