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The ongoing fall in oil prices has driven risk-off sentiments across all asset classes. U.S. stocks closed mostly lower on Wednesday despite the unexpected rise in home resales. The U.S. Treasury yield curve flattened further to almost a decade-low ignoring the Fed policymakers' hawkish statements. Meanwhile, commodity currencies felt most of the pain with the Lonnie and Aussie falling against the U.S. dollar.

It's evident that oil prices are becoming the primary driver of the financial markets. After both benchmarks entered a bear market with Brent plunging below $45 for the first time since November, investors are becoming more concerned as to when the plunge will stop.

Back in November 2016, when OPEC and non-OPEC producers, including Russia, decided to cut production, most market participants believed that this would lead to a re-balancing of the market and the supply glut would come to an end. Eight months later, U.S. shale producers increased the rate of drilling, Libya is pumping oil at the highest levels in four years, and the amount of oil that's being stored in tankers jumped to a new high in 2017.

The key question most traders are asking is when oil will finally find support? At this stage, it's hard to say where prices will bottom out. Comments from Iranian oil minister, Bijan Zangeneh that Iran is in discussions with OPEC members for further production cuts fell on deaf ears, meaning that comments from OPEC members are unlikely to influence prices. With no hard data to encourage bulls to jump in, the risk to the downside will continue to persist. However, I believe at low $40 or below, U.S. shale producers will start to suffer and drilling activities will most likely take a U-turn, meaning that U.S. and global inventories will start declining at a faster pace.

Supply is not the only justification for lower prices. When looking at the other side of the equation we see that China's demand is slowing, and it's expected that 10% of the country's refining capacity will shut down during Q3, which is another factor to worry about in the next couple of months.

I'm still confident that prices will return to the $50 - $60 range on the longer run, but with no action from OPEC to deepen production cuts, it will take longer for markets to rebalance, and central banks, especially the Fed should reconsider the risks of disinflation.

Daily Pivots: (S1) 1.0846; (P) 1.0855; (R1) 1.0867; More...

Intraday bias in EUR/CHF remains neutral for the moment. On the downside, break of 1.0837 support will resume the correction from 1.0986 and turn bias to the downside. In that case, we'd continue to expect strong support from 1.0791/0872 support zone to bring rebound. On the upside, break of 1.0908 resistance will argue that such correction is completed and turn bias to the upside for retesting 1.0987/0999 resistance zone.

In the bigger picture, the price actions from 1.1198 are seen as a corrective move. Such correction could have completed after defending 38.2% retracement of 0.9771 to 1.1198 at 1.0653. Decisive break of 1.0999 resistance will target a test on 1.1198 high. For now, this will be the preferred case as long as 1.0791 support holds.

The US dollar index closed bearish yesterday after price rallied to the technical resistance level of 97.40 - 97.50. This gave a brief relief to its counterparts which managed to post a modest recovery. The economic calendar was light yesterday, and with not much of data, traders focused on central banker speeches.

The BOE 's chief economist Andrew Haldane was hawkish as he said that he was in favor of a rate hike as well as pointing out that the stimulus program should be removedby the second half of the next year. The British pound recovered only to give up some of the gains on the day.

Looking ahead, the economic data today will see Canada's retail sales numbers coming out. Retail sales are forecasted to rise 0.6% on the month on the core, reversing the 0.2% declines posted previously while headline retail sales are expected to rise 0.3%, following a 0.7% increase previously.

Among central bank speeches, BoE Member, Kristin Forbes, who voted for a rate hike will be speaking today while FOMC Member, Powell will be speaking in regards to the Fed's policies.

EURUSD intraday analysis

EURUSD (1.1168): The EUR/USD was seen posting a recovery yesterday with price action likely to extend gains in the near term. Minor support is seen forming at 1.1129, which looks to be potentially turning out into a head and shoulders pattern neckline support. A near term bounce could push EURUSD towards 1.1120 - 1.1253 level, where we could expect a near-term reversal. A validation of the head and shoulders pattern on the daily chart will signal further downside when the support at 1.1129 breaks which will push EURUSD towards 1.1000. On the 4-hour chart, we can expect EURUSD to struggle near the resistance of 1.1171, with a breakout above this level pushing the currency pair towards 1.12290.

GBPUSD intraday analysis

GBPUSD (1.2669): The British pound extended the declines down to 1.2600 and confirmed the first downside target. Price immediately reversed the losses and rallied back up to test 1.2685 resistance level before giving up the gains here slightly. In the near term, GBPUSD could remain range bound within 1.2688 and 1.2600. The bias remains to the downside, but a break out from either of these levels will see further gains or losses coming its way. To the upside, above 1.2688, GBP/USD will likely aim for 1.2800 while to the downside, below 1.2600, the next support at 1.2400 will be in focus.

USDJPY intraday analysis

USDJPY (111.12):USDJPY remained subdued yesterday with price briefly testing the resistance at 111.61 once again. The resistance level is likely to hold out in the near term, meaning that USDJPY could be seen pushing down to the support at 110.78 - 110.52 region. Establishing support here could see USDJPY attempt to break past the resistance level to the upside. However, should USDJPY fail to establish support at 110.78 - 110.52, then further downside could see declines extending towards the lower support at 109.50 - 109.25.

Sunrise Market Commentary

• Rates: Core bonds remain resilient, partly because of oil sell-off
  Risk sentiment and oil prices could guide global trading. Core bonds can profit in a daily perspective if oil extends losses, but moves are expected to remain within narrow technical ranges. The technical picture for Brent deteriorated following the break below $46/barrel. The eco calendar only contains second tier eco data.
• Currencies: Oil price and low core yields weigh on dollar
  There is little eco news to guide USD trading this week and this won't change today. The decline of the oil prices keeps LT yields low and weighs slightly on the dollar. Sterling rebounded temporary on hawkish comments from BoE Haldane, but a test of the EUR/GBP 0.8854/66 resistance is still possible.

The Sunrise Headlines

• The S&P and Dow Jones performed weak yesterday, amongst others due to falling oil prices. Nasdaq was a clear outperformer, gaining 0.74%. In Asian markets, equity gains are modest overall.
• Brent oil is holding under $45/ barrel after yet another decline during US trading hours yesterday.
• The New Zealand Reserve Bank kept its interest rates unchanged at 1.75%. Markets interpret the NZRB statement slightly less dovish. This resulted in small gains for the Kiwi dollar versus the US dollar.
• Fed policymaker Harker said he prefers pausing rates while reducing the bank's balance sheet. He also stated that, despite low wage growth, there is very little slack left in the jobs market and wage acceleration will soon start.
• Senate Republicans plan to release a new health-care bill that would curtail federal Medicaid funding, repeal taxes on the wealthy and eliminate funding for Planned Parenthood as part of an effort to undo Obamacare.
• PM May will outline her approach to reassuring EU expatriates about their futures in the UK. The UK stance will likely disappoint EU-members as May faces a tough balancing act between the EU-wishes and the euro-sceptics at home.
• The eco-calendar contains mainly second tier releases like US jobless claims, UK CBI total orders, the Norvegian rate decision and EMU consumer confidence. In terms of events, the EU summit and Fed speaker Powell might be interesting

Currencies: Oil Price And Low Core Yields Weigh On Dollar

Oil price decline weighs on USD

Yesterday, there was nothing to inspire USD trading. EUR/USD was locked in the mid 1.11 area for most of the day. An uptick in core bond yields supported a temporary USD/JPY comeback, but the USD gain could not be sustained. USD/JPY finished the session at 111.38 (from 111.45). EUR/USD closed an uneventful session at 1.1168 (from 1.1134).

Overnight, risk sentiment in Asia remains constructive. The tech sector rebound outweighs the impact of a decline of the oil price. Brent oil is holding below the $45/barrel level. USD/JPY trades with a slightly negative bias. The dollar also trades marginally softer against the euro (EUR/USD 1.1170 area). The Reserve bank of New Zealand, as expected, left its policy rate unchanged at 1.75%. The RBNZ maintained a positive economic outlook. It also wasn't worried about the recent rise of the kiwi dollar. NZD/USD strengthened to currently trade in the 0.7250 area.

The eco calendar is again only little interesting. In EMU, consumer confidence is expected to improve slightly further. In the US, the jobless claims and some second tier data will be published. The data might have some intraday significance for the dollar at best, but won't set a clear directional trend. The decline in oil prices and the equity performance remain wildcards. The usual inverse correlation between the dollar and oil currently doesn't work. Sometimes this turns out to be USD negative as well. USD/JPY is currently more sensitive to the low level of core interest rates rather than to the swings in the equities. In this context, a further decline of oil might continue to weigh on USD/JPY. The impact on EUR/USD is less obvious. We maintain a neutral stance on EUR/USD today.

Global context. After last week's relatively hawkish Fed statement, the topside in EUR/USD is better protected and a cautious sell-on upticks approach is advised. However, sustained USD gains need better US eco data, supportive Fed comments and/or higher US yields. With few high profile US data this week, it is doubtful that the US currency will receive this support. If the equity rally slows, so might be the USD rebound. Oil is also a wildcard

Technical picture

The USD/JPY rally ran into resistance in early May. A mini sell-off mid-May made the short-term picture negative, driving the pair further down in the 108.13/114.37 range. The post-Fed USD rebound pushed the pair beyond a first minor resistance at 110.81. A break beyond the 112.13 correction top would improve the ST-picture. The day-to-day sentiment improved slightly of late, but we remain cautious to forecast a U-turn.

Early May, EUR/USD failed to break below the 1.0821/1.0778 support (gap). Poor US data and US political upheaval propelled EUR/USD north of the 1.1023 range top. The pair tested the 1.1300 area going into the FOMC decision, but the test was rejected. So the Trump top/correction top at 1.1300/1.1366 proved to be a solid resistance. USD sentiment will have to become really negative to clear this hurdle. EUR/USD 1.1110 is a first minor support. A return below 1.1023 would indicate that the upside momentum has eased

EUR/USD: test off 1.1300/66 resistance rejected, but correction remains modest. First support at 1.1110 holds

EUR/GBP

Sterling haunted by BoE comments

Comments from BoE governors continue to haunt UK interest rate markets and sterling. On Tuesday sterling was hammered as BoE governor Carney said that it is too early for a rate hike. EUR/GBP yesterday even came within reach of the 0.8854/66 key resistance. However, sterling fortunes changed again as BoE chief economist Haldane said that it could be prudent to withdraw some policy stimulation in the second half of the year. At last week's BoE meeting, Haldane was the in the camp of the MPC members who voted to leave rates unchanged. So, the division within the BoE is profound. The outcome of the next BoE meetings might be a close call. Sterling jumped sharply higher on the Haldane comments but returned part of the gains later. EUR/GBP closed the session at 0.8814. Cable finished the day at 1.2671.

Today, the CBI Trends orders will be published. A modest decline (7 from 9) is expected. It is interesting to see whether the recent turmoil might affect the economy going forward. However, the CBI data are usually no market mover. The political developments remain a wildcard. The interest debate with the BoE could in theory support sterling. However, at the end of the day, we still see no rate hike short-term as political and economic uncertainty remains really high. We maintain a sterling negative bias.

From a technical point of view, EUR/GBP extensively tested the 0.8854 area (2017 top), but a real break didn't occur. BoE comments caused some intraday volatility recently. In the end, the 0.8854/66 resistance remains within reach. A break would open the way to the 0.90 area. A return below the 0.8655 correction low would indicate easing pressure on sterling. Such a break lower will be difficult. A EUR/GBP buy-on-dips approach remains favoured

EUR/GBP: sterling rebounds temporary on BoE comments but the 0.8854/66 resistance stays within reach

Download entire Sunrise Market Commentary

Market movers today

In the euro area, consumer confidence is due for release today. Consumer confidence rose from -3.6 in April to -3.3 in May, which is its highest level since 2007. We believe that consumer confidence will increase further as employment continues to be a tailwind and uncertainty over a euro break-up is fading with the outcome of the French elect ion.

The major event in the Scandi region is the Norges Bank meeting, where we expect unchanged rates but for it to remove it s ‘easing bias' from the interest rate path.

Selected market news

The rout in Oil markets continues to hunt financial markets. Yesterday, most US stocks fell, with notably energy and industrial shares leading the declines, which overshadowed a fresh rebound in technology and biotech companies. Asian stocks are increasing this morning, although traditional safe havens such as gold and Japanese yen are trading on a strong note.

The Brent oil price fell beneath USD45 a barrel to join West Texas Intermediate in a bear market yesterday. Among the factors creating pressure on the oil prices were indications that stockpiles in America remain above seasonal averages and Libya resumed some production. Furthermore, the lower break-even of shale oil producers in the US has created concerns that even at oil prices in the 40s, these producers will fill the gap if OPEC producers decide to cut production further. However, in our view, a weakening belief in global demand is one of the main drivers.

The oil rout is also setting the tone in fixed income markets. Five-year inflation expectations are now below the levels before Trump was elected and the global reflation story took hold in financial markets. Hence, inflation markets are doubting the arguments by US Federal Reserve that the fall in inflation will be transitory, even as growth in the US is holding up at the moment. The reaction by US Fed governors this week will certainly be interesting to follow, such as central bank policy makers Jerome Powell, James Bullard and Loret ta Mester today and tomorrow.

In the UK, the Queen delivered her speech in parliament yesterday, laying out the policies of the UK government. Despite the speech, there is st ill no deal between the conservative party and the Democratic Unionist Party on support for a conservative-led party. The speech laid out 27 bills that will be put forward in parliament , of which eight were related to Brexit and its impact on immigration and trade. However, other previous policy priorities were dropped from the agenda, possibly due to the limited majority of a conservative government.

US Session Highlights

(IR) Iran Oil Min Zanganeh: OPEC may decide to make further oil production cuts but need to assess effect of current supply levels

OPEC and Non-OPEC members said to see oil market re-balancing in Q2 2018

(US) MBA MORTGAGE APPLICATIONS W/E JUN 16TH: 0.6% V 2.8% PRIOR

(US) MAY EXISTING HOME SALES: 5.62M V 5.55ME; existing home price: $252.8K (all time high)

(US) DOE CRUDE: -2.5M V -1ME; GASOLINE: -0.6M V +0.5ME; DISTILLATE: +1.1M V +0.5ME

(RU) Russia govt spokesperson: to cancel meeting between Russia Dep Foreign Min and US Undersecretary of State; new sanctions continue destructive trend set by Obama administration

Techs and health care outshined the rest of the stock market and helped the Nasdaq gain 0.7% on the day, while the Dow and Russell posted small losses and the S&P was almost flat. Oil dropped 2% on continued negative sentiment about global market oversupply, and jawboning from Iranian oil officials had little effect on price action.

US markets on close: Dow -0.3%, S&P500 -0.1%, Nasdaq +0.7%

Best Sector in S&P500: Health Care

Worst Sector in S&P500: Energy

Biggest gainers: CA +13.4%; RHT +9.6%; INCY +7.6%

Biggest losers: FTR -8.2%; CHK -7.9%; SIG -5.6%

At the close: VIX 10.8 (-0.1pts); Treasuries: 2-yr 1.35% (flat), 10-yr 2.16% (+1bps), 30-yr 2.72% (-2bps)

US movers afterhours

ORCL Reports Q4 $0.89 v $0.79e, Rev $10.9B v $10.5Be; Guides FY18 EPS growth to accelerate; +10.3 afterhours

CO Reports Q4 $0.07 v $0.03 y/y, Rev $29.3M v $24.3M y/y; -2.6% afterhours

SCS Reports Q1 $0.18 v $0.19e, Rev $735M v $745Me; Guides Q2 $0.21-0.25 v $0.38e, R$750-780M v $800Me; -17.8% afterhours

Politics

(US) US President Trump: Reiterates to either renegotiate successfully or terminate NAFTA - Iowa Rally

(US) Discussion draft of Senate healthcare bill reportedly is largely similar to the House bill, but would link insurance subsidies to age and cuts Medicaid expansion more gradually - Wash Post

Key economic data

(NZ) NEW ZEALAND CENTRAL BANK (RBNZ) LEAVES OFFICIAL CASH RATE (OCR) UNCHANGED AT 1.75%; AS EXPECTED

(NZ) New Zealand May Credit Card Spending M/M: 0.9% v 0.9% prior; Y/Y: 7.6% v 6.4% prior

Speakers and Press

China

(CN) China Ministry of Commerce (MOFCOM) spokesperson Sun Jiwen: New FTZ negative list cuts foreign M&A restrictionsp; China, US still in discussion on 100-day trade plan

(CN) PBoC adviser reiterates PBoC will not unwind balance sheet like the US Fed - Chinese Press

Japan

(JP) BOJ Dep Gov Iwata: Monetary easing is still necessary in Japan; Inflation is still lacking momentum and is distant from target

(JP) Japan Chief Cabinet Sec Suga: Will talk with ruling party if request for extra Diet comes

Australia/New Zealand

(AU) BIS Oxford Economics: housing boom on Australia's east coast will be over in two years but a crash like the US subprime crisis in 2007 is not likely - AFR

(NZ) Kiwibank economist: NZD rise due to lack of "hard" words in RBNZ Gov Wheeler's comments about the currency gains - NZ Press

Korea

(KR) Bank of Korea (BOK) bi-annual report on financial stability: Q1 household debt to disposable income ratio 153.3%, +8.6% y/y

Asian Equity Indices/Futures (00:00ET)

Nikkei +0.2%, Hang Seng +0.6%, Shanghai Composite +0.8%, ASX200 +0.9%, Kospi +0.3%

Equity Futures: S&P500 flat; Nasdaq +0.1%, Dax +0.1%, FTSE100 +0.2%

FX ranges/Commodities/Fixed Income (00:00ET)

EUR 1.1160-1.1170; JPY 110.95-111.45; AUD 0.7540-0.7560; NZD 0.7200-0.7270

Aug Gold +0.7% at 1,254/oz; Aug Crude Oil +0.1% at $42.55/brl; July Copper -0.1% at $2.59/lb

SPDR Gold Trust ETF daily holdings rise 0.3 tonnes to 854.0 tonnes

(CN) PBOC SETS YUAN MID POINT AT 6.8197 V 6.8193 PRIOR; Weakest Yuan fix since May 31st and 3rd straight weaker setting

(CN) PBOC to inject combined CNY20B v CNY40B prior in 7-day reverse repos

Asia equities notable movers

Australia

Caltex (CTX) +0.6%; Guides H1

Vicinity Centres Re (VCX) -0.9%; CEO transition

Japan

Toshiba (6502) +0.6%; INCJ reportedly plans to take majority 50.1% stake in Toshiba's memory unit in order to keep technology located in Japan as part of consortium's acquisition - NIkkei

Tokyo Gas (9531) +0.2%; To cut gas prices

Takata (7312) -51.6%; Resumes trading

Hong Kong

Citic Dameng Hldg (1091) +9.1%; Guides H1

Wang On Group (1222) +2.7%; Reports FY17

Emperor International Holdings (163) -1.5%; Reports FY17

HKR International (480) -1.6%; Reports FY17

Singamas (716) -5.5%; Guides H1

GBP/USD – 1.2673

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 down

Original strategy :

Sold at 1.2675, Target: 1.2525, Stop: 1.2735

Position: - Short at 1.2675
Target:  - 1.2525
Stop: - 1.2735

New strategy :

Hold short entered at 1.2675, Target: 1.2525, Stop: 1.2735

Position: - Short at 1.2675
Target:  - 1.2525
Stop:- 1.2735

As sterling has rebounded after yesterday’s marginal fall to 1.2589, suggesting consolidation above this level would be seen, however, as long as previous support at 1.2723 holds, bearishness remains for another decline, below said support at 1.2589 would add credence to our view that recent decline from 1.3048 top has resumed for retracement of early upmove to 1.2550, then towards previous support at 1.2515 but loss of near term downward momentum should prevent sharp fall below 1.2490-00 and reckon 1.2450-60 would hold.

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 upside, expect recovery to be limited to 1.2700 and bring another decline. Above previous support at 1.2723 would defer and risk a stronger rebound to 1.2758 but break of this resistance is needed to signal a temporary low is formed instead, risk test of 1.2818 resistance later.

GBP/JPY - 140.80

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 down

Original strategy:

Exit long entered at 141.50,

Position: - Long at 141.50
Target: -
Stop: -

New strategy :

Stand aside

Position: -
Target:  -
Stop:-

Although sterling rebounded after finding support at 139.85 yesterday, break of 141.75-80 is needed to revive bullishness and signal the retreat from 142.50 has ended, bring another test of this level. Once this resistance is penetrated, this would signal the erratic rise from 138.70 is still in progress or test of indicated previous resistance at 142.75, above there would signal recent decline has ended and encourage for at least a strong retracement of recent selloff to 143.05-10.

On the downside, below said support at 139.85 would suggest the rebound from 138.70 has ended there and downside risk remains for weakness towards support at 139.15, however, break there is needed to add credence to this view and signal recent decline has resumed for retest of 138.70, then towards 138.00-10 later which is likely to hold from here due to near term oversold condition.

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.


EUR/JPY - 124.03

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

Original strategy:

Bought art 123.80, Target: 125.30, Stop: 123.20

Position: - Long at 123.80
Target: - 125.30
Stop: - 123.20

New strategy :

Hold long entered at 123.80, Target: 125.30, Stop: 123.20

Position: - Long at 123.80
Target:  - 125.30
Stop:- 123.20

Euro’s retreat after meeting resistance at 124.65 earlier this week suggests consolidation below this level would be seen, however, as long as 123.20-25 holds, prospect of another rise remains, above said resistance at 124.65 would signal recent upmove from 122.40 (last week’s low) is still in progress and may extend further gain to 125.00 but break of resistance at 125.31 is needed to retain upside bias and signal correction from 125.82 has ended at 122.40, bring subsequent rise towards this level which is likely to hold on first testing.

In view of this, we are holding on to our long position entered at 123.80. Below 123.20-25 would defer and suggest first leg of rebound from 122.40 has ended instead, risk further weakness to 122.90-00 but price should stay well above said support at 122.40, bring another rebound 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 – 0.7555

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 :

Bought at 0.7595, Target: 0.7745, Stop: 0.7535

Position: - Long at 0.7595
Target:  - 0.7745
Stop: - 0.7535

New strategy :

Hold long entered at 0.7595, Target: 0.7745, Stop: 0.7535

Position: - Long at 0.7595
Target:  - 0.7745
Stop:- 0.7535

Yesterday’s retreat has kept aussie under near term pressure and 0.7535 needs to hold to retain prospect of another rise, above 0.7600 would bring test of indicated resistance at 0.7636, break there would confirm recent upmove has resumed and extend the rise from 0.7329 towards previous resistance at 0.7680 but loss of momentum should limit upside to chart resistance at 0.7750 and price should falter below 0.7785-90.

In view of this, we are holding on to our long position entered at 0.7595. Below 0.7535 would defer and suggest top is possibly formed, bring correction to 0.7515-20, break there would provide confirmation, then correction to 0.7490-95 and possibly towards support at 0.7457 would be seen later. 

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.