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The Euro broke above 1.1800 barrier on Monday's rally and extended larger bull-trend to fresh high at 1.1845, the highest since Jan 2015. The single currency ended month in firm bullish mode, marking the fifth consecutive bullish month and the biggest monthly gains since Mar 2016 and confirming strong bullish stance.

The price action on Tuesday is consolidating within narrow range, holding above 1.1800 handle, now reverted to support and reinforced by broken bull-trendline (former bull-channel upper boundary) and broken 200SMA, which marks solid support.

The wave C, on which the price is currently riding (commenced from 1.1312 trough), met its FE161.8% target at 1.1845 and could extend towards FE 200% at 1.1975 and psychological 1.2000 barrier, where falling thick monthly cloud could limit rally.

Bulls so far ignore strongly overbought studies on daily/weekly charts, however, corrective action should be anticipated. Strong uptrend favors dip-buying strategy, with corrective pullbacks below 1.1800 handle to face support at 1.1693 (rising 10SMA) and expected to hold above ascending 20SMA (currently at 1.1563).

Res: 1.1845, 1.1896, 1.1950, 1.1975
Sup: 1.1800, 1.1776, 1.1723, 1.1693

EUR/USD

What started as a dull Monday, ended up with the EUR/USD pair reaching a fresh 2017 high of 1.1831, level last seen early January 2015, as mixed US data was not enough to revert the prevailing negative sentiment towards the American currency. The greenback advanced modestly before changing course, holding on to modest gains only against the CAD, undermined by a retracement in oil prices. As for the EUR/USD pair, it settled above the 1.1800 level, helped by a slightly improvement in European inflation according to July preliminary estimates released this Monday. Cope CPI is estimated to have risen by 1.2% yearly basis, beating expectations of 1.1%. Headline inflation remained steady at 1.3%. In Germany, retail sales were up 1.1% in June, above the 0.5% expected, although the annual reading came in at 1.5%, well below market's forecast of 2.7%. In the US, the Chicago PMI fell to 58.9 in July from 65.7 in June, the lowest level in three months, whilst the Dallas index surged to 16.8 from previous 15.0. Pending home sales surged by 1.5% in June, better-than-expected, although low inventories persist, holding back activity.

The macroeconomic calendar will remain quite busy all through the week, with final July PMIs and Q2 GDP for the EU being released early Tuesday, followed by US Personal Income and Spending figures, including PCE inflation, Fed's favorite measure when it comes to take decisions.

From a technical point of view, the EUR/USD pair has reached the top of the daily ascendant channel that led the way since mid April, unable to break it but pressuring it ahead of the Asian opening, signaling a possible upward acceleration on a break above it during the upcoming sessions. In the 4 hours chart, the price has met buying interest on a slide down to a bullish 20 SMA, whilst the Momentum indicator maintains its strong upward slope near overbought levels, whilst the RSI indicator hovers around 70, all of which favors the upside. The immediate resistance is now 1.1845, January 14th 2015 high, followed by the 1.1870 price zone, where the pair presents multiple daily highs and lows from earlier that month. Further gains, particularly if US upcoming data remain soft can see the rally extending up to 1.2101, the high for the mentioned month.

Support levels: 1.1780 1.1750 1.1715

Resistance levels 1.1845 1.1870 1.1910

USD/JPY

The USD/JPY pair extended its July's decline to 110.30 and settled around 110.40, down for a second consecutive day, as escalating tensions between North Korea and the US over the weekend fueled demand for the safe-haven currency at the beginning of the day, while mixed US data kept the greenback subdued in the American afternoon. Japanese industrial production bounced back in June, up by 1.6%, slightly below market's expectations of 1.7%, but well above May's 3.6% decline. Additionally, housing starts surged by 1.7% in June, while orders rose by 2.3%, although the news had little effect on the yen. During the upcoming Asian session, attention will focus on the Nikkei manufacturing PMI, expected unchanged at 52.2. The pair maintains a clear bearish stance intraday, as in the 4 hours chart, the price is further below its 100 and 200 SMAs, with the shortest about to cross below the larger, and technical indicators maintaining strong bearish slopes near oversold readings ahead of the Asian opening. Below the mentioned daily low, the pair has scope to extend its decline towards the 109.80/90 price zone, with a break lower opening doors for a steeper slide towards 108.80, June's monthly low.

Support levels: 110.30 109.85 109.40

Resistance levels: 110.80 111.20 111.60

GBP/USD

The GBP/USD pair surged to 1.3199, its highest since September last year, ending the day a few pips below the level, on the back of persistent dollar's weakness. In the UK, mortgage approvals were the lowest in nine months in June according to official money figures, with 64,684 approvals in June, down from 65,109 in May. Consumer credit growth fell modestly, with the annual rate of growth at 10% from 10.4% in the previous month. The report also showed that non-mortgage lending to consumers dropped from £1.8 billion in May to £1.5 billion in the same month. The Markit manufacturing PMI for July in the kingdom to be released this Tuesday is expected at 54.3, although the most relevant event for the week will be the BOE's monetary policy meeting on Thursday, which will bring fresh economic outlooks. From a technical point of view, the 4 hours chart shows that the bullish tone persists ahead of the Asia opening, with the price holding above a bullish 20 SMA and the Momentum indicator heading north above its 100 level, whilst the RSI consolidates around 66, rather reflecting the low volume at this time of the day than suggesting upward exhaustion.

Support levels: 1.3100 1.3060 1.3020

Resistance levels: 1.3160 1.3200 1.3250

GOLD

Spot gold settled at $1,268.32 a troy ounce, marginally lower daily basis, despite a peak of risk aversion at the beginning of the day and dollar's broad weakness. The commodity held near its recent highs, in fact advancing by a few cents, to a fresh July high of 1,270.97, but was unable to extend its rally, most likely retreating on profit taking at the last day of the month. From a technical point of view, the daily chart shows that technical indicators are retreating modestly, still within overbought territory, but the price remains well above all of its moving averages, while sentiment favor the upside, suggesting that any downward corrective movement will likely be corrective. In the shorter term, and according to the 4 hours chart, gold is biased higher, as the price remains well above a bullish 20 SMA, now the immediate support at 1,264.00,  whilst the Momentum indicator heads north above its 100 level and the RSI indicator consolidates around 65, in line with additional gains, particularly on an advance beyond 1,271.10, the immediate resistance.

Support levels: 1,264.00 1,254.75 1,245.20

Resistance levels: 1,271.10 1,283.30 1,290.10

WTI CRUDE OIL

Crude oil prices continued advancing in the last trading day of the month, with West Texas Intermediate crude futures settling at $50.13 a barrel after reaching a high of 50.26. The US benchmark posted its largest monthly gains for this year, holding at its highest in over eight weeks, as tensions in Venezuela and possible sanctions to the country from the US could result in a shortage of heavy oil for US refineries, somehow helping balancing the market. On the negative side, Reuters reported that OPEC oil output has risen this month by 90,000 barrels per day to a 2017 high, while in the US crude oil production rose 59,000 bpd in May to 9.169M bpd vs. revised 9.11M bpd in April. The commodity bounced from a daily low of 49.17 ahead of the close, and the daily chart shows that the price is surpassing its 200 DMA by a few cents, whilst technical indicators have lost upward strength, the Momentum easing, but the RSI holding near overbought levels. In the 4 hours chart, the price found support at a bullish 20 SMA, currently at 49.35, whilst the RSI indicator hovers around 70, but the Momentum lost upward strength, still diverging from price's action.

Support levels: 49.90 49.35 48.80

Resistance levels: 50.20 50.85 52.40

DJIA

Wall Street closed mixed, with the Dow Jones closing at an all-time high of 21,891.12 after adding 60 points. The Nasdaq Composite lost 0.42%, to 6.348.12, while the S&P lost 0.07%, and ended at 2,470.30. The indexes, however, posted monthly gains with the Dow up for fourth consecutive month. Home Depot was the best performer, up 1.03%, followed by Chevron that added 0.99%. El du Pont led decliners with a 2.11% loss, followed by Apple that shed 0.52%. The daily chart for the index shows that it stands near its daily high, and with scope to continue advancing according to the Momentum indicator, holding within positive territory. The RSI in the mentioned chart heads north around 73, while the index remains above all of its moving averages, further supporting gains ahead. In the 4 hours chart, technical indicators extended their advances within overbought levels, whilst the 20 SMA extended its advance below the current level, in line with further gains ahead.

Support levels: 21,814 21,766 21,718

Resistance levels: 21,900 21,945 21,990

FTSE100

The FTSE 100 managed to hold in the green, despite most European indexes closed lower, lifted by mining-related equities. The London benchmark added 3 points or 0.05% to end at 7,372.00, up for the month by 0.8%. An advance in mining-related equities, and a strong earnings report from HSBC bolstered the index, as the company posted a 5% increase in profits. Utilities were the best performers across the region, after RBC lifted the rating of Seven Trent, up 4.09% and United Utilities that added 2.98%, to "outperform." Leading losers' list were tobacco companies, still pressured by Friday's US FDA announcement on reducing nicotine levels. Imperial Brands lost 5.90%, while British American Tobacco closed 4.97% lower. The daily chart for the index shows that it holds around a flat 100 DMA, while technical indicators hover around their mid-lines, lacking directional strength. In the 4 hours chart, the index remains below all of its moving averages that anyway lack directional strength, whilst indicators aim modestly higher well below their mid-lines, far from suggesting an upward movement ahead.

Support levels: 7,340 7,294 7,257

Resistance levels: 7,398 7,434 7,587

DAX

European equities closed mostly lower in the last trading day of July, losing ground ahead of the close. The German DAX settled at 12,118.25, down 44 points, weighed by EUR's strength, as the common currency reached a fresh 2017 beyond the 1.1800 figure. In June, the index lost 1.7%, mostly due to the sharp appreciation of the local currency, which added 5 cents against the greenback in the same period. Utilities led the way higher, with RWE AG up 1.53% and E.ON up 1.39%. Deutsche Bank led the way lower, losing 2.15%, while the automotive sector remained under pressure, with Volkswagen closing down 1.04% and Daimler shedding 0.86%. The daily chart shows that DAX remains near its lowest since late May, and poised to extend its decline, as technical indicators extended their declines within bearish territory, now nearing oversold territory, whist the 20 DMA extends below the 100 DMA. In the 4 hours chart, the index is also biased lower, with an early advance contained by a bearish 20 SMA, and technical indicators also heading south near oversold readings.

Support levels: 12,085 12,041 12,003

Resistance levels: 12,143 12,199 12,235

AUDUSD is trading bullish since start of May, which gives us an idea that the bigger complex correction within blue wave B is completed. As such we may say that blue wave C of IV is now in motion, as viewed on the daily chart and it may reach levels near the former swing low at 0.8161 level, before make a new turning point lower.

AUDUSD, Daily

Below we have a 4h chart of AUDUSD, which shows us a nice bigger impulse in motion as part of blue wave C. We can see that waves 1) and 2) are already completed and the largest and steepest wave 3) is also showing some signs of a completion near the 0.8054 region. Well, if that is the case, then a new temporary correction into the following red wave 4) may follow in days ahead and later search for some support around the former black wave 4 and near the Fibonacci ratio of 38.2, where price can again bounce into final wave 5).

AUDUSD, 4H

Weekly
    •    Last Candlesticks pattern: Long white candlestick
    •    Time of formation: 16 Jan 2017
    •    Trend bias: Down

Daily
    •    Last Candlesticks pattern: Long white candlestick
    •    Time of formation: 18 Apr 2017
    •    Trend bias: Near term up

GBP/USD – 1.3193

Cable found renewed buying interest at 1.2933 and has resumed recent upmove, dampening our near term bearishness and upside risk remains for medium term rise from 1.1986 low to extend further gain to 1.3245-50 (61.8% projection of 1.1986-1.3048 measuring from 1.2589) and possibly 1.3300-10, however, near term overbought condition should prevent sharp move beyond resistance at 1.3425 and price should falter well below 1.3500-05 (50% Fibonacci retracement of 1.5018-1.1986), risk from there is seen for a retreat later.

On the downside, whilst pullback to 1.3095-00 cannot be ruled out, reckon the Tenkan-Sen (now at 1.3067) would hold and bring another rise later to aforesaid upside targets. Below 1.2950-55 would defer and risk test of support at 1.2999, then towards the Kijun-Sen (now at 1.2953), however, only a sustained breach below support at 1.2933 would abort and signal a temporary top is formed instead, bring retracement of recent upmove to 1.2890, then towards previous support at 1.2812 which is expected to contain downside.



Recommendation: Stand aside for this week.

 



On the weekly chart, the British pound has risen again after brief pullback just below 1.3000 level and the breach of resistance at 1.3126 signals the medium term rise from 1.1986 low is still in progress, hence upside bias is seen for this move to extend further gain to the upper Kumo (now at 1.3247), then 1.3300-10, however, near term overbought condition should limit upside to previous resistance at 1.3425 and reckon 1.3500-05 (50% Fibonacci retracement of 1.5018-1.1986) would hold, price should falter below 1.3670-75, bring another decline in Q4.

On the downside, although initial pullback to 1.3095-00 is likely, reckon downside would be limited to 1.3050-55 and said support at 1.2999 should hold, bring another rise later. A weekly close below 1.2999 would suggest a temporary top is possibly formed, bring test of 1.2933 support, break there would add credence to this view, then retracement of recent rise to the Tenkan-Sen (now at 1.2895) and later 1.2812 support would follow, however, downside would be limited to 1.2700-10 and price should stay well above support at 1.2589, bring a rebound later.

EUR/USD

Current level - 1.1816

The recent break through 1.1775 shows, that the uptrend is intact, heading towards 1.1870, en route to 1.2000 sentiment area. Initial intraday support lies at 1.1775, followed by the crucial low at 1.1720.

USD/JPY

Current level - 110.20

The downtrend is still intact, heading towards 109.30 dynamic support. Key resistance lies at 110.75. 

GBP/USD

Current level - 1.3210

The bias is positive, for a rise towards 1.3260, en route to 1.3350 zone. Key static support lies at 1.3157 and crucial on the downside is 1.3050.

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 – 0.9467

Despite falling to 0.9438 last month, the subsequent stronger-than-expected rebound suggests a temporary low has been formed there and few weeks of consolidation above this level would take place and initial upside risk is seen for gain to 0.9769-71 (50% Fibonacci retracement of 1.0100-0.9438 and previous resistance), then towards 0.9800, however, as this move is viewed as retracement of recent decline, reckon upside would be limited to 0.9847 (61.8% Fibonacci retracement) and the upper Kumo (now at 0.9857) should hold, bring another decline later.

On the downside, whilst initial pullback to 0.9630-35 is likely, reckon the Tenkan-Sen (now at 0.9583) would limit downside and the greenback shall stage another rebound from there later. Only a drop 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: Stand aside for this week

On the weekly chart, the greenback staged a strong rebound last week and a long white candlestick was formed, suggesting a temporary low is possibly formed at 0.9438 and consolidation with mild upside bias is seen for retracement of recent selloff, hence further gain to 0.9771 resistance would be seen, above there would bring test of the Kijun-Sen (now at 0.9805), however, reckon upside would be limited too 0.9845-50 (61.8% Fibonacci retracement of 1.0100-0.9438) and price should falter below the lower Kumo (now at 0.9894), bring another decline later.

On the downside, expect pullback to be limited to the Tenkan-Sen (now at 0.9605) and 0.9580 should hold, 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.

USD/CHF - 0.9679

Most recent candlesticks pattern : N/A

Trend                                    : Near term up

Tenkan-Sen level                  : 0.9672

Kijun-Sen level                    : 0.9675

Ichimoku cloud top                 : 0.9684

Ichimoku cloud bottom              : 0.9609

Original strategy :

Buy at 0.9600, Target: 0.9700, Stop: 0.9565

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 0.9600, Target: 0.9700, Stop: 0.9565

Position : -

Target :  -

Stop : -

Although the greenback has recovered after finding support at 0.9637 yesterday, reckon resistance at 0.9727 would limit upside and bring further consolidation below this level, hence risk of another retreat to 0.9635 (38.2% Fibonacci retracement of 0.9490-0.9727) remains, however, previous resistance at 0.9596 should turn into support and contain downside, bring another rise later, above said resistance at 0.9727 would extend recent rise to 0.9750-60, then 0.9780 but reckon 0.9800 would hold from here.

In view of this, would not chase this rise here and would be prudent to buy dollar on subsequent pullback as previous resistance at 0.9596 should turn into support and contain dollar’s downside. Below 0.9580 (61.8% Fibonacci retracement of 0.9490-0.9727) would defer and suggest a temporary top is formed instead, bring correction to 0.9540-50 but price should stay well above support at 0.9490, bring another rise later. 

The Euro is continuing to advance against the American Dollar in a rising wedge pattern. In the middle of Monday the currency pair created a second confirmation point for the bottom trend-line that is located slightly above the combined support level set up by the weekly PP, the 100% Fibonacci retracement level and the 55-hour SMA near 1.1714. Due to the 93-pip surge, the rate has easily bypassed the weekly R1 at 1.1815 and reached the pattern's upper boundary. Most likely, today the pair will try to get back to the 1.1789 and then 1.1749 levels, provided that it will manage to cross the above weekly R1. However, if experts' prognoses about the US ISM Manufacturing PMI will be confirmed, the pair might end the day in the opposite direction, i.e. near the weekly R2 at 1.1878.

Contrary to expectations, the currency exchange rate left a rising wedge formation in the northern direction straight through the weekly R1 at 1.3200. The reason behind such outcome is attributed to 54-pip surge in the middle of the day that matched with release of information of the US Pending Home Sales. It is difficult to project where the currency rate is going to move today because of announcement of the UK Manufacturing PMI at 8:30 GMT and then the US ISM Manufacturing PMI at 14:00. If the British and American data will justify forecasts, the currency rate might jump to the weekly R2 at 1.3264. In the opposite scenario, the fall should be delayed by the 20-hour SMA and, then fully stopped by the approaching 55- and 100-hour SMAs.

In the second half of Monday the American Dollar continued to move along the 20-hour SMA and the former triangle's upper resistance line. It did not make a fully-fledged rebound, nor did it not fall below the weekly S1 at 110.11. Generally, the pair is expected to continue to slide today in the southern direction. Firstly, because it experiences pressure from the above 20-hour SMA as well as from the approaching 55-hour SMA near 110.60. Secondly, because of reaction on announcement of information on the US ISM Manufacturing PMI that will be released at 14:00 GMT, provided that actual figures will match with experts' forecasts. However, the possible fall should not go beyond the weekly S2 that is located at the 109.50 level.