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The initial reaction to the release of the Census Bureau's report on the US durable goods orders was limited, as markets were focusing on the underlying data rather than the jump in the headline measure, which left the USD/JPY currency pair holding below the 111.40 mark. The report showed that total orders for durable goods in the US surged 6.5% over the course of June compared with a 3.2% uptick expected by economists, while the core gauge posted a 0.2% gain, missing analysts' forecasts for a 0.4% climb in the reported month. Overall, the data released yesterday suggested a steady underlying improvement in conditions despite the fact that the surge was mainly driven by a sharp rise in aircraft orders, which sent capital goods orders soar 19% over the month of June.

The Euro bounced from Thursday' correction low at 1.1650 and regained levels at 1.1700 zone in Asia on Friday, but still weighed down by Thursday's bearish daily candle with long upper shadow. Reversal of slow stochastic and RSI on daily chart, as well as bearish divergence on slow stochastic ads on downside pressure. German CPI data are in focus and would provide fresh signals

The pair is still above pivotal supports at 1.1624/21 (daily Tenkan-sen / 10SMA / top of thick 4-hr cloud), violation of which would generate stronger bearish signal. End of the week profit taking may also accelerate the price lower and expose supports at 1.1525/12 (base of 4-hr cloud / Fibo 38.2% of 1.1118/1.1776 / rising 20SMA).

Underlying strong uptrend remains intact for extension towards 1.2000 target.

Res: 1.1715, 1.1776, 1.1800, 1.1848
Sup: 1.1671, 1.1650, 1.1621, 1.1583

EUR/USD

Current level - 1.1691

Yesterday's slide below 1.1716 support shows a minor reversal at 1.1775, but the overall outlook remains positive on the senior frames, for 1.1870. Crucial on the downside is 1.1611 low. 

USD/JPY

Current level - 110.94

My outlook remains bearish, for a break through 110.60 low, towards 109.30 mark. 

GBP/USD

Current level - 1.3080

The intraday bias is slightly negative, but until 1.2930 low is intact, the outlook on the higher frames will remain bullish, for 1.3260. Minor intraday resistance lies at 1.3104.

EUR/USD

The greenback edged higher across the board, having reverted most of its post-Fed losses, with the Japanese yen being an exception to the rule. The EUR/USD pair settled at 1.1660, after trading as high as 1.1776 earlier on the day, the highest since January 2015. The corrective movement of the American currency was backed by a bounce in a dollar index after it hit a fresh 2017 low of 92.96. In the data front, however, US data came mixed, as Durable Goods Orders surged 6.5% in June, beating expectations of a 3.0% advance, mostly due to large orders in private aircraft, although the core reading, excluding transportation, came below the 0.4% expected, up by just 0.2%. In the same month, the trade deficit was of $64B, better than previous $66B, while weekly unemployment claims for the week ended July 21st resulted at 244K, up from previous' week revised 234K.

Friday will be quite an active day in the macroeconomic front, with the release of EU July business confidence indexes, German inflation and US Q2 preliminary GDP among the most relevant figures. The US economy is expected to have grew by 1.3% in the three months to June, well below previous 1.9%, which may send the market back against the greenback.

In the meantime, the EUR/USD pair retreated after nearing the top of the ascendant channel that leads the way since mid May, holding in the upper half of it and paring losses around its 20 SMA in the 4 hours chart, while technical indicators in the mentioned time frame have corrected overbought conditions, but pared their declines around their mid-lines, from where they are currently bouncing, indicating that the intraday slide was more due to profit taking than amid selling interest.

Support levels: 1.1650 1.1615 1.1580

Resistance levels 1.1690 1.1745 1.1790

USD/JPY

The USD/JPY pair advanced up to 111.70 mid US session, but reverse course suddenly after failing to clear a strong Fibonacci resistance, and as Wall Street plunged. There was no clear catalyst behind the late decline, but clearly, mixed US data released at the beginning of the session was not enough to fuel a rally in the pair. During the upcoming Asian session, Japan will release its June National CPI figures and Tokyo July CPI ones, forecasted to remain depressed and near its recent lows. The pair is ending the day a handful of pips above a daily of 110.77. and poised to extend its decline, given that in the 4 hours chart, technical indicators have turned sharply lower, having entered negative territory, whilst the intraday advance stalled short of its 100 and 200 SMAs, with the shortest gaining downward slope above the largest, in line with a bearish continuation for this Friday.

Support levels: 110.90 110.60 110.25

Resistance levels: 111.60 112.00 112.45

GBP/USD

The GBP/USD pair posted a fresh yearly high of 1.3158, but ended the day in the red in the 1.3070 region, as profit taking from the latest dollar's slump benefit the greenback in the short term. In the UK, the Confederation of British Industry released its monthly sales survey, which showed that retail sales picked up sharply in July, with the index up to 22%, well above market's expectations of 10%. Beyond that, there were little news coming from the kingdom, with the calendar to remain light this Friday and attention shifting towards the BOE's monetary policy meeting next week. Soft growth figures, and decelerating inflation have triggered speculation that the Central Bank will have little reasons to turn more hawkish this time, mostly anticipated to be a non-event. From a technical point of view, the downward potential remains limited according to the 4 hours chart, as the price is holding above a its 20 SMA, whilst technical indicators have eased their downward strength within positive territory, having corrected overbought conditions. The pair set a daily low of 1.3050, with a break below it favoring a deeper correction towards 1.2965.

Support levels: 1.3050 1.3010 1.2965

Resistance levels: 1.3125 1.3180 1.3230

GOLD

After a soft start to the day, spot gold bounced back ahead of the US close and settled at $1,262.15 a troy ounce, as plummeting equities backed demand for the safe-haven commodity. The bright metal closed the day unchanged, but posted a higher high and a higher low daily basis, maintaining the risk towards the upside. Additionally, spot reached a fresh 6-week high of 1,265.21, another factor supporting the case of a bullish continuation. In the daily chart, technical indicators have eased modestly, but hold near overbought readings, whilst the price held above all of its moving averages. In the 4 hours chart, the price met buying interest on a test of its 20 SMA, currently acting as a dynamic support at 1,254.76, while the Momentum indicator holds directionless well above its 100 level, and the RSI heads modestly lower around 61, posing a limited downward risk.

Support levels: 1,254.75 1,245.20 1,236.30

Resistance levels: 1,266.60 1,274.10 1,283.30

WTI CRUDE OIL

West Texas Intermediate crude futures closed at $48.96 a barrel, the highest since late May, reverting an early slide towards the 48.00 level. The early decline could be attributed to dollar's short-term recovery, while the later bounce came amid speculative interest buying back crude, encouraged by latest positive market data. The daily chart shows that WTI advanced for a fourth consecutive day and remains biased higher, albeit in the daily chart, technical indicators are giving some first signs of exhaustion, easing near overbought levels. Still the price remains well above its 100 DMA, while the 20 DMA extended its advance below the larger. In the 4 hours chart, technical indicators are also easing modestly, still in overbought readings, whilst a sharply bullish 20 SMA below the current level and above the largest ones, indicates that the upside remains favored by market's sentiment.

Support levels: 48.40 47.85 47.20

Resistance levels: 49.25 49.70 50.20

DJIA

US indexes closed mixed with the Dow Jones Industrial Average settling at fresh record highs of 21,796.55, up 85 points or 0.39%, but the Nasdaq Composite shed 40 points, to 6,382.19, whilst the S&P closed 2 points lower, at 2,475.42. The index plummeted mid US session but resurged ahead of the close, weighed by a slump within tech equities. Within the Dow, Verizon led advancers, adding 7.41%, followed by Merck that closed 3.35% higher. Apple, on the other hand, was the worst performer, down 2.09%, followed by American Express that shed 1.91%. Up for a third consecutive day the index presents a strong upward momentum in the daily chart, as technical indicators extend their advances within positive territory, whilst the benchmark is further above bullish moving averages. In the shorter term, and according to the 4 hours chart, the risk is also towards the upside, as technical indicators resume their advances after a modest downward correction from overbought levels, whilst the 20 SMA accelerated its advance below the current level.

Support levels: 21,785 21,741 21,679

Resistance levels: 21,830 21,865 21,900

FTSE100

The FTSE 100 shed 9 points and closed the day at 7,443.01, following the lead of its continental counterparts. AstraZeneca was the worst performer, down 15.41% after a disappointing cancer-drug trial, followed by Provident Financial and Lloyds Banking Group, both down over 2%. Diageo was the best performer, up 5.98%, followed by Rentokil Initial that added 5.82$. Additionally, a stronger Pound at the beginning of the day dented investors' mood. Technically, the index remains above its 20 and 100 SMAs, but posted a lower low and a lower high daily basis, whilst technical indicators turned modestly lower, nearing their mid-lines from above, leaning the scale towards the downside, albeit not enough to confirm further slides. In the 4 hours chart, the index remains stuck between directionless moving averages, whilst the Momentum indicator aims higher within positive territory as the RSI indicator remains stuck around its 50 level, indicating absence of clear directional strength.

Support levels: 7,485 7,435 7,390

Resistance levels: 7,482 7,518 7,561

DAX

The German DAX closed at 12,212.04, down 92 points or 0.76%, as pharmaceutical and financial equities weighed down European indexes. In the news, the German GFK consumer confidence survey surged to a record high of 10.8 from 10.6 in the previous month, in line with the IFO reading seen earlier this month, indicating strong business confidence in the leading European country. Deutsche Bank was the worst performer, ending the day 4.92%, followed by Bayer that shed 3.07%. Allianz, on the other hand, led the advance with a 1.76% gain, followed by Vonovia that added 1.57%. In the daily chart, the technical bias is towards the downside, with the index further below its 20 and 100 SMAs and technical indicators extending their slides within negative territory. In the 4 hours chart, the downside is also favored, given that the index remained contained by a bearish 20 SMA, currently at 12,251, whilst the Momentum indicator turned lower around its 100 level, and the RSI indicator barely bounced from oversold levels.

Support levels: 12,146 12,098 12,053

Resistance levels: 12,251 12,303 12,354

USDJPY (111.13): The USDJPY continues to remain range bound within 111.77 and 110.80 levels of resistance and support. The consolidation has been continuing for the past four consecutive sessions. This implies a possible breakout from this range in the near term. To the upside, above 111.77 expect to see further bullish momentum push USDJPY towards 113.71, while to the downside, below 110.80, USDJPY could be seen posting declines to 109.58.

GBPUSD (1.3079): The British pound rallied to a 10-month high yesterday before turning bearish. The daily chart shows the rising wedge pattern in play. However, support is seen at 1.3025 which needs to be breached for any downside to continue. In this case, GBPUSD could be seen posting strong declines with the next support seen only at 1.2656. On the 4-hour chart, following the strong declines, any pullback to the upside will be limited. Near-term support below 1.3025 is seen at 1.2818.

EURUSD (1.1685): The EURUSD closed bearish yesterday after briefly reaching for a new 3-year high. The common currency fell following a brief gain in the US dollar index. Still, the declines are expected to be limited to the immediate support found at 1.635. Only a breach of this support will spell further weakness in the currency pair. The next main technical support sits at 1.1475 which could be tested in the short-term basis. Alternately, a reversal at 1.1635 will keep the EURUSD supported to the upside. But price action will need to push higher in order to maintain the steady pace of gains.

The US dollar managed to pare losses, rising on the back of a better than expected durable goods orders report yesterday. Data from the commerce department showed that durable goods orders rose 6.5% on the month in June. This marked the quickest pace of increase in three years and beat estimates of a 3.8% increase.

The US dollar index briefly fell to a 13-month session low before managing to close the day with gains.

Looking ahead, traders will be watching the advance GDP report from the US today. According to the economists polled, the US GDP is expected to have increased 2.5% on the quarter, following a 1.4% increase in GDP in Q1. From the eurozone, flash GDP numbers from France and Spain are due while Germany will be reporting the preliminary inflation data for July.

EUR/JPY - 129.93

Recent wave: wave v of (C) ended at 94.12 and major correction in wave A has ended at 149.79

Trend: Near term up

New strategy :

Stand aside

Position: -
Target:  -
Stop:-

Despite edging higher to 130.61 yesterday, the subsequent retreat has retained our view that further consolidation below recent high at 130.77 would be seen and pullback to 129.45-50 is likely, however, reckon downside would be limited to 129.20-25 and 128.49-57 support should hold, bring another rise later.

On the upside, above 130.61 would bring retest of said resistance at 130.77 but break there is needed to confirm recent upmove has resumed and bring further gain to 131.00-10, above there would encourage for headway to 131.50, however, loss of upward momentum should prevent sharp move beyond latter level and reckon 132.00 would hold from here, risk from there is seen for a retreat later.

Our latest preferred count is that wave (ii) is ABC-X-ABC which ended at 123.33 and wave (iii) is unfolding with wave iii ended at 100.77, followed by wave iv at 111.57 and wave v as well as the wave (iii) has ended at 97.04, followed by wave (iv) at 111.43 and wave (v) has ended at 94.12 which is also the end of the larger degree v, this also implied the major wave (C) has also ended there, hence major correction has commenced from there with (A) leg unfolding in its lower degree wave c which has possibly ended at 145.69. Under this count, A-B-C wave (B) has commenced with A leg ended at 136.23, wave B at 143.79 and wave C has possibly ended at 149.79.

Our larger degree count is that the decline from 139.26 is wave (C) and is sub-divided into a diagonal triangle i-ii-iii-iv-v with wave i - 105.44, wave ii- 123.33, wave iii - 97.03, wave iv - 111.43, followed by the final wave v as well as the end of wave (C) at 94.12, this also mark the bottom of larger degree wave B. Under this count, major rise in wave C has commenced as an impulsive wave with minor wave III ended at 145.69, wave V is still in progress for further gain to 150.00. Having said that, this so-called wave V could well be the first leg of larger degree 5-waver wave C and this wave C should bring at least a retest of wave A top at 169.97 (July 2008).

AUD/USD – 0.7979

Recent wave: Wave 5 ended at 1.1081 and major correction has commenced for fall to 0.7000 and then towards 0.6500-10

Trend: Near term up

Original strategy :

Buy at 0.7890, Target: 0.8090, Stop: 0.7830

Position: -
Target:  -
Stop: -

New strategy :

Buy at 0.7880, Target: 0.8080, Stop: 0.7820

O.C.O.

Sell at 0.8020, Target: 0.7880, Stop: 0.8080

Position: -
Target:  -
Stop:-

Although aussie extended recent upmove to 0.8066 yesterday, the subsequent retreat suggests the wave iii top is possibly formed there and consolidation with mild downside bias is seen for correction in wave iv, hence weakness to 0.7900 is likely, however, reckon previous support at 0.7875-78 would hold and renewed buying interest should emerge there, bring another rise later. Above said resistance at 0.8066 would signal recent upmove is still in progress for headway to 0.8100, then 0.8140-50 but overbought condition should limit upside to 0.8190-00, bring retreat later. We are keeping our latest bullish count that recent impulsive waves is unfolding as (1 2, (i)(ii), i ii) and may extend headway to aforesaid upside targets. 

In view of this, whilst we are looking to buy aussie on subsequent pullback, we would turn short on recovery as 0.8020-30 should limit upside. A sustained breach below support at 0.7875 would defer and risk correction to 0.7810-20, however, still reckon downside would be limited to 0.7786 and price should stay well above wave i top at 0.7712.

On the 4-hour chart, the move from 0.8066 is the wave 5 with i: 0.8860, ii: 0.8315, wave iii is an extended move ended at 1.0183, iv: 0.9706 and wave v has ended at 1.1081 (also the top of entire wave 5). The subsequent selloff is the major correction which is unfolding as ABC-X-ABC and 2nd A leg has ended at 0.8848, followed by a-b-c wave B which ended at 0.9758, hence, 2nd C wave is now in progress and indicated downside target at 0.7000 and 0.6950 had been met, so further fall to 0.6710-20 cannot be ruled out.