Sample Category Title

USD/CAD - 1.2363

Trend:  Down

 
Original strategy       :

Sell at 1.2500, Target: 1.2340, Stop: 1.2560

Position: -

Target:  -

Stop: -

 
New strategy             :

Sell at 1.2490, Target: 1.2340, Stop: 1.2550

Position: -

Target:  -

Stop:-

Although the greenback recovered after falling to 1.2340 on Friday, reckon upside would be limited to 1.2420-25 and renewed selling interest should emerge around 1.2490-00, bring another decline, below 1.2340 would extend recent decline in wave v to 1.2300-10, having said that, oversold condition should limit downside and reckon current wave v would be limited to 1.2250-60, price should stay above 1.2200-10. We are keeping our count that wave v as well as wave (C) ended at 1.3794 and impulsive wave (i ii, i ii) is now unfolding with minor wave iii ended at 1.2414, followed by wave iv correction possibly ended at 1.2778, wave v should extend towards 1.2200.

In view o this, would not chase this fall here and would be prudent to sell on recovery as 1.2490-00 should limit upside. Above 1.2550 would suggest a temporary low is formed instead, bring a stronger rebound to 1.2575-80 but indicated resistance at 1.2663 should remain intact. 

To recap, wave B from 1.3066 is unfolding as an a-b-c and is sub-divided as a: 1.2192, b: 1.2716 and wave c is a 5-waver with i: 1.1983, ii: 1.2506, extended wave iii with minor iii at 1.0206, wave iv ended at 1.0781 and wave v as well as wave iii has ended at 0.9931, hence the subsequent choppy trading is the wave iv which is unfolding as (a)-(b)-(c) with (a) leg of iv ended at 1.0854, followed by (b) leg at 1.0108 and (c) leg as well as the wave iv ended at 1.0674. The wave v is sub-divided by minor wave (i): 0.9980, (ii): 1.0374, (iii): 0.9446, (iv): 0.9913 and (v) as well as v has possibly ended at 0.9407, therefore, consolidation with upside bias is seen for major correction, indicated target at 1.3700 and 1.4000 had been met and further gain to 1.4700 would be seen later.

After defying all the Brexit doom-mongers in the initial aftermath of the shock referendum result, the British economy appears to be succumbing to the uncertainty, with GDP in the first half of the year growing at its slowest in five years. Talks between Britain and the European Union have not gotten to a very good start, with little progress made on key issues after three rounds of negotiations.

The uncertain future of the UK's relationship with its European partners is weighing not just on business spending plans but is also hitting companies' ability to find available and skilled workers. Many EU citizens residing in the UK are leaving the country, while others are becoming less reluctant to move there. However, wages have yet to see significant upside pressure from the staff shortages. Combined with the surge in import prices as a result of the pound's tumble after the Brexit vote, UK consumers are feeling the pinch as living costs rise faster than household income.

The fall in people's disposable income is a serious risk to Britain's consumer led economy, where consumption accounts for about two thirds of GDP. There was further evidence of this today from the Markit/CIPS services PMI. The index fell from 53.8 to 53.2 in August, missing expectations of 53.5. This was the weakest reading since September 2016. Respondents to the survey said fragile business confidence and the uncertain outlook for the economy impacted on business decision making, while rising input costs added pressure on firms to raise prices. However, despite the deteriorating outlook, many firms reported a rising backlog of work and sought to raise capacity by hiring more people, pushing the employment index to a 19-month high.

In the manufacturing sector, the tide may finally be turning for UK exporters. Markit/CIP's latest manufacturing survey showed the PMI rising to a four-month high of 56.9 in August from an upwardly revised 55.3 in July, beating forecasts 55.0. Output was driven by stronger domestic as well as overseas demand and employment grew at its fastest since June 2014.

In a further sign that the weaker pound is finally boosting exports, the manufacturers' trade association, EEF, reported strong increases in output and orders in its latest quarterly survey today. The output balance rose to +34% in the third quarter from +26% in the prior quarter. The balance for export orders jumped to +33% and total orders hit a historic high of +37%.

Reaction to the above data has been limited in forex markets, with Brexit concerns and moves in other currencies being a bigger driver for sterling in recent days. The pound has been ranging in the $1.28-$1.30 region for the past week, while against the euro, it remains close to last week's 10½-month low of 0.9306 per euro.

It remains to be seen if the rebound in manufacturing activity will be sustainable and whether this will be enough to offset the slowdown in consumer spending. Progress in the Brexit negotiations will be crucial in assuring businesses that the UK is not headed for a cliff-edge exit when its withdrawal from the EU takes effect in March 2019. Prolonged uncertainty can only be negative for the pound and would further weigh on the economy's longer-term prospects.

Price is trading in the green and looks determined to approach and reach fresh new highs in the upcoming period. Technically, is expected to climb much higher as it's located in the buyer's territory. The dollar is losing altitude as the USDX is still under massive selling pressure. USDX needs a bullish spark to be able to climb much higher in the upcoming period.

The index hovers right above the 92.49 static support, a rejection will signal a USD potential increase, but is premature to talk about this as the fundamental factors will have a significant impact in the afternoon.

The Cable increases even if the United Kingdom Services PMI dropped from 53.8 points to 53.2 points in August, has come much worse compared to the 53.5 estimate. The BRC Retail Sales Monitor increased by 1.3%, more versus the 0.9% estimate.

Price increased and erased the yesterday's losses and should reach and retest the 1.3046 static resistance. GBP/USD is expected to resume the upside movement after the failure to close the former gap down.

Technically should approach and reach at least the 1.3266 previous high. Resistance can be found at the first warning line (wl1) of the ascending pitchfork's body, where he may find temporary resistance again.

The false breakdown below the upper median line (UML) have attracted more buyers, which are trying to drive it towards fresh new highs.

Price changed little today, but maybe the United States Factory Orders will bring life on this pair. The economic indicator is expected to drop by 3.3%, a better report will lift the greenback. Technically is somehow expected to climb much higher after the false breakdown below the median line (ml) of the minor descending pitchfork. Could come higher to retest the upper median line (UML) before will make a crucial decision.

Price rallies and resumes the yesterday's bullish candle. You can see that the price action has developed a Falling Wedge pattern, but this is far from being confirmed. NZD/USD climbed above the 50% retracement level and is almost to touch the upside line of the Falling Wedge pattern.

Only a breakout followed by a minor consolidation above the 50% Fibonacci level will validate it and a bullish momentum.

Daily Pivots: (S1) 1.1868; (P) 1.1895 (R1) 1.1918; More...

EUR/USD is staying in consolidation from 1.2069 and intraday bias remains neutral. Below 1.1822 will bring deeper fall. But after all, there is no clear sign of trend reversal yet. Outlook will remain bullish as long as 1.1661 holds. Break of 1.2069 will extend larger rise from 1.0339 to next key fibonacci level at 1.2516. Nonetheless, break of 1.1661 will bring much lengthier consolidation first.

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 1.1774) 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. For now, medium term outlook will remain bullish as long as 1.1295 support holds, in case of pull back.

Daily Pivots: (S1) 1.2904; (P) 1.2934; (R1) 1.2957; More...

GBP/USD is supported by 4 hour 55 EMA and recovered. But it's staying well below 1.3030 resistance. Intraday bias remains neutral with bearish outlook. We're favoring the case that correction from 1.1946 is completed at 1.3267. Below 1.2852 minor support will turn intraday bias back to the downside for 1.2588 key near term support first. Decisive break of 1.2588 will confirm our view and target a test on 1.1946 low. Though, break of 1.3030 will dampen this bearish view and turn bias back to the upside for retesting 1.3267.

In the bigger picture, overall, price actions from 1.1946 medium term low are seen as a corrective pattern. While further rise cannot be ruled out, larger outlook remains bearish as long as 1.3444 key resistance holds. Down trend from 1.7190 (2014 high) is expected to resume later after the correction completes. And break of 1.2588 will indicate that such down trend is resuming.

Daily Pivots: (S1) 0.9544; (P) 0.9581; (R1) 0.9610; More....

Intraday bias in USD/CHF remains neutral for the moment. On the downside, below 0.9537 minor support will turn bias back to the downside for retesting 0.9427 first. Break of 0.9427 will resume whole decline from 1.3042. Meanwhile, considering it's close to to 0.9443 key support, consolidation from 0.9427 might extend further. But still, break of 0.9772 resistance is needed to confirm near term reversal. Otherwise, outlook stays bearish for another decline.

In the bigger picture, current development suggests that 0.9443 key support (2016 low) could be taken out firmly as down trend form 1.0342 extends. There are various interpretation of the price actions. But in any case, medium term outlook will stay bearish as long as 0.9772 resistance holds. Current down trend could extend to 38.2% retracement of 0.7065 (2011 low) to 1.0342 (2016 high) at 0.9090. However, break of 0.9772 will indicate that USD/CHF has successfully defended 0.9443 again and turn outlook bullish for 1.0099 resistance.

Daily Pivots: (S1) 0.7932; (P) 0.7952; (R1) 0.7963; More...

AUD/USD jumps notably in early US session but it's staying well below 0.8065 resistance. Intraday bias remains neutral for the moment as consolidation from 0.8065 might extend. But in case of another fall, downside should be contained by 0.7785 cluster support (38.2% retracement of 0.7328 to 0.8065 at 0.7783) to bring rebound. On the upside, break of 0.8065 will resume the medium term rise and target 100% projection of 0.6826 to 0.7833 from 0.7328 at 0.8335.

In the bigger picture, rise from 0.6826 medium term bottom is still in progress. At this point, there is no confirmation of trend reversal yet and we'll continue to treat such rebound as a corrective pattern. But in any case, break of 55 month EMA (now at 0.8087) will target 38.2% retracement of 1.1079 to 0.6826 at 0.8451. Break of 0.7328 support is needed to confirm completion of the rebound. Otherwise, further rise is now in favor.

Daily Pivots: (S1) 109.41; (P) 109.66; (R1) 109.95; More...

Intraday bias in USD/JPY stays on the downside for 108.12/26 support zone. Decisive break there will resume the whole corrective decline from 118.65. In that case, USD/JPY will target 61.8% retracement of 98.97 to 118.65 at 106.48. In any case, outlook will remain cautiously bearish as long as 110.94 resistance holds. Nonetheless, considering bullish convergence condition in 4 hour MACD, break of 110.94 will indicate near term reversal and bring stronger rebound back towards 114.49 resistance.

In the bigger picture, the corrective structure of the fall from 118.65 suggests that rise from 98.97 is not completed yet. Break of 118.65 will target a test on 125.85 high. At this point, it's uncertain whether rise from 98.97 is resuming the long term up trend from 75.56, or it's a leg in the consolidation from 125.85. Hence, we'll be cautious on topping as it approaches 125.85. If fall from 118.65 extends lower, downside should be contained by 61.8% retracement of 98.97 to 118.65 at 106.48 and bring rebound.