Sample Category Title

GBP/USD - 1.2685

Original strategy :

Sold at 1.2695, Target: 1.2585, Stop: 1.2730

Position : -  Short at 1.2695

Target :  - 1.2585

Stop : - 1.2730

New strategy  :

Hold short entered at 1.2695, Target: 1.2595, Stop: 1.2710

Position : - Short at 1.2695

Target :  - 1.2595

Stop : - 1.2710

Although cable has staged a strong rebound after intra-day brief fall to 1.2589, as long as 1.2710 holds, mild downside  bias remains for another decline, below 1.2635-40 would bring another fall towards said support but break there is needed to retain bearishness and signal recent decline has resumed for weakness towards 1.2550, however, oversold condition should limit downside to 1.2520-25. 

In view of this, we are holding on to our short position entered at 1.2695. Only above 1.2720-25 would abort and suggest low has been formed instead, bring a stronger rebound to 1.2755-60 and possibly 1.2780 but price should falter below indicated strong resistance at 1.2818.

EUR/USD - 1.1134

Original strategy  :

Sell at 1.1175, Target: 1.1085, Stop: 1.1210

Position : -

Target :  -

Stop : -

New strategy  :

Sell at 1.1175, Target: 1.1085, Stop: 1.1210

Position : -

Target :  -

Stop : -

Yesterday’s breach of previous support at 1.1132 confirms recent decline has resumed and bearishness remains for further weakness to previous support at 1.1109, however, break there is needed to retain our bearish view and extend subsequent selloff to 1.1075-80 but loss of near term downward momentum should prevent sharp fall below 1.1050, risk from there is seen for a rebound later.

In view of this, we are looking to sell euro on recovery as 1.1175-80 should limit upside. Only above 1.1213 resistance would defer and risk a stronger rebound to 1.1230-35 but upside should be limited to 1.1260-70, bring another decline later.

USD/JPY - 111.60

Original strategy  :

Buy at 110.65, Target: 111.65, Stop: 110.30

Position :  -

Target :  -

Stop : -

New strategy  :

Buy at 110.65, Target: 111.65, Stop: 110.30

Position :  -

Target :  -

Stop : -

Although the greenback has rebounded after finding support at 111.07 and test of yesterday’s high at 111.79 is likely, break there is needed to confirm the rise from 108.82 low has resumed and may extend headway to 111.90-95 (50% projection of 108.82-111.42-110.65) but upside should be limited to resistance at 112.13 and 112.25 (61.8% Fibonacci retracement of 114.37-108.82 and 61.8% projection) should hold from here. If said resistance continues to hold, then another retreat to 111.07 cannot be ruled out but 110.65 (previous support as well as 38.2% Fibonacci retracement of 108.82-111.79) would limit downside and bring another rise later.

In view of this, would not chase this rise here and we are looking to buy dollar on pullback as 110.65 support should limit downside. Below 110.30-35 (50% Fibonacci retracement of 108.82-111.79 and previous resistance turned support) would abort and signal a temporary top has been formed instead, risk weakness towards 109.95-00 (61.8% Fibonacci retracement).

GOLD: The commodity continues to face downside pressure on bearishness. On the downside, support comes in at the 1,240.00 level where a break will turn attention to the 1,230.00 level. Further down, a cut through here will open the door for a move lower towards the 1,220.00 level. Below here if seen could trigger further downside pressure targeting the 1,210.00 level. Its daily RSI is bearish and pointing suggesting further weakness. Conversely, resistance resides at the 1,250.00 level where a break will aim at the 1,260.00 level. A turn above there will expose the 1,270.00 level. Further out, resistance stands at the 1,280.00 level. All in all, GOLD looks to weaken further on bear pressure.

Daily Pivots: (S1) 1.1113; (P) 1.1138 (R1) 1.1159; More....

EUR/USD is still staying in range of 1.1109/1295 and intraday bias remains neutral first. On the upside, decisive break of 1.1298 key resistance will carry larger bullish implication and target 1.1615 resistance next. On the downside, break of 1.1109 support will indicate short term topping and rejection from 1.1298. In such case, intraday bias will be turned to the downside for 1.0838 support.

In the bigger picture, the case for medium term reversal continues to build up with EUR/USD staying far above 55 week EMA (now at 1.0932). Also, bullish convergence condition is seen in weekly MACD. Focus will now be on 1.1298 key resistance. Rejection from there will maintain medium term bearishness and would extend the whole down trend from 1.6039 (2008 high). However, firm break of 1.1298 will indicate reversal. In such case, further rally would be seen back to 1.2042 support turned resistance next.

Daily Pivots: (S1) 0.9727; (P) 0.9747; (R1) 0.9768; More.....

Intraday bias in USD/CHF remains neutral as it's still bounded in the consolidation from 0.9613. As long as 0.9807 resistance holds, near term outlook remains bearish and deeper fall is expected. Below 0.9613 will extend the whole decline from 1.0342 to 0.9548 support and below. We'd start to look for bottoming signal again as it approaches 0.9443 key support level. However, considering bullish convergence condition in 4 hour MACD, break of 0.9807 will indicate near term reversal and turn outlook bullish for 1.0099 resistance next.

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.

Daily Pivots: (S1) 111.24; (P) 111.51; (R1) 111.72; More...

Intraday bias in USD/JPY remains neutral for the moment. Further rise is expected long as 110.63 minor support holds. Above 111.78 will target near term channel resistance (now at 113.02). Sustained break there will suggest that whole pull back from 118.65 has completed at 108.12 already. In such case, further rise should be seen to 114.36 resistance for confirmation. However, break of 110.63 will turn bias back to the downside for 108.81 instead.

In the bigger picture, price actions from 125.85 high are seen as a corrective pattern. It's uncertain whether it's completed yet. But in case of another fall, downside should be contained by 61.8% retracement of 75.56 to 125.85 at 94.77 to bring rebound. Overall, rise from 75.56 is still expected to resume later after the correction from 125.85 completes.

The GBP/NZD has formed a bearish equidistant channel, but recent news gave the push in bullish momentum and the price might reverse. The zone to watch is 0.7560-80 (Channel top, ATR high, EMA89, D H4). Traders should watch for any reversal or continuation patterns within the POC zones. A bullish continuation pattern within the zone might push the price further towards the D H5 at 0.7653 while a bearish reversal pattern could drop the price towards D H3 and L3 - 0.7490 and 0.7370. The GBP/NZD is a very volatile pair and because the price is already at its extremes we might see a short term rejection from the POC soon and that could provide some short term trading opportunities.

Daily Pivots: (S1) 1.2565; (P) 1.2661; (R1) 1.2721; More...

GBP/USD rebounds strongly after dipping to 1.2588 earlier today. As the pair is trying to draw support from 1.2614 key support level, intraday bias is turned neutral first. Deeper fall is still expected as long as 1.2813 resistance holds. As noted before, we're still favoring the bearish case that consolidation pattern from 1.1946 has completed at 1.3047 already. Sustained break of 1.2614 resistance turned support should confirm our bearish view and target a test on 1.1946 low next. However, break of 1.2813 resistance will dampen our view and turn bias back to the upside for 1.3047 and above.

In the bigger picture, fall from 1.7190 is seen as part of the down trend from 2.1161. Price actions from 1.1946 medium term low are seen as a consolidation pattern, which could have completed after hitting 55 week EMA. Break of 1.1946 low will target 61.8% projection of 1.5016 to 1.1946 from 1.3047 at 1.1150 next. In case the consolidation from 1.1946 extends, outlook will stay remain bearish as long as 1.3444 resistance holds.

Sharp volatility in Sterling continues today as hawkish comments from BoE chief economist Andy Haldane propels it higher. Haldane said today that partial removal of monetary stimulus would be "prudent relatively soon". And he noted that "risks associated with tightening too early, on the one hand, and too late, on the other, has swung materially towards the latter in the past six to nine months." He pointed out that "the risks of tightening too early have shrunk as growth and, to lesser extent, inflation have shown greater resilience than expected. And if policy tightened too late, this could result in a much steeper path of rate rises later on."

Haldane's comments was taken seriously by the markets as firstly, he's the chief economist. Secondly, he's perceived by many as the most dovish MPC member. Thirdly, while Kristin Forbes will be released by Silvana Tenreyro, there are potentially still three MPC member, including Haldane, Ian McCafferty and Michael Saunders, that could vote for rate hike ahead. Haldane's comments were in sharp contrast to BoE Governor Mark Carney's, showing a clear split between the board.

Separately, a report by BoE's regional agents noted moderate growth in the country overall. Export volume was helped by depreciation of the Pound and showed continuing growth. More importantly, rising intentions on investments were seen. The report noted that upward pressure on companies' costs due to currency effect "may have passed their peak". Meanwhile, it warned that highest costs are feeding into consumer inflation that could weight on consumptions and some investments.

Technically, nonetheless, GBP/USD is staying below 1.3813 resistance, GBP/JPY below 142.75 resistance, EUR/GBP above 0.8639 support. The pound is staying near term bearish in these pairs.

ECB noted US, China and Brexit as new sources of risks

ECB noted in its monthly economic bulletin that "careful communications by the Federal Reserve System, coupled with a very gradual course of monetary policy tightening, and the decline in vulnerabilities in major emerging markets, appears to have eased the risk of a disorderly tightening of global financial conditions." But the central bank also warned of "new sources of risk". In particular, ECB pointed to the "potentially protectionist direction of the new US administration" that could have a "significant negative effect on the global economy". In addition, "China's vulnerabilities over the medium term are also still elevated". And potential contentious negotiations over Britain's departure from the European Union remain a source of concern".

BoJ Kuroda: economy on firmer footing

BoJ Governor Haruhiko Kuroda said today that the economy is on "firmer footing" but Japan is still "distant from our 2 percent inflation target". He reiterated that "it is appropriate to keep monetary conditions easy with our current market operations framework." Also Kuroda noted that it's he is not thinking about stimulus exit yet. And the pace of JGB purchase could rise again easily. Regarding the economy, he offered an optimistic of assessment of capital expenditure and corporate profits. and Output gap is moving back into positive territory.

The minutes of BoJ's April meeting showed that policy makers were comfortable with the fluctuation in JGB purchases. The minutes noted that "members reaffirmed their view that debt purchases will fluctuate within a range depending on market conditions and agreed this poses no problems to the BOJ's guidance for market operations." This came into question as BoJ recently slowed down the bong purchases. And with the current pace, the total annual increase could be projected as JPY 60T, instead of JPY 80T as the central noted in its communications. Nonetheless, it's been clear that BoJ changed its approach last year to the so called Yield Curve Control framework. That is, the central bank is targeting to keep long term yield at zero, instead of a figure of asset purchase.

On the data front

UK public sector net borrowing dropped to GBP 6.0b in May. Australia Westpac leading index rose 0.0% mom in May. Japan all industry index rose 2.1% mom in April. RBNZ rate decision will be a focus in the upcoming Asian session. The central bank is widely expected to keep OCR unchanged at 1.75%.

GBP/USD Mid-Day Outlook

Daily Pivots: (S1) 1.2565; (P) 1.2661; (R1) 1.2721; More...

GBP/USD rebounds strongly after dipping to 1.2588 earlier today. As the pair is trying to draw support from 1.2614 key support level, intraday bias is turned neutral first. Deeper fall is still expected as long as 1.2813 resistance holds. As noted before, we're still favoring the bearish case that consolidation pattern from 1.1946 has completed at 1.3047 already. Sustained break of 1.2614 resistance turned support should confirm our bearish view and target a test on 1.1946 low next. However, break of 1.2813 resistance will dampen our view and turn bias back to the upside for 1.3047 and above.

In the bigger picture, fall from 1.7190 is seen as part of the down trend from 2.1161. Price actions from 1.1946 medium term low are seen as a consolidation pattern, which could have completed after hitting 55 week EMA. Break of 1.1946 low will target 61.8% projection of 1.5016 to 1.1946 from 1.3047 at 1.1150 next. In case the consolidation from 1.1946 extends, outlook will stay remain bearish as long as 1.3444 resistance holds.

Economic Indicators Update