Sample Category Title

Weekly
    •    Last Candlesticks pattern: Shooting doji
    •    Time of formation: 01 May 2017
    •    Trend bias: Sideway

Daily
    •    Last Candlesticks pattern: Bearish engulfing
    •    Time of formation: 5 May 2017
    •    Trend bias: Down



USD/CAD – 1.2945

 




As the greenback has remained under pressure after recent selloff and price has broken below indicated previous support at 1.2969, adding credence to our bearish view that early erratic rise from 1.2461 has ended at 1.3794 earlier, hence further fall to 1.2900 and later 1.2850 would be seen, however, reckon support at 1.2822 would hold from here due to oversold condition and price should stay well above support at 1.2763, risk from there has increased for a rebound to take place later this month.

On the upside, whilst initial recovery to 1.3000-05 and possibly towards 1.3050 cannot be ruled out, reckon upside would be limited to the Tenkan-Sen (now at 1.3092) and bring another selloff later. Only a sustained breach above previous support 1.3165 (now resistance) would defer and bring a stronger rebound to 1.3180-85 and then test of previous support at 1.3208 but upside should be limited to the Kijun-Sen (now at 1.3230) and price should falter below 1.3305-10, bring another decline later. 

Recommendation: Sell again at 1.3050 for 1.2850 with stop above 1.3150.


On the weekly chart, last week’s selloff below indicated previous support at 1.2969 did form another long black candlestick and bearishness remains fort the fall from 1.3794 top to extend weakness to 1.2900, break there would signal the entire recovery from 1.2461 low (2016 low) has ended at 1.3794 early last month, then further decline to 1.2850 and then test of support at 1.2822 would be seen, however, near term oversold condition should limit downside and price should stay above another previous support at 1.2763, bring rebound later. 

On the upside, although initial recovery to 1.3070-80 cannot be ruled out, reckon 1.3100-10 would limit upside and bring another decline later. A weekly close above said previous support at 1.3165 would defer and risk a stronger recovery to 1.3200-10 but still reckon 1.3270-75 would limit upside and price should falter below resistance at 1.3348 and bring another selloff next month.

Daily Pivots: (S1) 0.9583; (P) 0.9622; (R1) 0.9643; More......

Break of 0.9620 minor support suggests that recovery from 0.9551 is already completed at 0.9687. Intraday bias is turned back to the downside for 0.9551 low. Break will extend the decline from 1.0342 to 0.94443 key support level. At this point, we'd expect strong support from there to bring rebound. Above 0.9687 will bring another recovery. But overall, outlook will remain bearish as long as 0.9777 resistance holds.

In the bigger picture, USD/CHF is still bounded in medium term range of 0.9443/1.0342 for the moment. Consolidative trading would likely continue and medium term outlook remains neutral. Break of 1.0342 key resistance is needed to confirm underlying bullish momentum in the pair. Meanwhile, downside attempts should be contained by 0.9443 key support level. However, sustained break of 0.9443 will carry larger bearish implication and target 0.9 handle.

Market movers today

The main release today is the US jobs report for June. We expect employment rose 180,000 due to strong ISM and Markit PMI employment indices but yesterday's ADP jobs report puts some downside risks to this forecast . We estimate the unemployment rate was unchanged at 4.3% and wage growth rose slightly to 2.6%, which is st ill low in a historical perspective. For more, see US Labour Market Monitor: June report likely to be stronger than in recent months, 5 July.

Also, the Fed is due to release the monetary policy report today ahead of Janet Yellen's testimony to Congress next week. The FOMC minutes from the June meeting revealed that the Fed may soon begin quantitative tightening (see FOMC Minutes: Fed likely to announce start of QT in September, 5 July).

In Sweden, we are due to get household consumption data at 09:30 CET . In Norway, we are due get product ion data at 08:00 CET.

In the UK, the NIESR GDP estimate for June and product ion and construct ion data for May are due out today.

The G20 summit begins today and there are many t hings to discuss: North Korea, Ukraine and trade/protectionism to mention but a few.

Selected market news

The European fixed income market sold off yesterday on the back of hawkish minutes from the ECB, modest demand for the long-end of France and Spain at the auctions yesterday and a technical sell-off as the 10Y German government bond yield broke through the important level of 0.5%.

Focus on global monetary policy tightening is set to be an ongoing theme in markets but both the ECB and the Federal Reserve are well aware that they have to do this gradually in order to avoid the previous policy mistakes made in 2011, when the ECB tightened monetary policy too early, and 2013, with the Federal Reserve's taper tantrum. Hence, we expect rates to remain range-bound.

Sentiment in the Asian equity markets this morning was hit by rising rates and the hawkish minutes from the ECB. This also affected the euro versus the US dollar, with EUR/USD remaining above the 1.14 level in Asian trading.

USD/CHF - 0.9613

Most recent candlesticks pattern : N/A

Trend                                    : Near term down

Tenkan-Sen level                  : 0.9608

Kijun-Sen level                    : 0.9629

Ichimoku cloud top                 : 0.9655

Ichimoku cloud bottom              : 0.9655

Original strategy :

Buy at 0.9585, Target: 0.9685, Stop: 0.9550

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 0.9555, Target: 0.9655, Stop: 0.9520

Position : -

Target :  -

Stop : -

Although the greenback retreated after rising to 0.9688 and near term downside risk remains for initial weakness to 0.9580, reckon last week’s low at 0.9552 would limit downside and bring another rebound later, above 0.9660 would signal the retreat from 0.9688 has ended and bring test of this level, break there would signal low has been formed at 0.9552, bring retracement of early decline to 0.9700 and later towards resistance area at 0.9738-43.

In view of this, we are inclined to buy dollar on further fall. Below said support at 0.9552 would signal recent decline has resumed instead, then weakness to 0.9520-25 would follow but reckon 0.9500 would hold on first testing. 

GBP/USD - 1.2959

Most recent candlesticks pattern   : N/A

Trend                                 : Near term up

Tenkan-Sen level                 : 1.2962

Kijun-Sen level                    : 1.2954

Ichimoku cloud top              : 1.2927

Ichimoku cloud bottom        : 1.2926

Original strategy :

Buy at 1.2865, Target: 1.3000, Stop: 1.2830

Position : - 

Target :  -

Stop : -

New strategy  :

Stand aside

Position : -

Target :  -

Stop : -

Although the British pound found support at 1.2893 earlier this week and has rebounded, above 1.3000 is needed to signal the pullback from 1.3030 (last week’s high) has indeed ended and bring retest of this level, break there would signal early upmove has resumed and extend further gain towards recent high 1.3048, only break there would retain bullishness and encourage for headway to 1.3080, then 1.3100-10. 

In view of this, would not chase this rise here and would be prudent to stand aside for now. Below 1.2920 would prolong consolidation, bring another test of said support at 1.2893, break there would signal temporary top has been formed at 1.3030, bring further corrective fall to previous resistance at 1.2861, then towards 1.2830-35 (50% Fibonacci retracement of 1.2640-1.3030).

Daily Pivots: (S1) 112.85; (P) 113.14; (R1) 113.57; More...

USD/JPY's rally resumed after brief consolidation and intraday bias is back on the upside for 114.36 resistance. Decisive break there will confirm our bullish view that corrective pull back from 118.65 has completed at 108.12. In that case, further rally would be seen to retest 118.65. On the downside, break of 112.88 support is needed to indicate short term topping. Otherwise, outlook will remain bullish in case of retreat.

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.

EUR/USD - 1.1415

Most recent candlesticks pattern   : N/A

Trend                      : Near term up

Tenkan-Sen level              : 1.1417

Kijun-Sen level                  : 1.1379

Ichimoku cloud top             : 1.1344

Ichimoku cloud bottom      : 1.1341

Original strategy  :

Buy at 1.1355, Target: 1.1455, Stop: 1.1320

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 1.1355, Target: 1.1455, Stop: 1.1320

Position : -

Target :  -

Stop : -

As the single currency staged a strong rebound after finding renewed buying interest at 1.1312, suggesting the pullback from last week’s high of 1.1446 has ended there and retest of this level would be seen, however, break there is needed to confirm recent upmove has resumed for headway to 1.1475-80 but price should falter below 1.1500.

In view of this, we are looking to buy euro on dips but one should exit on subsequent rally. Below 1.1325-30 would abort and signal the rebound from 1.1312 has ended, bring another test of this level, then 1.1292 (previous support as well as 50% Fibonacci retracement of 1.1139-1.1446).

USD/JPY - 113.75

Most recent candlesticks pattern   : N/A

Trend                      : Near term up

Tenkan-Sen level              : 113.47

Kijun-Sen level                  : 113.42

Ichimoku cloud top             : 113.22

Ichimoku cloud bottom      : 113.19

New strategy  :

Stand aside

Position :  -

Target :  -

Stop : -

Although the greenback has risen again and broke above resistance at 113.69 and initial upside risk remains for recent upmove to extend gain to 114.00, loss of momentum should prevent sharp move beyond 114.25-30 and reckon 114.50-55 would hold from here, risk from there has increased for a retreat to take place later.

In view of this, would not chase this rise here and would be prudent to stand aside ahead of US opening. Below the Kijun-Sen (now at 113.42) would bring pullback to 113.10-15 but only break of support at 112.74-88 would signal top is formed, bring correction of recent rise to 112.60, then 112.40.

A note on lower timeframe confirming price action...

Waiting for lower timeframe confirmation is our main tool to confirm strength within higher timeframe zones, and has really been the key to our trading success. It takes a little time to understand the subtle nuances, however, as each trade is never the same, but once you master the rhythm so to speak, you will be saved from countless unnecessary losing trades. The following is a list of what we look for:

• A break/retest of supply or demand dependent on which way you're trading.
• A trendline break/retest.
• Buying/selling tails ... essentially we look for a cluster of very obvious spikes off of lower timeframe support and resistance levels within the higher timeframe zone.
• Candlestick patterns. We tend to only stick with pin bars and engulfing bars as these have proven to be the most effective.

We typically search for lower-timeframe confirmation between the M15 and H1 timeframes, since most of our higher-timeframe areas begin with the H4. Stops are usually placed 1-3 pips beyond confirming structures.

EUR/USD

The EUR/USD bulls went on the offensive during yesterday's segment, running through both the H4 resistance area at 1.1372-1.1390, as well as the 1.14 handle. Influenced by lower-than-expected US ADP non-farm employment numbers and weekly unemployment figures, the major managed to end the day forming a nice-looking daily full-bodied bullish candle.

While we agree that the bulls look incredibly aggressive at this time, traders may want to note that weekly flow remains loitering within the walls of a major supply zone drawn from 1.1533-1.1278 that has capped upside since May 2015. Furthermore, we also see a strong-looking daily resistance level overhead at 1.1468. Therefore, the bears still clearly have a hand in this fight!

Our suggestions: Based on the above findings, our desk has their eye on a H4 supply zone positioned just above the 1.1450 mid-level line at 1.1529-1.1484 (seen higher on the screen) for potential shorts. Why this area? Well, we can see that it's located within the upper boundary of the said weekly supply zone, thus should we trade it, we can place stops above the weekly supply. What's more, it is positioned just above the aforementioned daily resistance line, and also of interest is how fresh the H4 supply zone is!

In addition, stop-loss orders above 1.1450 and the daily resistance line at 1.1464 will, should price strike our H4 supply, likely provide enough liquidity for the big boys to sell, and this is exactly where we want to be!

Data points to consider: US Employment figures at 1.30pm, US Fed Monetary policy report at 4pm GMT+1.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: 1.1529-1.1484 ([waiting for a H4 bear candle – preferably a full, or near full-bodied candle –to form is advised] stop loss: ideally beyond the candle's wick).

GBP/USD

Cable struck the 1.29 handle on Wednesday and, as you can see, has remained in a bullish state since. Using May's opening level at 1.2927 to bolster price yesterday, the pair managed to lock horns with a H4 resistance level at 1.2971 going into the close. This level, and the nearby 1.30 psychological band located above, are of interest to our team this morning.

Looking over to the bigger picture, weekly price remains teasing a supply pegged at 1.3120-1.2957 and daily action is also seen kissing the underside of a supply base coming in at 1.3058-1.2979.

Now, looking at how the H4 candles have responded to the resistance line at 1.2971, we feel that the 1.30 boundary will likely be seeing some action today. This number – coupled with it being sited within both of the above said weekly and daily supply areas, is of interest to our desk this morning. However, one has to take into account that should the bears react from 1.30, there's a chance that 1.2971 could halt selling as it will effectively be a support at that stage.

Our suggestions: To confirm bearish intent from 1.30, we would need to see price close back below 1.2971. This, for us, would be enough evidence to suggest that the H4 candles are likely going to retest May's opening level at 1.2927, and possibly the 1.29 handle lurking just beneath it.

Data points to consider: UK manufacturing production at 9.30am, BoE Gov. Carney is also speaking sometime today. US Employment figures at 1.30pm, US Fed Monetary policy report at 4pm GMT+1.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: 1.30 region ([waiting for a H4 bearish close to form below 1.2971 is advised before pulling the trigger] stop loss: ideally beyond the candle's wick).

AUD/USD

The AUD/USD charts are certainly interesting this morning! Over on the weekly chart, the bears continue to dig their way into a support area marked at 0.7610-0.7543. Stepping down a level to the daily chart, however, the unit shows space for price to continue pushing lower until we reach the support area formed at 0.7556-0.7523, which happens to be glued around the lower edge of the current weekly support area.

Now, this is where it gets exciting! As mentioned in Thursday's report, we are currently watching to see if H4 price can shake hands with the mid-level support at 0.7550 for potential longs. Here's our reasoning:

By and of itself, 0.7550 is a watched psychological band.

0.7550 merges with a H4 trendline support etched from the low 0.7519.

Should the H4 candles continue pressing lower, the approach will have formed a beautiful-looking AB=CD bullish formation terminating at 0.7550 (see black arrows).

0.7550 is also located within both of the above said weekly and daily support areas.

Our suggestions: So, put simply, we are going to be watching for price to strike 0.7550 today and hold firm. Should we spot H4 bulls coming into the picture from here in the shape of a (preferably) full-bodied bull candle, we would have no hesitation buying this market and targeting 0.76 as an initial take-profit zone.

Data points to consider: US Employment figures at 1.30pm, US Fed Monetary policy report at 4pm GMT+1.

Levels to watch/live orders:

• Buys: 0.7550 region ([waiting for a H4 bull candle – preferably a full, or near full-bodied candle –to form is advised] stop loss: ideally beyond the candle's tail).
• Sells: Flat (stop loss: N/A).

USD/JPY

Over the past few days, the USD/JPY has been somewhat subdued. H4 action remains capped between the mid-level resistance at 113.50 and the 113 handle. Directly above this area sits a resistance level drawn from 113.74, and below 113, we do not see much in the way of support until the mid-level number 112.50.

Recent developments on the weekly timeframe show price came within a cat's whisker of connecting with the underside of supply pegged at 115.50-113.85. Assuming that the unit connects with this area, it could also form a possible AB=CD correction completing around 115 (see pink arrows). Sliding down to the daily timeframe, nonetheless, we can see that the candles remain capped by the trendline resistance taken from the high 115.50. What's also notable from a technical perspective is this has formed back-to-back indecision candles here.

Our suggestions: Seeing as the overall structure of this market remains unchanged, we still do not want to risk trading short until we know that the market is located within the aforementioned weekly supply. What would be ideal here, however, is for the said weekly AB=CD formation to complete, but that could be sometime before we see this come to fruition!

Data points to consider: US Employment figures at 1.30pm, US Fed Monetary policy report at 4pm GMT+1.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: Flat (stop loss: N/A).

USD/CAD

As can be seen from the H4 chart this morning, the unit remains consolidating between demand at 1.2910-1.2923 and the 1.30 boundary.

As highlighted in yesterday's report, we do not expect the bulls to breach the top edge of this range for the following reasons:

1.30 is a line watched by the majority of the market and seeing as it already held as resistance on Monday; we believe it is likely to continue holding firm.

Secondly, 1.30 also denotes the underside of a recently broken weekly demand base at 1.3006 (now acting as a resistance area).

The underlying trend is strongly pointing to the downside at the moment, and daily price shows space for the unit to continue lower until we reach demand pegged at 1.2822-1.2883.

Our suggestions: The desk has come to a general consensus that 1.30 could, if retested for a third time today, be an area we may consider a sell from. To decide this, however, we would require a H4 bearish candle to form following the retest, preferably in the shape of a full, or near-full-bodied candle. The first take-profit target, assuming that a sell comes to fruition, would be the aforementioned H4 demand, followed closely by the 1.29 handle.

Data points to consider: US Employment figures at 1.30pm, US Fed Monetary policy report at 4pm. Canadian employment figures at 1.30pm GMT+1.

Levels to watch/live orders:

• Buys: Flat (Stop loss: N/A).
• Sells: 1.30 region ([waiting for a H4 bear candle – preferably a full, or near full-bodied candle –to form is advised] stop loss: ideally beyond the candle's wick).

USD/CHF

Kicking this morning's report off with a look at the weekly timeframe, we can see that the resistance level at 0.9639 is holding firm for the time being. With that said, the bears have certainly not got it easy right now! Not only have they got to overcome the nearby support at 0.9581, but also the support level seen below it at 0.9508. Looking down to the daily timeframe, the next area of support can be seen at 0.9561, a 127.2% Fib ext. taken from the high 0.9808, followed closely by support at 0.9546.

Bouncing across to the H4 timeframe, the pair has recently crossed swords with the 0.96 handle and is, for now, holding firm. Personally, we do not feel 0.96 is going to hold for much longer though. The reason is simply because of the green area planted below (comprised of the weekly support level at 0.9581 and the daily support level pegged at 0.9546) being far more attractive.

Our suggestions: In the event that our analysis is correct and H4 price connects with the aforementioned green zone, our team will, once again, be looking to buy from here. Should a H4 bull candle, preferably a full-bodied candle, take shape, a long from here is high probability. The first area of trouble would obviously be the 0.96 line, so we'd be looking for price to overcome this before considering reducing risk to breakeven and taking some profits off the table.

Data points to consider: US Employment figures at 1.30pm, US Fed Monetary policy report at 4pm GMT+1.

Levels to watch/live orders:

• Buys: 0.9546-0.9581 ([waiting for a H4 bull candle – preferably a full, or near full-bodied candle –to form is advised] stop loss: ideally beyond the candle's tail).
• Sells: Flat (stop loss: N/A).

DOW 30

In recent trading, US equities took a turn for the worse and traded to a low of 21300 by the closing bell. What the move also did was tap our breakeven stop at 21323 for a reasonable profit as we already took 50% off the table upon striking the H4 trendline resistance extended from the high 21541.

With H4 price now lurking nearby a support level at 21268, where do we go from here? Well, 21268 hovers just ahead of a daily demand base coming in at 21192-21254, so if you're thinking of going long from the H4 level, be ready for a possible fakeout to take place! On the weekly timeframe, there's little stopping the unit from pulling all the way back to 21022: a support level which has relatively sound history as a resistance.

Our suggestions: We will be watching for H4 price to whipsaw through the current H4 support and touch gloves with the said daily demand. Should this come to fruition, our team would likely look to enter long again, with stops planted below the fakeout candle's tail, targeting the said H4 trendline resistance as an initial take-profit zone.

Data points to consider: US Employment figures at 1.30pm, US Fed Monetary policy report at 4pm GMT+1.

Levels to watch/live orders:

• Buys: 21323 region ([watching for H4 price to fake through this number and touch daily demand before looking to go long here] stop loss: ideally beyond the fakeout candle's tail).
• Sells: Flat (stop loss: N/A).

GOLD

(Much of the following gold report echoes similar thoughts to Thursday's analysis since structure remains unchanged). 

As we noted in Thursday's report, H4 price continues to put together a consolidation zone formed by a resistance area penciled in at 1229.1-1231.6 and a demand base coming in at 1216.7-1219.3.

While traders who only focus on one timeframe may feel that this market is likely headed south due to the medium-term downtrend that we are currently in on the H4 timeframe, the higher-timeframe picture would suggest otherwise!

Scrolling over to the weekly timeframe, the buyers and sellers are seen battling for position within a demand zone at 1194.8-1229.1. This demand has held price higher once already back in early May, so there's a solid chance that history may repeat itself here. In conjunction with the weekly timeframe, daily price also shows the yellow metal trading from within a demand at 1214.1-1225.5, which happens to be positioned within the said weekly demand area.

While the H4 candles could remain bouncing from the H4 range extremes this week, we do not believe this consolidation will give way to the downside for reasons stated above. And, even if it does, we don't feel price will manage to get far beyond the lower edge of the daily demand at 1214.1.

As mentioned in yesterday's analysis, a level that has sparked some interest is the H4 resistance base penciled in at 1235.0, due to its connection with the daily trendline resistance seen extended from the low 1180.4. Still, shorting from this line would still entail one going against potential weekly buying power.

With that in mind, it would not be until a decisive H4 close above 1235.0 is seen, would our team consider buying as an option.

Our suggestions: Typically, we try to avoid trading against higher-timeframe flow. And selling 1235.0 would place us against potential weekly flow! Therefore, our desk is going to remain on the sidelines and wait and see if the H4 bulls can close above 1235.0 for possible longs up to April's opening level at 1248.0.

Levels to watch/live orders:

• Buys: Watching for 1235.0 to be consumed on the H4 chart before buying becomes an option.
• Sells: Flat (stop loss: N/A).

Currency pair EUR/USD

The EUR/USD used the broken top and support zone (blue box) to bounce up. Price then broke above the resistance trend line (dotted red) and is now heading towards the Fibonacci target of wave 5 vs 1+3 and the round level of 1.15.

The EUR/USD is showing strong bullish momentum as part of a wave 3 (orange). Once price makes a correction, there could be a wave 4 and 5 before completing wave 5 (brown).

Currency pair USD/JPY

The USD/JPY extended the uptrend by showing a bullish break above the resistance trend line (dotted red). Price is now moving towards the Fibonacci targets of wave 5 vs 1+3.

The USD/JPY failed to break the local support trend line (light blue) and bounced at support. A break above 114 could price move towards 115.

Currency pair GBP/USD

The GBP/USD bounced back up after strong bullish momentum. The Cable is now approaching a strong resistance trend line (red). A break above it could see price extend the uptrend.

The GBP/USD broke above the resistance trend line (dotted orange) after bouncing to complete a wave 4 (purple). A break above the next resistance trend line (red) could see price start a wave 3 (purple).