Sample Category Title

EUR/GBP - 0.9051

 
Recent wave: Major double three (A)-(B)-(C)-(X)-(A)-(B)-(C) is unfolding and 2nd (A) has possibly ended at 0.6936.

Trend: Near term up

New strategy  :

Sell at 0.9080, Target: 0.8980, Stop: 0.9120

Position : -

Target :  -

Stop : -

 
Although the single currency has risen again after brief retreat to 0.8995 and near term upside risk remains for recent upmove to extend gain to 0.9080, loss of near term upward momentum should prevent sharp move beyond 0.9100 and bring retreat later, below said support at 0.8995 would suggest top is possibly formed, bring test of 0.8965-70 but below 0.8945-50 is needed to add credence to this view, bring retracement of recent upmove towards support at 0.8922.

In view of this, would not chase this rise here and we are inclined to sell euro on next upmove. Above 0.9110-20 would risk gain to 0.9145-50, however, still reckon sharp move beyond there should not be repeated and upside should be limited to 0.9175-80, price should falter below 0.9100, bring correction later.

Our preferred count is that, after forming a major top at 0.9805 (wave V), (A)-(B)-(C) correction is unfolding with (A) leg ended at 0.8400 (A: 0.8637, B: 0.9491 and 5-waver C ended at 0.8400. Wave (B) has ended at 0.9413 and impulsive wave (C) has either ended at 0.8067 or may extend one more fall to 0.8000 before prospect of another rally. Current breach of indicated resistance at 0.9043 confirms our view that the (C) leg has ended and bring stronger rebound towards 0.9150/54, then towards 0.9240/50.

Daily Pivots: (S1) 0.9677; (P) 0.9720; (R1) 0.9771; More...

USD/CHF's rebound from 0.9437 is still in progress and intraday bias remains on the upside for 38.2% retracement of 1.0342 to 0.9437 at 0.9783 first. As noted before, prior break of 0.9699 resistance suggests near term reversal after defending 0.9443 key support. Break of 0.9783 will target channel resistance (now at 0.9887). On the downside, break of 0.9630 is needed to indicate completion of the rebound. Otherwise, outlook will stay cautiously bullish in case of retreat.

In the bigger picture, current development argues that USD/CHF has successfully defended 0.9443 key support level. And long term range trading in 0.9443/1.0342 is extending with another rise. At this point, there is no sign of an up trend yet. Hence, while further rise is expected in USD/CHF, we'll start to be cautious on loss of momentum above 61.8% retracement of 1.0342 to 0.9437 at 0.9996.

Daily Pivots: (S1) 1.1702; (P) 1.1796 (R1) 1.1863; More...

Intraday bias in EUR/USD remains neutral for the moment. As noted before, a short term top is formed at 1.1908 on divergence condition in 4 hour MACD. Deeper correction is expected as long as 1.1908 holds. Below 1.1727 minor support will turn bias to the downside for 38.2% retracement of 1.1119 to 1.1908 at 1.1606. We'd expect strong support there to bring rebound.

In the bigger picture, an important bottom was formed at 1.0339 on bullish convergence condition in weekly MACD. Sustained break of 55 month EMA (now at 1.1760) 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.

USD/CAD - 1.2697

 
Recent wave: Only wave v of c has ended at 0.9407 and wave C of major A-B-C correction is underway with wave iii ended at 1.4690, wave v of C may bring one more marginal rise probably in 2018

Trend:  Down

 
Original strategy       :

Sell at 1.2770, Target: 1.2570, Stop: 1.2830

Position: -

Target:  -

Stop: -

 
New strategy             :

Sell at 1.2770, Target: 1.2570, Stop: 1.2830

Position: -

Target:  -

Stop:-

As the greenback has continued moving higher after staging a strong rebound from 1.2414, adding credence to our view that wave iii has possibly ended at 1.2414 last month and consolidation with upside bias is seen for wave iv correction to extend gain to1.2745-50, however, reckon upside would be limited to 1.2771 (previous resistance as well as 38.2% Fibonacci retracement of wave iii) and bring retreat later, below 1.2625-30 would bring test of 1.2540-50, break there would suggest the rebound from 1.2414 has ended instead, bring further fall to 1.2490-00 but reckon support at 1.2451 would hold on first testing. 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 possibly ended at 1.2414, hence wave iv correction is underway.

In view of this, would be prudent to stand aside for now and look to sell on further subsequent rebound as 1.2771 resistance should limit upside. Above 1.2800-10 would defer and risk a stronger correction to 1.2850, however, still reckon upside would be limited to 1.2880-85 (50% Fibonacci retracement of wave iii) and bring retreat later next week.

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.

The DAX index has started the week with losses. In the North American session, DAX is trading at 12,249.25, down 0.40% on the day. On the release front, German Industrial Orders disappointed with a decline of 1.1%, compared to the estimate of +0.2%. The Eurozone Sentix Investor Confidence slowed to 27.7, just shy of the forecast of 27.8 points.

Recent German numbers have been solid, so July's Industrial Production was a nasty surprise, posting a sharp decline of 1.1%. This marked the weakest reading this year. Still, German indicators continue to point to an expanding German economy. Retail Sales jumped 1.1%, its second-highest gain in 2017. Factory Orders gained 1.0%, while unemployment claims dropped 9 thousand – the employment indicator has declined every month in 2017, except one. Although manufacturing and services PMIs dipped in July, both are well over the 50-level, indicative of expansion. Are the strong German numbers too much of a good thing? Some analysts think so, and are cautioning that the German economy is in danger of overheating. The eurozone economy has also benefited from the robust German economy. Eurozone GDP gained 0.6% in the second quarter, up from 0.5% in the previous quarter. As well, Eurozone Retail Sales gained 0.5%, marking a 4-month high.

Last week's strong US payrolls report boosted the US dollar and raised the odds of a December rate hike, which are currently at 47%, up from 43% one week ago. With the Federal Reserve unlikely to raise rates before December, investor attention has shifted to the Fed's balance sheet, which stands at $4.2 trillion. Fed policymakers have broadly hinted at reducing purchases of bonds and securities starting in September, but San Francisco Fed President John Williams was more forthcoming about the Fed's plans, likely aimed at giving notice to the markets. In a speech on Wednesday, Williams said that the economy had "fully recovered" from the 2008 financial crisis and called on the Fed to start trimming the balance sheet "this fall". Williams added that the process would be gradual and would take four years to reduce the balance sheet to a "reasonable size". Other FOMC members have also come out in favor of the Fed starting to wind up its portfolio this fall.

Daily Pivots: (S1) 1.2983; (P) 1.3073; (R1) 1.3124; More...

GBP/USD's fall from 1.3267 continues today and intraday bias remains on the downside for 1.2932 support. Price actions from 1.1946 are viewed as a corrective pattern, no change is this view. Such correction could have completed at 1.3267 already. Break of 1.2932 will affirm this bearish case and target 1.2588 key near term support for confirmation. On the upside, however, above 1.3111 minor resistance will turn bias back to the upside for 1.3267 instead.

In the bigger picture, overall, price actions from 1.1946 medium term low are seen as a corrective pattern that is still in progress. While further upside is expected, 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.

Dollar is trying to regain momentum against most major currencies entering into US session, except versus Euro and Swiss Franc USD/CAD takes the earlier today by breaking last week's high. GBP/USD follows closely by taking out last week's low. Meanwhile Euro is so far trading firm against others. In particular, EUR/GBP is also resuming last week's rally and breaches 0.9050. Commodity currencies are trading generally soft today. In other markets, gold continues to hover in tight range between 1260/5. WTI crude oil's sideway consolidation extends and dips below 49 handle. Oil will take some more time to consolidate before having another attempt on 50 handle.

Eurozone Sentix dipped to 27.7

Eurozone Sentix investor confidence dropped to 27.7 in August, down from 28.3, but beat expectation of 27.6. Meanwhile, expectations gauge dropped to 16.0, down from 19.8. Sentix noted in the statement "it is become increasingly clear that the economic momentum has passed its high point." And "expectations are falling around the globe, led by the United States where they dropped for a fifth straight time". Also, "German 'model student' has also dropped sharply, with the scandal surrounding the automotive industry killing the economic mood."

UK PM May denied GBP 36b divorce bill

In UK, it's reported that it's prepared to pay GBP 36b to EU to settle the so-called "divorce bill". But Prime Minister Theresa May's spokesman James Slack denied it and told reporters "I don't recognize the figure". Brexit Secretary David Davis also said that the sum was "news to me". Meanwhile, an EU official also declined to comment on the "rumor". The financial settlement is a key issue to solve before Brexit negotiation could move on to the next stage. Little progress has been made so far and it's doubtful whether talks on post Brexit trade agreement could behind in October. The third round of talks will be held in the week of August 28.

Also released from Europe, German industrial production dropped -1.1% mom in June, versus expectation of 0.2% mom rise. Swiss Foreign currency reserves rose to CHF 714b in July. Swiss CPI dropped -0.3% mom rose 0.3% yoy in July, in line with consensus. UK Halifax house prices rose 0.4% mom in July.

New Zealand inflation expectation eased

New Zealand Dollar trades notably lower today as RBNZ's survey showed inflation expectation eased. The survey showed that respondents expect 1.77% annual inflation in 1 year and 2.09% in 2 years. That's much lower than the survey result three months ago, at 1.92% in 1 year and 2.17% in 2 years. For growth, firms expected GDP to grow 2.7% in 1 year and 2.64% in 2 years, comparing to prior 2.81% and 2.58% respectively.

The data comes just head of RBNZ meeting this week on August 9, which is a major focus of the week. RBNZ is widely expected to stand pat and keep OCR unchanged at 1.75%. The central bank will likely maintain a dovish tone and keep its own forecast that rates would be on hold until September 2019.

GBP/USD Mid-Day Outlook

Daily Pivots: (S1) 1.2983; (P) 1.3073; (R1) 1.3124; More...

GBP/USD's fall from 1.3267 continues today and intraday bias remains on the downside for 1.2932 support. Price actions from 1.1946 are viewed as a corrective pattern, no change is this view. Such correction could have completed at 1.3267 already. Break of 1.2932 will affirm this bearish case and target 1.2588 key near term support for confirmation. On the upside, however, above 1.3111 minor resistance will turn bias back to the upside for 1.3267 instead.

In the bigger picture, overall, price actions from 1.1946 medium term low are seen as a corrective pattern that is still in progress. While further upside is expected, 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.

Economic Indicators Update

USD/CHF - 0.9726

Original strategy :

Buy at 0.9685, Target: 0.9785, Stop: 0.9650

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 0.9685, Target: 0.9785, Stop: 0.9650

Position : -

Target :  -

Stop : -

Although the greenback has retreated after rising to 0.9765 on Friday and consolidation below this level would be seen, reckon downside would be limited to support at 0.9671 and bring another rise later, above said resistance at 0.9765 would signal recent upmove is still in progress, then further gain to 0.9775 (50% projection of 0.9438-0.9727 measuring from 0.9631) and later 0.9800-10 (61.8% projection) would follow but reckon 0.9830-40 would hold from here, bring another retreat later. 
 
In view of this, would not chase this rise here and would be prudent to buy dollar on pullback as 0.9680-85 should limit downside. Below 0.9671 support would defer and suggest top is possibly formed, risk test of support at 0.9631 but break there is needed to add credence to this view, bring retracement of recent rise to 0.9596 (previous resistance turned support). 

GBP/USD - 1.3020

Original strategy :

Sell at 1.3110, Target: 1.3010, Stop: 1.3145

Position : -

Target :  -

Stop : -

New strategy  :

Sell at 1.3110, Target: 1.3010, Stop: 1.3145

Position : -

Target :  -

Stop : -

As cable has remained under pressure after last week’s selloff from 1.3269 top, adding credence to our bearish view for this fall to bring retracement of recent upmove, hence bearishness remains for further decline to 1.3005-10 (100% projection of 1.3269-1.3112 measuring from 1.3165) but a break below support at 1.2999 is needed to retain bearishness, then subsequent fall to 1.2986 (61.8% Fibonacci retracement of 1.2812-1.3269) and possibly 1.2955-60 would follow.

In view of this, we are looking to sell cable on recovery as previous support at 1.3112 should limit upside. Only break of 1.3165 is needed to signal low is formed instead, bring a stronger rebound to 1.3200 but upside should be limited to 1.3240-50 and price should falter below said resistance at 1.3269.

EUR/USD - 1.1788

Original strategy  :

Sell at 1.1830, Target: 1.1730, Stop: 1.1865

Position : -

Target :  -

Stop : -

New strategy  :

Sell at 1.1830, Target: 1.1730, Stop: 1.1865

Position : -

Target :  -

Stop : -

As the single currency found support at 1.1728 after dropping sharply on Friday, suggesting consolidation above this level would be seen and recovery to the Kijun-Sen (now t 1.1809) cannot be ruled out, however, reckon previous support at 1.1830 would limit upside and bring another decline later, below 1.1750 would bring test of 1.1723-28 (previous support as well as 61.8% Fibonacci retracement of 1.1613-1.1910), break there would add credence to our view that top has been formed at 1.1910 last week, bring further fall to 1.1700 but reckon support at 1.1650 would hold. 

In view of this, we are looking to sell euro again on recovery as 1.1830 previous support should limit upside. Above the lower Kumo (now at 1.1854) would defer and risk a stronger rebound to 1.1870 but price should falter below said last week’s high at 1.1910, bring another decline later.