Sample Category Title

EUR/USD - 1.1143

Most recent candlesticks pattern   : N/A

Trend                      : Near term down

Tenkan-Sen level              : 1.1149

Kijun-Sen level                  : 1.1159

Ichimoku cloud top             : 1.1191

Ichimoku cloud bottom      : 1.1173

Original strategy  :

Sell at 1.1185, Target: 1.1085, Stop: 1.1220

Position : -

Target :  -

Stop : -

New strategy  :

Sell at 1.1185, Target: 1.1085, Stop: 1.1220

Position : -

Target :  -

Stop : -

The single currency met resistance at 1.1213 and retreated quite sharply from there, suggesting the rebound from 1.1132 has ended there and retest of said support would be seen, however, break there is needed to confirm recent decline has resumed and extend weakness to previous support at 1.1109, a drop below this level would encourage for subsequent fall to 1.1075-80 which is likely to hold on first testing.

In view of this, we are looking to sell euro on recovery as 1.1185-90 should limit upside. Only above 1.1213-14 (said resistance and 50% Fibonacci retracement of 1.1296-1.1132)  would defer and risk a stronger rebound to 1.1230-35 (61.8% Fibonacci retracement) but upside should be limited to 1.1260-70, bring another decline later.

USD/JPY - 111.54

Most recent candlesticks pattern   : N/A

Trend                      : Near term up

Tenkan-Sen level              : 111.55

Kijun-Sen level                  : 111.51

Ichimoku cloud top             : 111.07

Ichimoku cloud bottom      : 110.53

Original strategy  :

Buy at 111.10, Target: 112.10, Stop: 110.75

Position :  -

Target :  -

Stop : -

New strategy  :

Buy at 111.10, Target: 112.10, Stop: 110.75

Position :  -

Target :  -

Stop : -

As the greenback has maintained a firm undertone after breaking above previous resistance at 111.42, adding credence to our bullish view that the rise from 108.82 low is still in progress for retracement of recent decline from 114.37, hence further gain to 111.90-95 (50% projection of 108.82-111.42-110.65) would be seen, however, overbought condition should prevent sharp move beyond resistance at 112.13 and 112.25 (61.8% Fibonacci retracement of 114.37-108.82 and 61.8% projection) should hold on first testing, price should falter below 112.50.

In view of this, we are looking to buy dollar on pullback as 111.00-05 should limit downside. Below 110.85-90 would defer and suggest a temporary top is formed instead, risk retreat towards previous support at 110.65 but reckon previous resistance at 110.35 would turn into support and contain downside.

EUR/GBP - 0.8823

 
Recent wave: Major double three (A)-(B)-(C)-(X)-(A)-(B)-(C) is unfolding and 2nd (A) has possibly ended at 0.6936.

Trend: Near term up

Original strategy  :

Buy at 0.8660, Target: 0.8860, Stop: 0.8620

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 0.8660, Target: 0.8860, Stop: 0.8620

Position : -

Target :  -

Stop : -

 
Although the single currency has rebounded after finding support at 0.8719 and retest of recent high at 0.8866 cannot be ruled out, break there is needed to confirm recent erratic upmove from 0.8304 low has resumed and extend further gain to 0.8880, then 0.8900, having said that, as broad outlook remains consolidative, reckon current c leg of larger degree wave b should be limited to 0.8950 and price should falter well below 0.9000, bring retreat later. If said resistance at 0.8866 continues to hold, then further consolidation would take place and another retreat to 0.8740-50 cannot be ruled out, however, downside should be limited to support at 0.8652, bring another rise later.

In view of this, we are looking to buy euro on subsequent pullback but one should exit on such rise. Below 0.8650 would defer and risk test of 0.8620, a break below there would signal top is formed instead, bring further fall to 0.8620, then 0.8600 which is likely to hold from here.

Our preferred count is that, after forming a major top at 0.9805 (wave V), (A)-(B)-(C) correction is unfolding with (A) leg ended at 0.8400 (A: 0.8637, B: 0.9491 and 5-waver C ended at 0.8400. Wave (B) has ended at 0.9413 and impulsive wave (C) has either ended at 0.8067 or may extend one more fall to 0.8000 before prospect of another rally. Current breach of indicated resistance at 0.9043 confirms our view that the (C) leg has ended and bring stronger rebound towards 0.9150/54, then towards 0.9240/50.

USD/CAD - 1.3280

 
Recent wave: Only wave v of c has ended at 0.9407 and wave C of major A-B-C correction is underway for headway to 1.4700

Trend:  Near term down

 
Original strategy       :

Sell at 1.3350, Target: 1.3130, Stop: 1.3410

Position: -

Target:  -

Stop: -

 
New strategy             :

Sell at 1.3350, Target: 1.3130, Stop: 1.3410

Position: -

Target:  -

Stop:-

As the greenback found support at 1.3191 and has rebounded, retaining our view that further consolidation above 1.3165 support (last week’s low) would be seen and another bounce to 1.3308, above there would bring retracement of recent fall to 1.3330 but 1.3360-65 would limit upside and bring another decline later, below said support at 13191 would bring retest of 1.3165 but break there is needed to confirm reentry decline from 1.3794 top has resumed and extend weakness to 1.3100-10 and later towards previous support at 1.3078.

In view of this, would be prudent to sell again on subsequent recovery as 1.3350-60 should limit upside. Above previous support at 1.3387 (now resistance) would defer and suggest low is possibly formed, bring a stronger rebound to 1.3420-25 but break there is needed to provide confirmation. 

To recap, wave B from 1.3066 is unfolding as an a-b-c and is sub-divided as a: 1.2192, b: 1.2716 and wave c is a 5-waver with i: 1.1983, ii: 1.2506, extended wave iii with minor iii at 1.0206, wave iv ended at 1.0781 and wave v as well as wave iii has ended at 0.9931, hence the subsequent choppy trading is the wave iv which is unfolding as (a)-(b)-(c) with (a) leg of iv ended at 1.0854, followed by (b) leg at 1.0108 and (c) leg as well as the wave iv ended at 1.0674. The wave v is sub-divided by minor wave (i): 0.9980, (ii): 1.0374, (iii): 0.9446, (iv): 0.9913 and (v) as well as v has possibly ended at 0.9407, therefore, consolidation with upside bias is seen for major correction, indicated target at 1.3700 and 1.4000 had been met and further gain to 1.4700 would be seen later.

• European stock markets trade mixed near opening levels in a session devoid of eco releases. US stock markets opened in similar, lacklustre, vein.
• "Now is not yet the time" to tighten monetary policy, BoE governor Carney said in his delayed Mansion House speech, in comments that weighted on sterling. The speech is the governor's first public appearance since three members of the Bank's currently eight-person monetary policy committee voted to raise interest rates last week.
• Boston Fed Rosengren said that persistently low interest rates mean monetary policy will be less capable of fighting off future financial shocks and recessions. Vice-Chair Fischer warned that low rates may have led to "high" house prices.
• The Czech central bank may put off raising interest rates to beyond the third quarter if the crown keeps strengthening at the pace seen in recent weeks, bank board member Marek Mora said.
• The Germany economy is firing on all cylinders, according to the country's influential Ifo think-tank, which has delivered a healthy bump to its GDP growth forecasts for the eurozone's largest economy over the next year (1.8% for 2017 & 2% for 2018), describing it as "strong and stable".
• Hungary's central bank kept its policy rate unchanged at 0.9% and decided to lower its cap on three-month deposits to 300 billion forints by the end of September from 500 billion at the end of June. The bank also reiterated that it would be ready to loosen monetary conditions further via unconventional tools if needed.
• Oil dropped to the lowest in seven months (Brent crude <$46/barrel) amid a revival in output from Libya and rising volumes of fuel held in floating storage. Tonight and tomorrow, weekly inventory data are scheduled for release.
• The ECB is in no hurry to talk about tapering, though it has just six months of its current bond-buying program left. Officials see no need to make a decision until at least September, people familiar to the issue said. That means plans for 2018 may be disclosed only at the October meeting or even in December.

Rates

Boring trading as new impetus is missing

Core bonds moved in a tight range as no eco data of importance were released and central bankers spoke about macro-prudential issues and at best sideways about the economy or policy outlook. The US curve bull flattened with yields down between flat (2-yr) and 2.7 bps. German yields increased by 0.8 bp at the 2-yr and declined between 0.2 bp (2 yr) and 2.3 bps (30-yr).

Fed Rosengren said the low interest rate environment limited the central bank's ability to respond in case of negative shocks and could result in greater reliance on less traditional tools rather than interest rates. He added that policymakers need to factor in "exit strategies from very low rates" and how policy should respond to downturns. One could interpret this as hawkish in the sense that he wants rates to be away from very low levels ahead of a downturn. Rosengren in March favoured 4 rate hikes this year, but we don't know whether he changed his rate projection in June. However, we wouldn't draw too much conclusion from the summary we got from his remarks on a conference on macro-prudential policies.

After the US curve bear steepening yesterday, there was a bull flattening today. The only move worth mentioning was a small jump higher of the Bund when BoE Carney said it was not yet time to raise rates. The Bund rise came in sympathy with a similar jump in the gilt yields. Oil prices were under downside pressure and might have helped the curve flatten, but a time consistent move on the bond market was absent. Equities gradually slipped lower after a strong start, but once more its impact on bonds was small. The overall bond markets remained quiet throughout the session. Volumes remain far below "normal" levels. On intra-EMU bond markets, the peripheral spread narrowing continued, but slowed with Spain outperforming (+4 bps) and Portugal underperforming (+2 bps).

Currencies

USD holding tight ranges

With no important eco data on the agenda, there was again no great story behind USD trading. EUR/USD hovered close to, mostly slightly north of 1.1150. USD/JPY touched a short-term top in the 111.75/80 area, but reversed earlier gains as core yields and equities declined slightly.

Overnight, Asian equities traded mixed. Japan outperformed. Fed's Evens spoke more cautious than Dudley, but the dollar maintained yesterday's gains against the euro (EUR/USD 1.1155 area) and even gained slightly against the yen (111.70 area).

European equities opened strong. The dollar tried to gain some further ground, but the move immediately ran into resistance. European yields declined slightly after the Carny comments, but there was no obvious impact on EUR/USD. The pair hovered up and down in the 1.1140/65 area. USD/JPY gradually slipped off the intraday highs as core bond yields drifted south as the equity rally ran into resistance.

There was still no high profile news in the US to give clear directional guidance for USD trading. The US Q1 current account deficit widened less than expected but didn't help the dollar. Equity gains evaporated further. In technical trade EUR/USD and USD/JPY moved with a marginally negative bias. EUR/USD returned to the mid 1.11 area. The pair is holding within reach of the post-Fed low, but there is no strong enough driver for further USD gains. USD/JPY is changing hands in the 111.40/50 area.

Sterling nosedives as Carney signals no rate hike

Today, sterling traders kept a close eye on a speech of BoE governor Carney. Last week, markets were spooked by an unexpected MPC vote as thee members voted to raise rates by 25 basis points to keep inflation in check. The vote triggered a rebound of sterling. Today, markets were keen to see how much weight Carney would give to the recent rise in inflation. BoE governor Carney gave a straightforward assessment: 'Given the mixed signals on consumer spending and business investment, and given the still subdued domestic inflationary pressures, in particular anaemic wage growth, now is not yet the time to begin that adjustment (a rate hike)' The recent political and economic uncertainty apparently also creates discord within the BoE. UK bond yields and sterling nosedived. EUR/GBP rebounded north of 0.88. Cable dropped well below the 1.27 barrier. The pair trades currently in the 1.2650 area.

Crude oil is making a new drop lower, which could be an indication that red wave 4) correction is completed and that red wave 5) is in motion. If that is the case, then we expect a five wave development to take place within the final wave, and ideally look for support and limited downside around the 40 mark.

Crude oil, 1h

CRUDE OIL: The commodity continues to retain its downside pressure as it sold off on Tuesday. On the downside, support resides at the 43.00 level where a break will expose the 42.50 level. A cut through here will set the stage for a run at the 42.00 level. Further down, support resides at the 41.50 level. Its daily RSI is bearish and pointing lower suggesting further weakness. On the upside, resistance resides at the 44.00 level. Further out, resistance comes in at the 44.50 level. A break above here will aim at the 45.00 level and then the 45.50 level followed by the 46.00 level. All in all, CRUDE OIL remains biased to the downside.

EURCAD has been in a downtrend since falling from the June 2 high of 1.5257. There is risk to the downside since the momentum indicators are bearish. RSI is below 50 but not yet oversold, so there is a possibility of a move lower. The MACD is falling and approaching close to zero. Other bearish signals were given when prices broke below the 50-day moving average in mid-June. Meanwhile, the tenkan-sen has crossed below the kijun-sen line, giving a bearish signal, while prices have pierced the daily Ichimoku cloud.

EURCAD has been holding above the cloud until last week. The cloud top stands at 1.4794 and was acting as support until it failed and prices have dropped to threaten 1.4691, which is the 38.2 Fibonacci retracement level of the upleg from 1.3782 to 1.5257. The mid-point of this February to June uptrend is a critical support level. Falling below this level would start to change the medium-term bullish market structure.

Major resistance is expected at the 23.6% Fibonacci at 1.4907. A sustained beak above this could weaken the recent downside bias and see prices target the June high of 1.5257 for a resumption of the uptrend.

Looking at the bigger picture, EURCAD still maintains a bullish outlook as long as the market remains above the cloud. The rising 50-day moving average and its positive alignment with the 200-day moving average also supports a bullish view for the medium-term.

The EUR/USD is has been trading within a range that has been established in May and it's close to the POC zone 1.1115-1.1100 (W L4, 88.6, historical buyers, ATR pivot). The POC zone might spike the price towards 1.1185, 1.1230 and 1.1295. If the price breaks above W H4 1.1295 the door towards 1.1400 should be open. Major support lies at 1.1040 that is W L5 level. Failure of this level should put this pair in a bearish territory again. This POC zone might be the chance for bulls to regain positive momentum on this pair.

USD/CHF - 0.9743

Original strategy :

Bought at 0.9705, Target: 0.9805, Stop: 0.9690

Position : - Long at 0.9705

Target :  - 0.9805

Stop : - 0.9690

New strategy  :

Hold long entered at 0.9705, Target: 0.9805, Stop: 0.9690

Position : - Long at 0.9705

Target :  - 0.9805

Stop : - 0.9690

As the greenback found renewed buying interest at 0.9695 and staged a strong rebound, retaining our bullishness and suggesting the pullback from 0.9771 has ended there, hence upside bias remains for a retest of said resistance, break there would extend recent rise from 0.9613 low to resistance at 0.9808 but reckon previous resistance at 0.9825 would hold from here due to near term overbought condition, bring retreat later.

In view of this, we are holding on to our long position entered at 0.9705. Below said support at 0.9695 would defer and risk weakness towards said support at 0.9641 but only break there would abort and revive bearishness, this would also suggest the rebound from 0.9613 has ended instead, bring retest of this level later.