Sample Category Title

USD/CHF - 0.9615

Most recent candlesticks pattern : N/A

Trend                                    : Near term up

Tenkan-Sen level                  : 0.9622

Kijun-Sen level                    : 0.9652

Ichimoku cloud top                 : 0.9702

Ichimoku cloud bottom              : 0.9676

New strategy  :

Stand aside

Position : -

Target :  -

Stop : -

As the greenback has remained under pressure after yesterday’s selloff from 0.9699, suggesting near term downside risk remains for the fall from 0.9766 to extend weakness towards previous support at 0.9583, however, break there is needed to retain bearishness and signal another leg of decline from 0.9773 is underway and extend subsequent fall to 0.9550 which is likely to hold on first testing.

In view of this, would not chase this fall and stand aside for now. Above 0.9660-65 would bring another bounce to 0.9699 resistance but break there is needed to signal the fall from 0.9766 has ended, bring a stronger rebound to 0.9720-30, however, as broad outlook remains consolidative, said resistance at 0.9766 should hold. 

GBP/USD - 1.2895

Most recent candlesticks pattern   : N/A

Trend                                 : Near term down

Tenkan-Sen level                 : 1.2881

Kijun-Sen level                    : 1.2880

Ichimoku cloud top              : 1.2906

Ichimoku cloud bottom        : 1.2886

Original strategy :

Sell at 1.2920, Target: 1.2820, Stop: 1.2955

Position : -

Target :  -

Stop : -

New strategy  :

Sell at 1.2920, Target: 1.2820, Stop: 1.2955

Position : -

Target :  -

Stop : -

As cable has recovered after falling to 1.2842 earlier this week, suggesting consolidation above this level would be seen and corrective bounce to 1.2920 cannot be ruled out, however, reckon  previous support at 1.2933-40 would turn into resistance and limit upside, bring another decline later, below said support at 1.2842 would extend recent selloff to 1.2825-30 (61.8% projection of 1.3269-1.2940 measuring from 1.3032), having said that, oversold condition should limit downside to 1.2800 and reckon 1.2770 would hold from here, bring rebound later.

In view of this, would not chase this fall here and would be prudent to sell sterling on recovery as said previous support at 1.2933 should cap cable’s upside, bring another decline. Above 1.2950 would defer and risk a stronger rebound to 1.2990-00 before another decline.

EUR/USD - 1.1745

Most recent candlesticks pattern   : N/A

Trend                      : Sideways

Tenkan-Sen level              : 1.1729

Kijun-Sen level                  : 1.1721

Ichimoku cloud top             : 1.1757

Ichimoku cloud bottom      : 1.1736

Original strategy  :

Bought at 1.1715, Target: 1.1815, Stop: 1.1680

Position : - Long at 1.1715

Target :  - 1.1815

Stop : - 1.1680

New strategy  :

Hold long entered at 1.1715, Target: 1.1815, Stop: 1.1680

Position : - Long at 1.1715

Target :  - 1.1815

Stop : - 1.1680

Although the single currency fell briefly to 1.1662 yesterday, the subsequent rebound suggests a temporary low is possibly formed there and consolidation with mild upside bias remains for another test of indicated resistance at 1.1790, however, break there is needed to add credence to this view, bring further gain to 1.1820 but resistance at 1.1847 should hold from here.

In view of this, we are holding on to our long position entered at 1.1715. Below 1.1680-85 would risk retest of 1.1662, break there would extend the erratic decline from 1.1910 top to 1.1640-50 (50% Fibonacci retracement of 1.1370-1.1910 and previous support) but reckon 1.1600 would hold from here.

USD/JPY - 109.17

Most recent candlesticks pattern   : N/A

Trend                      : Near term up

Tenkan-Sen level              : 109.35

Kijun-Sen level                  : 109.76

Ichimoku cloud top             : 110.31

Ichimoku cloud bottom      : 110.13

New strategy  :

Stand aside

Position :  -

Target :  -

Stop : -

Although the greenback has fallen again after meeting renewed selling interest at 110.37 and near term downside risk remains for weakness towards previous support at 108.73, as broad outlook remains consolidative, reckon downside would be limited and bring rebound later due to near term oversold condition. A firm break below said support at 108.73 would signal recent decline has finally resumed and extend weakness to 108.50 first.

In view of this, would not chase this fall here and would be prudent to stand aside for now. Above 109.50-55 would bring recovery to the Kijun-Sen (now at 109.76) but upside should be limited to the lower Kumo (now at 110.13) and said resistance at 110.37 should hold from here, bring another decline.

Dollar Slips Vs Yen As Risk Sentiment Wobbles. Risk-aversion sentiment pushed gold and the Japanese yen to their highest level since 11 August. The dollar inched lower versus the yen on Friday, hampered by renewed investor concerns over the Trump administration’s ability to push forward its economic policy agenda. The dollar fell 0.2 percent to 109.41 yen, adding to its 0.6 percent drop on Thursday.

Canadian Dollar Off Two-Week High. The Canadian dollar weakened against its U.S. counterpart on Thursday, as White House drama and an attack in Barcelona reduced investor appetite for the loonie after it hit a nearly two-week high earlier in the day. “People are rushing into the U.S. dollar out of Canada, but they are also rushing out of the U.S. dollar into the euro, gold, Swiss and yen,” said Eric Theoret, a currency strategist at Scotiabank.

Euro Steady But Down 0.8 Percent For The Week. The euro had tumbled to a three-week low of $1.1662 on Thursday, after the minutes of the European Central Bank’s July 20 policy meeting showed policymakers were worried that the repricing of the currency could overshoot. Even with its losses this week, the euro is still up more than 11 percent so far this year.

Short term Dow Futures (YM_F) Elliott wave view suggest that the rally to 8/08 peak 22177 ended the “Cycle” from Feb 11, 2016 low. The decline from there is unfolding as an impulse suggesting the index could be following a Elliott Wave Zigzag pattern in larger degree correction. From there Intermediate wave (1) ended at 21789 in 5 waves at 21789 low and bounce from there ended in 3 swings at 22070 peak as another zigzag pattern within intermediate wave (2).

The decline from there is unfolding as an impulse Elliott wave structure within intermediate wave (3). Below from 21789 peak, Minor wave 1 ended at 21993, Minor wave 2 ended at 22034 peak. Below from there Minute wave ((i)) ended at 21885, Minute wave ((ii)) ended at 21950, Minute wave ((iii)) ended at 21705 low and above from there doing a Minute wave ((iv)) bounce. Which is expected to unfold in 3 swings and shouldn’t pass the 0.382% fibonacci retracement area 21798 of Minute wave ((iii)) for the idea to remain alive for further downside in Minute wave ((v)) of 3 lower initially. We don’t like selling the pullback and expect further downside extension as far as pivot from 22070 peak & more importantly from 22177 peak remains intact to continue correction lower.

Dow Futures 1 Hour Elliott Wave Chart

According to Elliott wave theory, the zigzag is a 3-wave structure that has an internal subdivision of (5-3-5) oscillation sequence. The internal oscillations are labeled A, B, C where A = 5 waves, B = 3 waves and C = 5 waves. This means that A and C can be impulsive or diagonal waves. The A and C waves must meet all the conditions of wave structure 5, such as: having an RSI divergence between wave subdivisions, ideal Fibonacci extensions, ideal retracts, etc. In the graph below, we can see how the Zig Zag structure of Elliott Wave looks. 5 waves down in A, 3 waves in B and 5 waves down in C

Market movers today

Today is set to be a relatively quiet day in terms of data releases.

Focus is on the US, where University of Michigan Consumer Confidence for August is due for release. In the wake of increasing tension and harder rhetoric between the US and North Korea recently, we expect the consumer confidence figure to be lower than the previous month's. Furthermore, Fed's Kaplan (voter, dovish) also speaks today.

The Canadian CPI figures for July will also be of interest , in light of the recent hawkish turn of the Bank of Canada and markets will focus on whet her the BoC's projected rebound in inflation will actually materialise, despite falling inflation expectations.

Selected market news

ECB minutes yesterday revealed that the Governing Council expressed concern over risk of euro overshooting. The effective euro has strengthened further since the ECB meeting in July. On the back of the ECB minutes EUR/USD slid and the EUR fixed income market rallied slightly.

Yesterday, euro area headline and core inflation in July were confirmed at 1.3% y/y and 1.2% y/y, respectively. Service price inflation (~60% of core inflation) was revised slightly higher to 1.6% y/y and therefore it was unchanged from June. Non-energy industrial goods price inflation (~40% of core inflation) was lifted by durables goods price inflation. Looking ahead, we expect the stronger euro to drag down this part of service price inflation.

US President Trump abandoned plans to create an infrastructure advisory council yesterday. Last month Trump signed an executive order to establish the advisory council with members drawn from realestate, construction, transportation and other sectors of the economy (see Reuters, 17, August ).

US initial jobless claims released yesterday fell to 232k in July (from 244k), which is the lowest level since February. This adds to signs showing some re-acceleration into H2 18. The Philly Fed business condition index fell slightly to 19.5 from 18.9, which was still higher than consensus at 18.0.

Currency pair USD/JPY

The USD/JPY is following the path of least resistance mentioned in the wave analysis earlier this week: a turn at the 38.2% Fibonacci resistance level at wave A (orange) followed by an ABC deep correction within wave B (orange). A bullish bounce could complete wave B and start wave C, but this ABC zigzag is invalidated if price manages to break below the 100% Fib at 108.73.

The USD/JPY indeed completed an ABC (purple) as expected within wave B (orange).

Currency pair EUR/USD

The EUR/USD made one more lower low at 1.0660 yesterday, which invalidated the immediate bullish reversal. However, price is still above the long-term trend line (blue), local support (green), and long-term moving average, which favours a wave 4 (green) correction. A bullish break above resistance (red) would confirm the end of wave 4 and start of wave 5.

The EUR/USD seems to have made a wave 4 (brown) extension with wave ABC (orange). Price be again attempting to build a wave 1-2 (purple) as long as price stays above the 100% Fib level. A break above resistance (red) line could see wave 3 start.

Currency pair USD/JPY

The GBP/USD is building a bear flag pattern and testing the resistance trend line (red). A bullish break should start a wave 2 (red) correction whereas a bearish break could still indicate the continuation of wave 5 of wave 1 (red).

GBP/USD could be building bear flag chart pattern (orange/blue) within a wave 4 (grey). This scenario is invalidated if price manages to break above the top of the bear flag (orange line) and 50% Fib of wave 4 vs 3.

Daily Pivots: (S1) 1.1659; (P) 1.1725 (R1) 1.1788; More...

EUR/USD's corrective fall from 1.1908 is still in progress and outlook is unchanged. While deeper pull back could be seen, downside should be contained by 38.2% retracement of 1.1119 to 1.1908 at 1.1606 to bring rebound. On the upside, break of 1.1908 will extend recent up trend to 1.2042 long term support turned resistance next.

In the bigger picture, an important bottom was formed at 1.0339 on bullish convergence condition in weekly MACD. Sustained trading above 55 month EMA (now at 1.1768) will pave the way to key fibonacci level at 38.2% retracement of 1.6039 (2008 high) to 1.0339 (2017 low) at 1.2516. While rise from 1.0339 is strong, there is no confirmation that it's developing into a long term up trend yet. Hence, we'll be cautious on strong resistance from 1.2516 to limit upside. But for now, medium term outlook will remain bullish as long as 1.1295 support holds, in case of pull back.

A note on lower timeframe confirming price action...

Waiting for lower timeframe confirmation is our main tool to confirm strength within higher timeframe zones, and has really been the key to our trading success. It takes a little time to understand the subtle nuances, however, as each trade is never the same, but once you master the rhythm so to speak, you will be saved from countless unnecessary losing trades. The following is a list of what we look for:

• A break/retest of supply or demand dependent on which way you're trading.
• A trendline break/retest.
• Buying/selling tails ... essentially we look for a cluster of very obvious spikes off of lower timeframe support and resistance levels within the higher timeframe zone.
• Candlestick patterns. We tend to only stick with pin bars and engulfing bars as these have proven to be the most effective.

We typically search for lower-timeframe confirmation between the M15 and H1 timeframes, since most of our higher-timeframe areas begin with the H4. Stops are usually placed 1-3 pips beyond confirming structures.

EUR/USD

Leaving the 1.18 psychological band unchallenged, the single currency chomped its way through the H4 mid-level support at 1.1750 during yesterday’s London morning segment. This, as you can see, allowed the unit to aggressively whipsaw through the 1.17 handle, challenge a H4 demand at 1.1650-1.1664 and end the day retesting 1.1750 as resistance.

Building a case for entry in this market has been (and still is) proving difficult. On the daily timeframe, the pair remains bolstered by demand coming in at 1.1650-1.1733. A little higher up on the curve, however, the weekly timeframe shows price trading from a resistance at 1.1871.

Suggestions: Unless we’re missing something obvious here, this market remains technically challenging. A long would place you in direct conflict with potential weekly sellers, and a short against possible daily buyers! Considering this, our desk will remain on the sidelines today and look to reassess structure going into Monday’s open.

Data points to consider: US Prelim UoM consumer sentiment at 9pm, followed closely by FOMC member Kaplan speaking at 3.15pm GMT+1.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: Flat (stop loss: N/A).

GBP/USD:  

Since Tuesday, the H4 candles have been consolidating between the 1.29 handle and the mid-level support at 1.2850. While we cannot rule out the possibility of fresh upside attempts within the current H4 range, the odds of price breaching 1.2850 is high, in our humble view.

Our reasoning lies within the higher-timeframe structure. The daily support area at 1.3058-1.2979 recently gave way leaving downside free to challenge the daily support area pegged at 1.2818-1.2752 (converges with a daily channel support extended from the low 1.2365). Further supporting the bears, the weekly timeframe shows space for the market to trade as far down as the demand area coming in at 1.2589-1.2759.

Suggestions: Selling sub 1.2850, however, is problematic. Located only 30 pips below this number is the top edge of the aforementioned daily support area, shadowed closely by the 1.28 handle drawn on the H4 chart. As a result,

we are looking for the market to challenge the current daily support area and its fusing channel support (green circle). It will be from this point that we’ll begin hunting for long opportunities on the H4 timeframe and lower.

Data points to consider: US Prelim UoM consumer sentiment at 9pm, followed closely by FOMC member Kaplan speaking at 3.15pm GMT+1.

Levels to watch/live orders:

• Buys: 1.2818-1.2752 is an interesting base for long opportunities.
• Sells: Flat (stop loss: N/A).

AUD/USD

Failing to sustain gains beyond the converging H4 mid-level resistance at 0.7950 and trendline resistance (taken from the high 0.8065) saw the commodity currency change course on Thursday and head into negative territory. In recent hours the 0.79 handle was consumed, leaving the pair free to challenge the H4 mid-level support at 0.7850.

Turning our attention over to the bigger picture, we can see the weekly support area at 0.7849-0.7752 remains in play. While this may be the case, it might be worth noting that the current weekly candle exhibits indecisiveness at the moment. Down on the daily timeframe, the bounce seen from demand at 0.7786-0.7838, which encases a broken Quasimodo level at 0.7819, failed to reach the daily Quasimodo resistance at 0.7988 before turning red. By and of itself, this could imply that we may see the unit retest the demand today/ early next week.

Suggestions: While the daily picture shows room for the piece to trade lower, a short at 0.79 is not something we’d be comfortable with. Given that this market is entrenched within a strong uptrend, and weekly price holding at demand, albeit without conviction, we feel remaining on the sidelines may be the better bet here.

Data points to consider: US Prelim UoM consumer sentiment at 9pm, followed closely by FOMC member Kaplan speaking at 3.15pm GMT+1.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: Flat (stop loss: N/A).

USD/JPY

Weekly bulls, as you can see, are struggling to gather momentum from demand at 108.13-108.95. A violation of this zone will lead to price almost immediately challenging a support area seen at 105.19-107.54. A closer look at price action on the daily timeframe, however, shows that the unit is currently hovering ahead of a Quasimodo support at 109.11. This level held the market higher on Friday last week, so there’s a chance we may see history repeat itself here.

Moving across to the H4 timeframe, price recently crossed below the mid-level support at 109.50. Should the bears remain dominant here, the next level on the hit list is the 109 handle. Also of particular interest on this scale is the AB=CD approach (black arrows), completing just beneath 109 at 108.87 (161.8% Fib ext. point).

Suggestions: A long from the 109 handle could be an option today, given the H4 approach (AB=CD), daily Quasimodo support and weekly demand. To be on the safe side though, we would highly recommend waiting for a H4 bull candle to form in the shape of a full, or near full-bodied candle. Although this will not guarantee a winning trade, it will show buyer intent!

Data points to consider: US Prelim UoM consumer sentiment at 9pm, followed closely by FOMC member Kaplan speaking at 3.15pm GMT+1.

Levels to watch/live orders:

• Buys: 1.09 region ([waiting for a reasonably sized H4 bullish candle to form– in the shape of either a full, or near-full-bodied candle – is advised] stop loss: ideally beyond the candle’s tail).
• Sells: Flat (stop loss: N/A).

USD/CAD

Early on in yesterday’s London segment, H4 price challenged the 1.26 handle and gravitated north. The mid-level resistance at 1.2650 was engulfed going into the US session, opening up the backdoor to 1.27. As you can see though, price has so far been unable to challenge this psychological band.

The bullish momentum seen from the weekly support area at 1.2433-1.2569 has, over the past couple of weeks, diminished. This likely has something to do with the daily resistance area at 1.2831-1.2763 that elbowed its way into view this week.

Suggestions: With selling pressure being seen from daily structure, and weekly price holding above a support area, direction is somewhat restricted at the moment.

We do, however, like the H4 Quasimodo resistance level at 1.2752, which aligns nicely with the H4 mid-level resistance at 1.2750 and the lower edge of the said daily resistance area. Nevertheless, shorting here would place you against potential weekly buying!

Data points to consider: Canadian inflation figures at 1.30pm GMT+1.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: 1.2750 region ([waiting for a reasonably sized bearish candle to form– in the shape of either a full, or near-full-bodied candle – is advised] stop loss: ideally beyond the candle’s wick).

USD/CHF

After aggressively whipsawing through June and August’s opening levels at 0.9680/0.9672 and coming within a few pips of the 0.97 handle, the pair went on to erase daily gains during the US segment. With H4 price seen hovering just ahead of the 0.96 handle right now, what’s likely in store for this market today?

According to weekly structure, further selling could be upon us. The trendline resistance extended from the low 0.9257 remains in view, and therefore could send the unit down as far as the support area penciled in at 0.9443-0.9515. Also of particular interest is the daily timeframe. The chart shows room for the pair to trade as far down as support coming in at 0.9546, which happens to unite with a channel support etched from the low 0.9438 and a AB=CD 127.2 Fib ext. at 0.9532.

Suggestions: Despite both weekly and daily structure indicating further selling could be on the cards, the 0.96 handle and July’s opening level at 0.9580 are not levels we’d feel comfortable selling into. Usually, in cases such as this, we would simply wait for these levels to be consumed and then look to trade the retest. However, given the distance between 0.9580 and 0.9546 (the daily support) is only 34 pips, we’re unfortunately left with little room to maneuver for a short.

Data points to consider: US Prelim UoM consumer sentiment at 9pm, followed closely by FOMC member Kaplan speaking at 3.15pm GMT+1.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: Flat (stop loss: N/A).

DOW 30

The US equity market came under considerable pressure on Thursday. The H4 trendline support etched from the low 21273, alongside August’s opening level at 21913, was engulfed as a result of this. Traders may have also noticed that daily action closed below a channel support line extended from the low 20494. With that being said, however, the daily candles are now seen loitering just ahead of an AB=CD (black arrows) 127.2% Fib ext. point at 21683, and a converging 50% support line at 21680 drawn from the low 21192.

If you’re in the process of considering whether or not it’s worth taking a long from the daily AB=CD 127.2% completion point, you may want to look at the weekly timeframe. A fresh demand is seen lurking just below current price at 21462-21645. Of particular interest is the top edge of this area being positioned just above the daily support level at 21541 (converges with daily AB=CD 161.8% Fib ext. point) and a few points below the AB=CD completion 127.2% point!

Our suggestions: Personally, a long from the daily support mentioned above at 21541 seems the most logical, in our opinion. The level, as mentioned above, fuses with a daily AB=CD 161.8% ext. point and is positioned within the noted weekly demand. Further adding to this, the trend in this market is incredibly strong, and by trading long from 21541, we can place stops below the consolidation of candles seen marked with a green circle on the daily chart at 21459.

Data points to consider: US Prelim UoM consumer sentiment at 9pm, followed closely by FOMC member Kaplan speaking at 3.15pm GMT+1.

Levels to watch/live orders:

• Buys: 21541 region (stop loss: 21459).
• Sells: Flat (stop loss: N/A).

GOLD

It was a relatively sober day in the gold market yesterday, with price continuing to loiter within H4 supply coming in at 1288.8-1283.4. As a result of this, much of the following report will echo thoughts put forward in Thursday’s analysis.

From the weekly timeframe, we can see that the bears are struggling to hold ground. Of course, it’s far too early to judge just yet since the green weekly resistance area (comprised of two weekly Fibonacci extensions 161.8/127.2% at 1312.2/1284.3 taken from the low 1188.1) has managed to successfully hold the metal lower on two separate occasions in the past.

The story on the daily chart, nevertheless, shows price trading nearby a resistance level at 1295.4. Apart from the two instances on 17/04/2017 and 06/06/2017, there’s little history registered with this number! For that reason, we may see price break above this line and head to the resistance carved from 1308.4, which boasts very attractive history dating back to early 2011.

The way we see things right now is the above noted H4 supply is the last barrier stopping daily price from connecting with resistance mentioned above at 1295.4.

Our suggestions: Based on the above, our desk will not be looking for (long-term) shorts until the daily resistance line plotted at 1308.4 is in play. This is due to the history surrounding this number and its position within the current weekly resistance area (allowing us to place stops tightly above this zone). Regarding intraday opportunities, we still see very little to hang our hat on at the moment.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: 1308.4 region. This is, given the location of this daily resistance on the weekly timeframe, a fantastic level to be looking for a short from.