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Cable was lower in Asian session after daily cloud top capped upside attempts and fresh strength of the US dollar increased pressure on Sterling. Fresh weakness is eyeing key supports at 1.2851/48 (daily cloud base/Fibo 61.8% of 1.2588/1.3268 rally), break of which is expected to generate stronger bearish signal for resumption of broader downtrend from 1.3268 (03 Aug peak) which has been paused for 1.2917/1.2831 consolidation in recent days.

Res: 1.2877, 1.2908, 1.2917, 1.2928
Sup: 1.2850, 1.2831, 1.2811, 1.2749

Daily Pivots: (S1) 1.1330; (P) 1.1354; (R1) 1.1387; More...

EUR/CHF is staying in consolidation pattern from 1.1537 and intraday bias remains neutral. On the upside, break of 1.1477 resistance will argue that the consolidation from 1.1537 has completed and larger rise is resuming. However, firm break of 38.2% retracement of 1.0830 to 1.1537 at 1.1267 will extend the correction to 61.8% retracement at 1.1100 before completion.

In the bigger picture, firm break of 1.1198 key resistance confirms resumption of the long term rise from SNB spike low back in 2015. In this case, EUR/CHF would eventually head back to prior SNB imposed floor at 1.2000. For now, this will be the favored case as long as 1.1087 resistance turned support holds.

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 – 0.9650

Despite last week’s initial rise to 0.9766, as the greenback has retreated again after faltering below recent high at 0.9773, suggesting the rise from 0.9438 low is not ready to resume yet and further consolidation would be seen, hence weakness to 0.9583 support cannot be ruled out, however, if our view that low has been formed at 0.9438 is correct, downside should be limited to 0.9540-50 and bring another rebound later. Above 0.9700 would bring another test of 0.9773 but only break there would revive bullishness and extend the rise form 0.9438 low to resistance at 0.9808. Looking ahead, a break above this level is needed to retain bullishness and encourage for subsequent rise to 0.9845-50 (61.8% Fibonacci retracement of 1.0100-0.9438).

On the downside, whilst initial pullback to 0.9583 cannot be ruled out, reckon downside would be limited to 0.9540-50 and bring another rebound later. Only a daily close below support at 0.9490 would abort and signal the rebound from 0.9438 has ended instead, risk retest of this level, once this support is penetrated, this would indicate recent decline from 1.0344 (2016 high) has resumed and extend weakness to 0.9390-00, then towards 0.9330-40.

Recommendation: Long entered at 0.9600 stopped profit at 0.9640 and would stand aside for this week.

On the weekly chart, dollar’s retreat after faltering below resistance at 0.9773 formed a candlestick with a long upper shadow, suggesting further consolidation below 0.9773 would be seen and although weakness to 0.9583 and possibly 0.9540-50 cannot be ruled out, as long as said support at 0.9438 holds, prospect of another rebound remains, above 0.9773 resistance would add credence to our view that a temporary low is possibly formed at 0.9438 last month, bring retracement of recent selloff to 0.9805-08 (current level of the Kijun-Sen and previous resistance), above there would provide confirmation, bring subsequent gain to 0.9845-50 (61.8% Fibonacci retracement of 1.0100-0.9438) and possibly test of the lower Kumo (now at 0.9894) but price should falter below psychological resistance at 1.0000, bring another decline later.

On the downside, expect pullback to be limited to 0.9583 and 0.9540-50 should attract buying interest, bring another rise later. Only a drop below support at 0.9490 would abort and suggest the rebound from 0.9438 has ended, bring retest of this level later. Once this recent low is penetrated, this would signal the decline from 1.0344 (2016 high) is still in progress and may extend weakness to 0.9350, then towards 0.9290-00, however, loss of near term downward momentum should prevent sharp fall below 0.9250 and reckon 0.9200-10 would hold from here, risk from there has increased for a rebound later.

Price drops right now after the retest of the fourth warning line (wl4) of the former ascending pitchfork. Technically is expected to drop on the short term, at least till will hit the 38.2% retracement level. NZD/USD is developing a Head and Shoulders pattern on the Daily chart, will be confirmed after a valid breakdown below the Neckline (red line).

Price increased a little and is trying to retest the median line (ml) of the minor descending pitchfork. The next downside target remains at the first warning line (WL1) of the major ascending pitchfork. Only a failure to retest this level will signal a rebound towards the 150% Fibonacci line (ascending dotted line). However, a breakdown will confirm a major drop, but is premature to say what will happen because Nikkei has opened with a gap up in the morning and is fighting hard to recover after the yesterday’s massive drop.

The EUR/USD has decreased a little in the morning as the USDX has managed to rebound. The currency pair maintains a bullish perspective on the daily chart, but we may have a minor consolidation before will resume the upside movement. Needs to recapture more directional energy to be able to climb above the 1.1909 previous high.

USD has dragged the pair lower, but this could be only temporary as the dollar index is expected to drop deeper on the short term. The USDX stays above the 93.00 psychological level above the 92.94 previous low, a drop towards the 92.55 swing low is possible if will close below these levels.

The German ZEW Economic Sentiment will be released later and is forecasted to decrease from 17.5 to 14.8 points, while the Euro-zone ZEW Economic Sentiment could decrease from 35.6 to 34.2 points. On the other hand, is to release the HPI and the Richmond Manufacturing Index in the afternoon.

Price decreased a little, but is somehow expected to resume the upside movement. Has found strong support at the 1.1712 downside obstacle and now could move in range before will start another significant move. Only a failure to close above the 1.1909 will signal an exhaustion and a potential reversal on the short term. However, a retest of the median line (ml) will signal a further increase in the upcoming period, the next major upside target will be at the 1.2037 level.

USD/CHF - 0.9649

Most recent candlesticks pattern : N/A

Trend                                    : Sideways

Tenkan-Sen level                  : 0.9638

Kijun-Sen level                    : 0.9643

Ichimoku cloud top                 : 0.9643

Ichimoku cloud bottom              : 0.9641

New strategy  :

Stand aside

Position : -

Target :  -

Stop : -

As the greenback has rebounded again after finding support at 0.9600, retaining our view that further consolidation above support at 0.9583 would take place, however, still reckon resistance at 0.9686 would limit upside and bring another decline, below 0.9600 would bring test of said support at 0.9583 but break there is needed to retain bearishness and signal another leg of decline from 0.9773 is underway for further weakness to 0.9550, then 0.9515-20 which is likely to hold from here.

In view of this, would not chase this fall here and would be prudent to stand aside for now. Above said resistance at 0.9686 would bring test of 0.9699 but only break there would signal the fall from 0.9766 has ended and bring a stronger rebound to 0.9725-30 first.

The Euro edged lower in Asia on Tuesday after previous day's rally and close above 1.1800 barrier. The single currency came under pressure on comments from president Trump who said that US would stay on course on military support to Afghanistan that inflated US dollar. With negative impact on dollar over geopolitical tensions in the Korean peninsula fading, focus turns towards Trump's plans for tax cut. Traders hope that president Trump could recover from political setback in the recent weeks and set the stage for tax cut plan after US Congress starts after summer break. Jackson Hole symposium is also in focus as the key event this week, with markets awaiting comments from two top central bankers, Fed chief Janet Yellen and ECB's President Mario Draghi, for stronger signals about policies of central banks. Technical studies for the EURUSD pair remain bullish, with Monday's break and close above bear trendline from 1.1910 peak, seen as bullish signal. Broken bear-trendline marks good support at 1.1776, followed by broken daily Tenkan-sen at 1.1754, above which extended downticks should find support to keep near-term bulls in play. Also, the pair is establishing above weekly 200SMA (1.1758) after showing hesitation to break it clearly in past three weeks. Weekly close above 200SMA will be an additional bullish signal. Release of German and EU ZEW economic sentiment data is the key release for Euro. Both indicators are forecasted lower in August (German 15.0 vs 17.5 and EU 34.2 vs 35.6) which would risk further Euro's easing on release at / below forecasts.

Res: 1.1815, 1.1828, 1.1846, 1.1889
Sup: 1.1776, 1.1754, 1.1731, 1.1708

U.S. equity markets kicked off the week on a positive note, ending a two-day fall which sent the S&P 500 to its lowest levels since 11 July - total declines of 2.6% from the 2,490.9 peak were recorded on 8 August. The low trading volumes on Wall Street indicate that investors are still uncertain as to where to head next, and many have been hedging their portfolios by adding gold. According to the latest data from the Commodity Futures Trading Commission, net-long positions rose to their highest levels since October 2016, and gold ETFs have seen some decent inflows so far this month. However, the precious metal continues to be challenged by the $1,300 resistance level, where it has failed on two occasions this year to break through. If gold gathers momentum and manages to close the week above $1,300, I believe we'll be seeing another leg higher, with a potential to test 2016 highs around $1,375.

It seems the political turmoil in Washington will keep investors on edge for now. The clashes with North Korea, divisions within the Congress, debt ceiling negotiations and the ability to implement longawaited tax and stimulus measures, will all play a significant role in where markets go next. However, it's evident that investors will remain on the defensive for some time.

This week's key event continues to be the Jackson Hole Economic Policy Symposium. Euro traders managed to push the single currency above 1.18 yesterday, on expectations that the ECB's President might announce a shift in policy. On this date five years ago, Mario Draghi delivered his famous "whatever it takes" speech. During the following ECB meeting, a new plan for buying bonds from Eurozone countries was announced, and since then, the monetary policy has been slackening. This time, investors are expecting Mr. Draghi to take the opposite direction and announce the beginning of policy normalization. While the Euro has already priced in much of the policy shift, an official announcement will provide further support. However, I expect Mario Draghi to choose his words very carefully, and he probably won't provide a clear roadmap on what's coming next. Even when the ECB starts normalizing policy, it will be very slow and not a significant shift. This is why I expect a slight pullback in the Euro from current levels, but given the recent strength in Eurozone data, I would still prefer to buy the dips than sell the rallies.

USDCAD is showing little sign of ending the current bearish run that began on August 15, with the pair hitting a 2-week low of 1.2546 earlier today. This low is just below the 61.8% Fibonacci retracement level of the July-August uptrend from 1.2413 to 1.2777.

Technical indicators remain in bearish area with the MACD deep below zero and still declining. However, the stochastics are in oversold territory and the %D line is attempting to cross above the %K line, suggesting a possible easing of the downside momentum.

Should we see an upside push, resistance will likely come from the 50% Fibonacci retracement level of 1.2595, followed by the 38.2% Fibonacci level at 1.2638. Further up, the 200- and 50-period moving averages (currently at 1.2655 and 1.2668, respectively) could stand in the way of prices reaching the 23.6% Fibonacci level at 1.2690.

If the pair fails to hold above the 61.8% Fibonacci support level of 1.2552, further losses would lead the way towards the 78.6% Fibonacci level of 1.2491. A break below this mark would clear the way to July’s 2-year trough of 1.2413. A breach of this low would signal a resumption of the longer-run downtrend that began in May and reinforce the bearish outlook in the medium term.