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Spot Gold is consolidating above fresh seven-week low at $1218 posted after sharp fall on Monday. The yellow metal was down nearly 1.8% on strong bearish acceleration triggered by break of former key supports at $1236/35 (former low of 26 June / 200SMA). Recovery attempts were so far limited and holding below pivotal barrier at $1227 (Fibo 38.2% of Monday's fall), signaling extended consolidation before bears resume, as slow stochastic is oversold on daily chart. Technical studies are in firm bearish setup on daily chart and supportive for final push towards target at $1214 (09 May low) and $1209 (50% retracement of $1122/$1296 ascend) in extension. Extended upticks should be capped by falling 200SMA (now reverted to resistance), currently at $1233.

Res: 1227; 1230; 1233; 1236
Sup: 1218; 1214; 1209; 1200

GBP/USD – 1.2933

 
GBP/USD – Wave 4 is unfolding as an (A)-(B)-(C) and could have ended at 1.7192

 
As cable’s rebound from 1.2589 turned out to be much stronger than expected, suggesting the correction from 1.3048 has ended there and although price has eased from 1.3030, reckon downside would be limited to 1.2790-00 and bring another rise towards 1.3048 resistance, break there would extend recent upmove from 1.1986 low to 1.3140-50 (38.2% Fibonacci retracement of 1.5018-1.1986) and possibly 1.3200 but near term overbought condition should prevent sharp move beyond 1.3300, risk from there is seen for a retreat later.  

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 possibly ended at 1.7192, below support at 1.4232 would add credence to this count, then further fall to 1.4000 level would follow but reckon downside would be limited to 1.3655 support and price should stay above previous support at 1.3500.

On the downside, whilst initial pullback to 1.2800 cannot be ruled out, reckon support at 1.2760 (previous resistance) would hold and bring another rise later. A daily close below 1.2700-10 would defer and prolong choppy trading below 1.3048, bring weakness to 1.2650-55 but still reckon downside would be limited and said support at 1.2589 should remain intact. In the event sterling drops below this support, this would extend the fall from 1.3048 for retracement of recent upmove to 1.2550, then towards 1.2500.
 

Recommendation: Buy at 1.2800 for 1.3000 with stop below 1.2700.

 
Longer term - Cable's rise from 1.0520 (Feb 1985) to 2.0100 (September 1992) is seen as [A], the decline to 1.3682 is labeled as (B) and (C) wave rally has ended at 2.1162 (9 Nov, 2007) which is also the top of larger degree wave B with circle. The selloff from there is a 5-waver with wave (A) ended at 1.3500 (23 Jan 2009), wave (B) itself is labeled as A: 1.6733, triangle wave B: 1.4813 and wave C as well as top of wave (B) ended at 1.7192 (2014), hence the selloff from there is an impulsive wave (C) with wave I : 1.4566, wave II 1.5930, an extended wave III is unfolding and already exceeded our downside target at 1.3500 and 1.3000, hence weakness to 1.2500 and possibly 1.2000 cannot be ruled out, however, price should stay well above psychological level at 1.0000.

GBP/CHF – 1.2485

  





GBP/CHF – Circle wave v ended at 0.9106 and major correction has commenced for subsequent gain to 1.5547.




 

As sterling has rebounded again after holding above support at 1.2241, retaining our view that further consolidation above this level would be seen and recovery to 1.2540-50 (previous resistance and 38.2% Fibonacci retracement of 1.3069-1.2241) is likely, however, reckon upside would be limited to 1.2655-60 (50% Fibonacci retracement) and bring another decline later (probably in early Q3). Below 1.2390-95 would weakness to 1.2310-15 but break of said support at 1.2241 is needed to signal the fall from 1.3069 top has resumed for test of previous chart support at 1.2215, then 1.2150, having said that, loss of momentum should prevent sharp fall below another chart support at 1.2102 (this year’s low).  




To recap the larger degree count, the selloff from 2.4965 (July 2007) is the beginning of wave V with circle and is labeled as 1: 2.3760, 2: 2.4425, wave 3 extension ended at 1.1470, followed by wave 4 at 1.5547, the quick rebound from 0.9106 suggests wave 5 as well as entire circle wave V could have ended there, hence consolidation with mild upside bias is seen for major correction to take place, bring initial test of 1.5547 (previous 4th of a lesser degree).


 
On the upside, whilst initial recovery to 1.2540-50 cannot be ruled out, reckon upside would be limited to 1.2655-60 (50% Fibonacci retracement of 1.3069-1.2241) and bring another decline later. Only a daily close above resistance at 1.2690-95 would abort and suggest first leg of decline from 1.3069 has ended, bring a stronger rebound to 1.2740-50, however, as top has been formed at 1.3069, still reckon upside would be limited to 1.2785-90 and price should falter below 1.2850-60, bring another decline later.  




Recommendation: Sell at 1.2655 for 1.2355 with stop below 1.2755.

On the Monthly chart, the longer-term count is that major downtrend is under way with circle wave I at 2.8645 (Sep 1.978), then wave II with circle at 4.6175 (Feb 1981), the wave III with circle ended at 1.7425 (Nov 1995) and followed by wave IV with circle at 2.4965 (July 2007 with a short wave C) and wave V with circle has possibly ended at 0.9106. A monthly close above 1.5547 would add credence to this view, bring major correction to 1.7000, then towards psychological level at 2.0000.

As expected by market participants, the Reserve Bank of Australia (RBA) today decided to keep rates unchanged at the historical low level of 1.5%. This comes at a time when major central banks around the world are either normalizing rates or are signalling that they're getting closer to start tightening their respective monetary policies.

The RBA's decision followed the release of the Australian retail sales data, which were published a few hours earlier. The figures showed retail sales growing by 0.6% month-on-month during May. This was a positive surprise relative to the 0.2% expected by analysts, but was below April's respective growth rate at 1.0%. On Monday, other figures out of Australia showed an unexpected steep deterioration in building approvals by 5.6% and a slight improvement in the AIG manufacturing index, which rose to 55.0 from 54.8 in May.

The RBA, contrasting the recent hawkish signals from the Federal Reserve, European Central Bank, Bank of England and the Bank of Canada, stuck on its neutral monetary stance that has been in place since August 2016, the last time the Bank engaged in a rate cut. RBA policymakers repeated in today's report that “holding the stance of monetary policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time”. In addition, they seemed less confident about Australia's economic outlook, expressing concerns about the high household debt levels that could act as a drag on growth at a time of more or less stagnant wages.

Turning to the forex market's reaction following the central bank's meeting, the aussie steeply declined versus the dollar on the news. Specifically, aussie/dollar fell to as low as 0.7590. The pair traded at 0.7679 previously. It was last down more than seven-tenths of a percent on the day.

It should be noted that Australian inflation was released at 2.1% year-on-year in the first quarter of the year, a level that is within the RBA's target range of 2-3%. In the meantime, GDP growth declined to 1.7% over the same period after a strong recovery in the fourth quarter of 2016.

Daily Pivots: (S1) 145.95; (P) 146.43; (R1) 147.20; More....

Upside momentum in GBP/JPY is weak with 4 hour MACD staying below signal line. But with 145.13 minor support intact, further rise is expected to 148.09/42 resistance. Decisive break there will extend whole rally from 122.36 to long term fibonacci level at 150.43 next. On the downside, below 145.13 minor support will turn intraday bias neutral and bring consolidation again before staging another rally.

In the bigger picture, rise from medium term bottom at 122.36 is expected to continue to 38.2% retracement of 196.85 to 122.36 at 150.43. Decisive break there will carry long term bullish implications and pave the way to 61.8% retracement at 167.78. In case the sideway pattern from 148.42 extends, we'd be looking for strong support from 135.58 and 50% retracement of 122.36 to 148.42 at 135.39 to contain downside.

The CAC index is showing little movement in the Tuesday session. The index is currently trading at 5191.80 and is down 0.10% on the day. On the release front, Eurozone PPI declined 0.4% in May, missing the estimate of -0.2%. The index has not posted a gain since February, underscoring weak inflation in the eurozone.

The watershed French election, in which voters have given President Emmanuel Macron's En Marche party a resounding majority in parliament. There is a renewed feeling of optimism in the country, and recent indicators are pointing to stronger consumer confidence and spending levels. French consumer spending climbed 1.0% in June, easily beating the estimate of 0.5%. This marked the indicator's strongest gain since January 2015. The solid manufacturing data points to stronger optimism in the business sector. The economy appears to be improving – a recent INSEE report revised upwards its estimate for France's GDP for the first quarter to 0.5%, up from 0.4% earlier in June. Still, inflation levels remains mired at low levels, as underscored by French Preliminary CPI, which dropped to a flat 0.0%.

The annual European forum of central bankers is generally a non-event for the markets, but last week's gathering was a significant market-mover. Both the euro and the pound recorded sharp gains, following hawkish remarks from ECB President Mario Draghi and BoE Governor Mark Carney. The euro jumped 2.0% last week, catching ECB policymakers by surprise. The bank tried to dampen market speculation about any imminent moves to withdraw stimulus, but the euro remains at high levels. Last week's stampede to snap up euros has forced ECB policymakers to reassess whether what moves, if any, it will announce at the July 20 policy meeting. In June, the ECB removed an easing bias regarding interest rates, effectively closing the door to further rate cuts. However, after the Draghi rally last week, policymakers may be wary about removing a second easing bias regarding the asset-purchase program, to avoid another run on the euro. The ECB has repeated loud and clear that it will not remove QE until inflation levels are closer to the bank's target of 2.0%, but Draghi may have learned the hard way at the ECB forum that the market is picking up a different message than what the ECB thinks it is sending. This could result in the ECB playing it safe and avoiding any meaningful discussion about QE at the July meeting, especially if the euro remains at high levels.

The Federal Reserve has given broad hints that it plans to raise interest rates three times in 2017, but the markets are becoming more skeptical. The odds of a rate hike in December have fallen to 47%, down from 53% last week, according to the CME Group. With the US economy giving a mediocre performance in the first quarter, and inflation levels remains low, there are Fed policymakers who are currently lukewarm to the idea of raising rates again this year. Key economic indicators have not looked particularly sharp in the second quarter, notably housing and consumer spending numbers. If inflation numbers do not improve and GDP reports for Q2 remain soft, the odds of a December hike will drop even further, which could translate into broad losses for the US dollar.

The pair is consolidating under fresh high at 113.47 (the highest since 16 May) posted on strong rally on Monday (the biggest one day rally since 15 June).

Corrective dip to 112.73 in early Europe was short-lived and the price returned above 113.00 handle, maintaining positive tone.

Overall strong bullish tone favors further upside, with firm break above solid barrier at 113.50 to trigger fresh acceleration towards 114.00 and key barrier at 114.36 (11 May high).

Caution on overbought slow stochastic which is forming bearish divergence on daily chart. Increased downside risk could be expected on firm break below 112.80 pivot (Fibo 38.2% of 111.72/113.47 upleg).

Res: 113.50, 113.95, 114.36, 114.65
Sup: 113.05, 112.80, 112.60, 112.39

Daily Pivots: (S1) 128.22; (P) 128.58; (R1) 129.20; More...

EUR/JPY's rally resumed after brief retreat. Intraday bias is turned back to the upside for 61.8% projection of 114.84 to 125.80 from 122.39 at 129.16 first. We'd be aware of strong resistance between 129.16 and medium term projection level at 129.89 to bring short term topping. On the downside, below 1.2743 will bring deeper pull back to 125.80 resistance turned support.

In the bigger picture, the break of 126.09 support turned resistance should have confirmed completion of down trend form 149.76 (2014 high), at 109.03 (2016 low). Current rise from 109.03 should target 100% projection of 109.03 to 124.08 from 114.84 at 129.89 first. Break there will pave the way to 61.8% retracement of 149.76 to 109.03 at 134.20 and above. Medium term outlook will now remain bullish as long as 122.39 support holds.

GOLD Monitoring support at 1214.

Gold's is trading lower. The commodity has broken hourly support located at 1236 (26/06/2017 low). Stronger support is given at 1214 (09/05/2017 low). Hourly resistance can be found at 1258 (23/06/2017 high). Expected to show further monitoring of support at 1214.

In the long-term, the technical structure suggests that there is a growing upside momentum. A break of 1392 (17/03/2014) is necessary ton confirm it, A major support can be found at 1045 (05/02/2010 low).

SILVER Continued weakness.

Silver's bullish bounce quickly faded. Closest support given at 16.29 (26/06/2017 low). has been broken. Strong support is given at 16.06 (09/05/2017 low). Key resistance is given at a distance at 17.75 (06/06/2017 high). The road seems wide open for further decline.

In the long-term, the death cross indicates that further downsides are very likely. Resistance is located at 25.11 (28/08/2013 high). Strong support can be found at 11.75 (20/04/2009).

CRUDE OIL Pushing higher.

Crude oil's momentum seems strong again. Support is given at 42.05 (21/06/2017 low). Expected to show renewed weakness.

In the long-term, crude oil has recovered after its sharp decline last year. However, we consider that further weakness are very likely. Strong support lies at 35.24 (05/04/2016) while resistance can now be found at 55.24 (03/01/2017 high).

EUR/JPY Continued increase.

EUR/JPY is now consolidating after its recent rally. Key resistance is located at 128.83 (30/06/2017). Hourly support can be found at 127.10 (30/06/2017). Next support is given at 122.56 (18/05/2017 low). Further upside is favored.

In the longer term, the technical structure validates a medium-term succession of lower highs and lower lows. As a result, the resistance at 149.78 (08/12/2014 high) has likely marked the end of the rise that started in July 2012. Strong support at 94.12 (24/07/2012 low) looks nonetheless far away.

EUR/GBP Slight weakness.

EUR/GBP has broken downtrend resistance triggering a move towards support at 0.8719 (16/06/2017 low). Stronger support can be found at 0.8652 (08/06/2017 low). Expected to show continued weakness.

In the long-term, the pair has largely recovered from recent lows in 2015. The technical structure suggests a growing upside momentum. The pair is trading above from its 200 DMA. Strong resistance can be found at 0.9500 psychological level.

EUR/CHF Stalling below 1.0960.

EUR/CHF's short-term bullish pressures are definitely on after clear break of downtrend channel. Hourly support is located at a distance at 1.0792 (03/05/2017 low) while the pair is heading towards resistance given at 1.0987 (12/05/2017 high).

In the longer term, the technical structure is mixed. Resistance can be found at 1.1200 (04/02/2015 high). Yet,the ECB's QE programme is likely to cause persistent selling pressures on the euro, which should weigh on EUR/CHF. Supports can be found at 1.0184 (28/01/2015 low) and 1.0082 (27/01/2015 low).