Sample Category Title

USD/CAD 's bearish momentum is showing ending signals. The pair remains nonetheless in a strong bearish momentum. Hourly resistance is given at 1.2544 (26/07/2017). Expected to show further consolidation above 1.2400.

In the longer term, the pair has broken longterm support that can be found at 1.2461 (16/03/2015 low) before bouncing back. Strong resistance is given at 1.4690 (22/01/2016 high). The pair should head further lower.

USD/CHF is pausing. Hourly support can be found at 0.9439 (21/07/2017 high). Strong resistance is given at 0.9771 (15/06/2017 high) is on target. Expected to to show further strengthening.

In the long-term, the pair is still trading in range since 2011 despite some turmoil when the SNB unpegged the CHF. Key support can be found 0.8986 (30/01/2015 low). The technical structure favours nonetheless a long term bullish bias since the unpeg in January 2015.

USD/JPY's bearish momentum continues. Hourly support given at 110.62 (24/06/2016 low) has been broken. Stronger support is located at a distance at 108.83 (17/04/2017 low). Expected to show further downside pressurs.

We favor a long-term bearish bias. Support is now given at 96.57 (10/08/2013 low). A gradual rise towards the major resistance at 135.15 (01/02/2002 high) seems absolutely unlikely. Expected to decline further support at 93.79 (13/06/2013 low).

GBP/USD still lies within a bullish trend. Hourly resistance is given at 1.3159 (27/07/2017 high). Hourly support is given at 1.2933 (20/07/2017 low). Expected to show renewed monitoring of resistance below 1.3200.

The long-term technical pattern is even more negative since the Brexit vote has paved the way for further decline. Long-term support given at 1.0520 (01/03/85) represents a decent target. Long-term resistance is given at 1.5018 (24/06/2015) and would indicate a long-term reversal in the negative trend. Yet, it is very unlikely at the moment.

EUR/USD bullish pressures continue. Hourly resistance is given at 1.1777 (25/07/2017 high). Hourly support can be found at 1.1613 (26/07/2017 high). Stronger support lies at 1.1292 (28/06/2017 low). Expected to show continued bullish pressures.

In the longer term, the momentum is now turning largely positive. We favour a continued bullish bias. Key resistance is now holding at 1.1871 (24/08/2015 high)t while strong support lies at 1.0341 (03/01/2017 low).

SNB's profit plummet due to FX losses

The Swiss National Bank reported a profit of CHF 1.2 billion for the first half of 2017, compared to CHF 7.9 billion for the first quarter. The sharp appreciation of the Swiss franc against most of its peers, mostly the US dollar, ate up the profits from shares and bonds investments. The Swissie rose 5.9% against the USD, 2.4% against the CAD and 2.1% against the JPY.

The SNB recorded a loss of CHF 3.6 billion on interest-bearing paper and instruments amid surging bond yields. On the other hand, equity securities and instruments contributed CHF 9.4 billion to the net result. Exchange rate-related losses reached CHF 11.8 billion. Negative interest rates charged by the SNB yielded a gain of CHF 970 billion.

Foreign currency investments rose to 728 billion as of June 30th from CHF 714 billion three months ago and 700bn six months ago, highlighting clearly that the SNB is committed to defend the Swiss franc.

As the SNB declared on Monday: “…financial result depends largely on developments in the gold, foreign exchange and capital markets. Strong fluctuations are therefore to be expected, and only provisional conclusions are possible as regards the annual result”. Therefore it is hard to draw any relevant forecast regarding the year-end results, especially since those results do not reflect the sharp depreciation of the Swissie against the euro of the last few days.

Last week, the CHF fell as much as much as 3.60% against the euro sending the EUR/CHF pair to 1.14. We see this sharp appreciation as a catch-up session for the Swissie. Despite a broad-based appreciation of the euro, the Swiss franc held ground, which led directly to a sustain appreciation of the CHF against the USD. However at some point EUR/CHF could stay completely immune to the euro appreciation, after all the end of the ECB's ultra-loose monetary policy will impact the EU/CH interest rate differential. Therefore this is more a healthy adjustment, rather than the end of the CHF overvaluation. The EUR/CHF still has some legs but we doubt the pair will pass the 1.20 threshold. The 1.15 looks like to be a good equilibrium given the fact the EUR rally is losing steam.

Australia: RBA to wait & see

Tomorrow morning, the Reserve Bank of Australia's cash rate is set to remain on hold at 1.5% despite the Aussie is on a bullish trend since mid-May. The Aussie can be traded at almost $0.80. It is worth noting that the Australian currency has gained more than 11% this year.

We believe that it is likely that the Aussie breaks above $0.80 given global fundamentals. In particular, the greenback keeps on getting weaker (Trump's inability to deliver and Fed back towards patience). China's growth (Australian main trade partner) is better and has known a third positive quarter in a row.

Earlier this month, the RBA mentioned that “a strengthening exchange rate” would definitely render difficult the central bank's mission as Australia relies mostly on exports (iron ore). Australia's GDP target of 2.25% for June 2019 looks nonetheless difficult to attain. Right now, the GDP lies at 1.7% y/y and the continue rise of the Australian dollar would likely force the RBA to slash their forecasts.

We do not believe the AUD strengthening is sustainable over the medium-term even though it implies higher commodity prices but exports and other sectors of the Australian economy could suffer. A pullback is now getting more likely.

EUR/USD – 1.1733

EUR/USD:   Wave (c) of 2 ended at 1.3993 and wave 3 of III has commenced for weakness to 1.0411 (1.236 of wave 1), then 1.0000.

The single currency has maintained a firm undertone after recent rally, adding credence to our bullish count that wave v as well as larger degree wave 3 has ended at 1.0340, hence wave 4 has commenced from there and upside bias remains for this move to extend gain to 1.1800-10, however, near term overbought condition should limit upside to 1.1870-80 and reckon 1.1950 would hold, price should falter below 1.2000, bring retreat later. 

Our preferred count on the daily chart remains that a wave (II) from 1.2329 ended at 1.5145 with A-leg ended at 1.4720, followed by wave B at 1.2457, the wave C from there was also a 3 legged move and is labeled as (a): 1.3739, (b): 1.2885, the wave iii of the 5-waver (c) from 1.2885 has ended at 1.4339 and wave iv is a triangle ended at 1.3878 and wave v formed a top at 1.5145. The decline from there is a 5-waver (C) with minor wave (i) of I of (C) ended at 1.4218 with wave (ii) ended at 1.4580, wave (iii) ended at 1.3267 and wave (iv) ended at 1.3692 and wave (v) ended at 1.1876, this is also the low of wave I of (C) and wave II ended at 1.4940, hence wave III is now in progress with a diagonal wave 1 ended at 1.2042, the breach of previous support at 1.1876 (wave I trough) adds credence to our view that the wave 2 has ended at 1.3993, wave 3 has commenced for further weakness to 1.0411, then towards 1.0000.

On the downside, whilst initial pullback 1.1650 is likely, reckon downside would be limited to previous resistance at 1.1583 and 1.1530-35 should hold, bring another rise later. A daily close below support at 1.1479 would defer and suggest a temporary top is possibly formed, risk correction to minor support at 1.1435 but downside should be limited and price should stay above indicated support at 1.1370, bring another upmove later.

Recommendation: Buy at 1.1600 for 1.1800 with stop below 1.1500

Euro's long-term uptrend started from 0.8228 (26 Oct 2000) with an impulsive structure. The rise from 0.8228 to 0.9593 (5 Jan 2001) is labeled as wave I, the retreat to 0.8352 (6 Jul 2001) is wave II and the rally to 1.3670 (31 Dec 2004) is wave III. Wave IV from there ended at 1.1640 (15 Nov 2005), the subsequent upmove to 1.6040 (July 15, 2008) is treated as wave V, the major selloff from the record high of 1.6040 to 1.2329 (October 27, 2008) signals a reversal has taken place with (I) leg ended at 1.2329 and once (II) ended at 1.5145, wave (III) itself is an extended move with I: 1.1876 and complex wave II ended at 1.4902, wave III has commenced with wave 1 and 2 ended at 1.2042 and 1.3993 respectively, wave 3 of III is now unfolding for weakness towards parity.

USD/JPY - 110.65

USD/JPY – Wave V of larger degree circle V has possibly ended at 75.31 and major correction has commenced and already met indicated target at 125.00.

The greenback staged the anticipated recovery to 112.20 before meeting renewed selling interest there (we recommended in our previous update to sell at 112.00 and a short position was entered) and the subsequent decline adds credence to our view that top has been formed at 114.50 and the decline from there may extend further weakness to 110.00, a daily close below there would reinforce our count that the entire corrective rebound from 108.13 has ended at 114.50 (tentatively wave b top), hence consolidation with downside bias remains for subsequent fall to 109.40-50 but reckon downside would be limited to 108.82 support. Only a break of this level would provide confirmation and signal wave c has commenced for retest of 108.13 first.

Our preferred count is that, triangle wave IV (with circle) ended at 101.45 and the circle wave V brought dollar down to the record low of 75.31 in 2011 and the subsequent rebound signal major correction has commenced with A leg ended at 84.19, followed by wave B at 77.14 and impulsive wave C is now unfolding (indicated upside target at 125.00 had been met) for gain towards 127.00 level. In the event dollar drops below support at 99.01, this would confirm medium term decline from 125.86 top (2015 high) has resumed for subsequent weakness to 98.00 and possibly 97.00.

Under this count, this wave C is unfolding as impulsive waves with (1) (2), 1 2 ended at 80.67, 79.07, 82.84 and 81.69 respectively, hence the extended wave 3 has ended at 103.74 and wave 4 correction of recent upmove should bring weakness to 92.57, then towards 90.88 but psychological support at 90.00 should limit downside and bring another rally later in wave 5, indicated target at 125.00 had been met and gain to 127.00 cannot be ruled out but reckon price would falter below 130.00.

On the upside, whilst initial recovery to 111.00 cannot be ruled out, reckon upside would be limited and resistance at 111.71 should hold, bring another decline. Above 111.71 would risk test of said resistance at 112.20 but only break there would abort and signal first leg of decline from 114.50 has ended, bring a stronger rebound to 112.85-90 but resistance at 113.58 should cap upside, bring another selloff later.

Recommendation: Hold short entered at 112.00 for 110.00 with stop above 111.75.

On the monthly chart, we have changed our preferred count that an impulsive wave is unfolding with major wave III with circle ended at 79.75, then followed by wave IV with circle and is labeled as a triangle with A: 147.64 (11 August, 1998), B: 101.25, C: 135.20, D: 101.67 and E leg ended at 124.14 to end the wave IV with circle. Hence, wave V with circle commenced from there and hit a record low of 75.31, however, the subsequent strong rebound signals this circle wave V has possibly ended there, hence gain to (indicated upside target at 122.00 and 125.00 had been met), the retreat from 125.86 suggests wave A of major correction has ended there and wave B correction back to 99.00, then 95.00 would be seen, however, reckon downside would be limited to 90.00, bring another rebound in wave C next year.

GBP/USD – 1.3112




Recent wave: Wave V of larger degree wave (III) has ended at 1.1986 and major correction has commenced from there for gain to 1.3000 and 1.3140-50




Trend: Near term up




New strategy :

Buy at 1.3070, Target: 1.3250, Stop: 1.3010

Position: -



Target:  -



Stop:- 



As sterling has eased after faltering below resistance at 1.3159 (last week’s high), suggesting consolidation below this level would be seen and pullback to 1.3070-80 cannot be ruled out, however, reckon support at 1.3050 would hold and bring another rise later, above said resistance at 1.3159 would extend gain to 1.3200, having said that, as this move is still viewed as the final wave v of larger degree wave C, reckon upside would be limited to 1.3240-50 and price should falter below 1.3300-10, then sterling shall retreat sharply from there.

Our preferred count on the daily chart is that cable's rebound from 1.3500 (wave (A) trough) is unfolding as a wave (B) with A ended at 1.7043, followed by triangle wave B and wave C as well as wave (B) has ended at 1.7192, the subsequent selloff is the larger degree wave (C) which is still unfolding with minor wave (III) of larger degree wave 3 ended at 1.1986, hence wave (IV) correction is in progress which could either be a triangle wave (IV) of a complex formation but upside should be limited to 1.3500 and price should falter well below 1.4000, bring another decline in wave (V) of 3 for weakness to 1.1500, then 1.1200. 


On the downside, whilst pullback to 1.3070-80 cannot be ruled out, reckon support at 1.3050 would hold and bring another rise. Only below support at 1.2999 would abort and signal top has been formed at 1.3159, bring retracement of recent rise to 1.2980, then 1.2950-55 but previous support at 1.2933 should hold from here.  


Daily Pivots: (S1) 0.7946; (P) 0.7976; (R1) 0.8016; More...

Intraday bias in AUD/USD remains neutral for consolidation below 0.8065. Another rally is expected as long as 0.7877 support holds. Break of 0.8065 will target 100% projection of 0.6826 to 0.7833 from 0.7328 at 0.8335. Nonetheless, break of 0.7877 will indicate short term topping on bearish divergence condition in 4 hour MACD. In such case, intraday bias will be turned back to the downside for 0.7711 resistance turned support.

In the bigger picture, current development suggests that rebound from 0.6826 is developing into a medium term rise. There is no confirmation of trend reversal yet and we'll continue to treat such rebound as a corrective pattern. But in any case, further rise is now expected to 55 month EMA (now at 0.8100) or even further to 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 expected.