Sample Category Title

GBP/JPY - 144.34

Recent wave: Medium term low formed at 120.50 and (A)-(B)-(C) major correction has commenced with (A) leg ended at 148.45, hence wave (B) is unfolding for retreat to 131.00-10.

Trend: Near term up

Original strategy:

Sell at 147.00, Target: 145.00, Stop: 147.60

Position: -
Target: -
Stop: -

New strategy :

Sell at 145.30, Target: 143.30, Stop: 145.90

Position: -
Target:  -
Stop:-

Sterling has remained under pressure after last week’s selloff, suggesting temporary top has been formed at 147.75 earlier this month and consolidation with mild downside bias remains for this fall to bring retracement of recent upmove to 143.50, then towards support at 143.30, however, near term oversold condition should limit downside to 142.90-00 and price should stay above previous resistance at 142.50, bring rebound later.

In view of this, would not chase this fall here and we are looking to sell sterling on recovery as 145.30 should limit upside, bring another decline. Above 145.70-75 would defer and risk a stronger rebound to 146.00 but still reckon resistance at 146.30-35 would limit upside and bring another decline later. 

Our preferred count is that larger degree wave V with circle is unfolding from 251.12 with wave (I) 219.34, (II): 241.38 and wave (III) is subdivided into 1: 192.60, 2: 215.89 (23 Jul 2008) and wave 3 ended at 118.87 earlier in 2009. The correction from there to 162.60 is wave 4 which itself is a double three and is labeled as first a-b-c ended at 151.53, followed by wave x at 139.03, 2nd a ended at 162.60, 2nd b at 146.75 and 2nd c leg of wave 4 ended at 163.00. Therefore, the decline from 163.00 to 116.85 is now treated as wave 5 which also marked the end of larger degree wave (III), hence wave (IV) major correction has commenced for retracement of the wave (III) from 241.38 and upside target at 183.95-00 (50% Fibonacci retracement of the wave (II) from 241.38) had been met, a drop below 160.00 would suggest wave (IV) has ended at 195.85, bring decline in wave (V) for initial weakness to 130 (already met) and 120.


Daily Pivots: (S1) 110.73; (P) 111.40; (R1) 111.79; More...

USD/JPY's fall from 114.49 continues today and reaches as low as 110.61 so far. Intraday bias remains on the downside for 108.81 support. As noted before, whole correction from 118.65 is still in progress. Break of 108.81 will confirm and target target 61.8% retracement of 98.97 to 118.65 at 106.48. On the upside, break of 111.47 minor resistance will turn bias neutral and bring recovery before staging another decline.

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, down side should be contained by 61.8% retracement of 98.97 to 118.65 at 106.48 and bring rebound.

Daily Pivots: (S1) 1.2505; (P) 1.2557; (R1) 1.2591; More....

Intraday bias in USD/CAD remains on the downside for 1.2460 key support level. Considering bullish convergence condition in 4 hour MACD, we'll be cautious on strong support from there to contain downside and bring rebound. On the upside, break of 1.2700 resistance will indicate short term bottoming and turn bias back to the upside for 1.2968 support turned resistance.

In the bigger picture, price actions from 1.4689 medium term top are seen as a correction pattern. Fall from 1.3793 is seen as the third leg and should target 50% retracement of 0.9406 to 1.4869 at 1.2048. At this point, we'd look for strong support from there to contain downside and bring rebound. However, firm break there will target 100% projection of 1.4689 to 1.2460 from 1.3793 at 1.1564.

Cable extends recovery on Monday and holding firm above 1.3000, with fresh acceleration higher hitting session high at 1.3045, just ahead of 1.3051 pivot (Fibo 61.8% 1.3125/1.2932 pullback / 19 July high).

Today's rally is giving strong signals of reversal after pullback from 1.3125 peak found solid support at 1.2931 (just above Fibo 61.8% of 1.2811/1.3125 upleg), where strong downside rejection was seen.

Daily bulls remained intact after pullback and support further recovery which needs close above 1.3051 for confirmation.

Rising and widening 4-hr cloud continues to underpin the action and supports scenario.

UK GDP data on Wednesday are in focus for more signals.

Initial support lies at 1.3021 (4-hr cloud top), followed by psychological 1.3000 support and lower pivot at 1.2968 (4-hr cloud base / daily Tenkan-sen), loss of which would weaken near-term structure.

Res: 1.3051, 1.3080, 1.3100, 1.3125
Sup: 1.3021, 1.3000, 1.2968, 1.2931

JPY's rally still has legs

The Japanese has been rally strongly over the last two weeks as investors continued to discount the Fed's hawkish stance. USD/JPY broke the 111 support (psychological level and Fibonacci 61.8% on June-July rally) to the downside. The road is now wide open for further decline with the 109 threshold as first target.

The Federal Reserve will wrap up its July meeting on Wednesday with only an updated statement. We will have to wait the September meeting to get new economic forecast and a press conference. Therefore, it will likely be a non-event as Janet Yellen will surely seize the opportunity to play for time, rather than rushing to tighten monetary policy. Yet, the clock is ticking and postponing further the timeframe would send a negative signal to investors. The September meeting will therefore be the next key event.

In anticipation of this meeting, the market will monitor closely economic data from the US. A reversal in the negative trend of the last few months will quickly trigger into a re-pricing of a solid tightening pace, which would translate into a higher yields and stronger dollar. In the meantime, even though we think that the dollar's debasement has reached its limit against several of its peers, the Japanese yen still has room to appreciate, thanks to its safe-haven status.

US: demand for housing keeps increasing

The US real estate market keeps on growing very significantly. One key indicator of the US economy, existing homes sales keep increasing and are now at 2007 level. Today will be released June data and should remain around May levels at all time high! The million dollar question is now to know whether the US real estate market is in a bubble and when it is going to burst. Like the US stock markets, real estate market has been largely underpinned by free money provided by the Fed over the last decade.

On top of that, house prices levels are above the 2007 level. There is no evidence at the moment that we reached an inflection point and we may see higher prices. Yet, we already heard concern about asset valuation from the Fed regarding… stocks. Nonetheless, the “surprising” recent dovish comment from Yellen paves the way for more patience. In particular, the US debt level is way too high and inflation way too low to increase rates. But markets do not seem to worry about those levels.

We remain bullish on the EURUSD at least until September. Markets estimate that the ECB will hint at further tightening and will follow the Fed path. In our view, there is some room for more EURUSD dollar increase.

The Euro eased to 1.1630 on Monday, after retesting Friday's post ECB rally's peak, but initial 1.1700 barrier stays intact for now. Dip was boosted by weaker than expected EU PMI numbers, but corrective pullback remains shallow, as weak dollar continues to underpin. Hourly studies remain in bullish mode, with rising hourly cloud (spanned between 1.1612 and 1.1577) offering solid support and underpinning near-term action. Overbought daily studies so far did not generate negative signal and keep downside threats minimized for now. Extended consolidation ahead of attack at key double-Fibonacci barriers at 1.1713/35 could be anticipated, as markets are looking for further signals from Fed on Wednesday. Extended dips would face good supports at 1.1564 (Fibo 38.2% of 1.1370/1.1684) and 1.1490 (Fibo 61.8%) which is expected to contain and prevent deeper dips on break here and 1.1454 (20SMA). Eventual break above 1.1713/35 pivots would trigger fresh upside for extension of current wave C (from 1.1312 trough) towards its FE 138.2% at 1.1770 and FE 161.8% at 1.1848.

Res: 1.1684, 1.1700, 1.1713, 1.1735
Sup: 1.1630, 1.1612, 1.1577, 1.1564

EUR/JPY - 129.01

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:-

Although the single currency staged a stronger-than-expected to 130.51 late last week, the subsequent retreat has retained our view that further consolidation below recent high of 130.77 and test of 128.57 support cannot be ruled out, however, break of support at 128.49 is needed to retain bearishness and bring retracement of recent upmove to 128.00, then towards previous support at 127.44.

On the upside, whilst recovery to 129.60-70 cannot be ruled out, reckon 130.00 would limit upside and resistance at 130.51 should hold, bring another decline later. Only a break of 130.51 would signal the retreat from 130.77 has ended, bring retest of this level, break there would confirm recent upmove has resumed for headway to 131.00-10, then towards 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).

The GBP/JPY has followed my previous analysis exactly as planned and even during summer holidays trading, this still remains one of the best pair to trade due to its high ATR(14)-121. At this point we have two potential POC zones, should the pair retrace. POC1 144.70-90 (38.2, bearish order block D H3) should reject the pair short term towards 144.00. But if the pair breaks 144.00 without any retracement to the upside target is D L3 - 143.74 and 143.40 - W L3/ATR Low confluence.

Have in mind that even if the pair retraces to POC2 145.15-35 (equidistant channel high, 50.0, bearish order block, EMA89, W H3, 61.8) it will still be bearish and the zone should provide a good rejection towards the POC1 and above mentioned levels. This setup will also be discussed on Session Recap webinar so feel free to join.

AUD/USD – 0.7961

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 0.7800, Target: 0.7990, Stop: 0.7740

Position: -
Target:  -
Stop: -

New strategy :

Buy at 0.7840, Target: 0.7990, Stop: 0.7780

Position: -
Target:  -
Stop:-

Although aussie has rebounded after finding support at 0.7875 late last week, break of recent high at 0.7990 is needed to confirm recent upmove has resumed and extend gain to 0.8040-50 but loss of upward momentum should prevent sharp move beyond 0.8080 and reckon 0.8100 would hold from here, risk from there is seen for a 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 target. 

In view of this, would not chase this rise here and we are looking to buy aussie on subsequent pullback as 0.7800 should limit downside, bring another upmove later. Below support at 0.7786 would defer and suggest wave iii top is formed, bring correction in wave iv to 0.7750 but wave i top at 0.7712 should remain intact.

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.

GBPJPY has shifted its short-term bias back to the downside after a recent rally from 138.66 stalled at 147.77 on July 11 and prices dropped.

Support is currently provided by the 50-day moving average which is located close to the key 144.00 level, helping pause the market's decline.

The near-term bias remains to the downside, as suggested by the downward sloping RSI. The oscillator has dipped below 50, also indicating bearishness. A break below the 50-day MA would accelerate a decline in prices towards support at 141.81. This level is the 50% Fibonacci retracement level of the upleg from 135.60 to 148.10 (April 17 to May 10). From here, there is scope to drop to the 61.8% Fibonacci at 140.34. A break below the June 12 low of 138.66 could see prices re-test the April 17 low of 135.60.

Meanwhile, in the longer-term view, a double top chart pattern could be forming and would be confirmed if GBPJPY falls below 138.66. Such a move would bring about a bearish outlook for the pair, especially if the market remains below the daily Ichimoku cloud.

Only a move back above 145.11 (23.6% Fibonacci) would weaken the near-term bearish bias and may open the way for prices to target the 147.77 July 11 high before reaching the key 148.00 area. From this level, the market could resume its recent uptrend.

The short-term bias is bearish and the medium-term bias is neutral unless a double-top pattern is confirmed.