Sample Category Title

EUR/JPY - 124.36

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:

Buy art 123.40, Target: 125.40, Stop: 122.80

Position: -
Target: -
Stop: -

New strategy :

Buy art 123.80, Target: 125.30, Stop: 123.20

Position: -
Target:  -
Stop:-

As the single currency has continued moving higher, suggesting the rise from 122.40 (last week’s low) is still in progress and bullishness remains for this move to extend further gain to 125.00, however, 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 due to overbought condition.

In view of this, would not chase this rise here and we are looking to buy euro on dips as 123.80 should limit downside and bring another rebound later. Below 123.30-35 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).

On the hourly charts, which are drawn by the Dukascopy analysts, it can be observed that the weekly S1 at 1,243.59 has done its job in providing support to the yellow metal's price. However, the commodity price has still not reached the lower trend line of the long term ascending channel pattern. On Tuesday morning and throughout the rest of the day the trend line is set to remain below the 1,240 mark, which means that the price could still decline. In addition, the 55-hour SMA is approaching the bullion from the upside near the 1,250 mark. The simple moving average could provide the needed force to push the price lower. On the other hand the metal could continue to trade almost flat and also reach the mentioned trend line.

'The RBA is getting more concerned about the outlook for consumption and, just as it didn't get too depressed by the rise in the unemployment rate to 5.9 percent earlier this year, it won't get too excited by the fall to 5.5%.' - Paul Dales, Capital Economics

The Reserve Bank of Australia remained concerned over employment and the housing market, official data released on Tuesday showed. The Central bank said that real estate prices were surging in Sydney and Melbourne but noted that price pressures started to ease to some extent, minutes of the Bank's last meeting when policymakers kept interest rates unchanged at 1.50% revealed. Apart from that, the RBA said that employment growth improved significantly over the past several months, while the number of hours worked dropped. The Bank held its meeting before employment data for May was released and showed that the jobless rate fell to a four-year low of 5.5% and the economy gained new jobs for the third consecutive month. Policymakers expressed concerns over housing debt, as it offset household earnings. The RBA stated that weak pay growth would unlikely rebound in the near future and, therefore, consumer spending is expected to remain weak. Despite the weak Q1 performance, policymakers said that economic growth would likely pick-up in the upcoming quarters.

AUD/USD – 0.7617

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 :

Buy at 0.7525, Target: 0.7670, Stop: 0.7465

Position: -
Target:  -
Stop: -

New strategy :

Buy at 0.7595, Target: 0.7745, Stop: 0.7535

Position: -
Target:  -
Stop:-

As aussie has maintained a firm undertone, suggesting recent upmove would resume after consolidation, above indicated resistance at 0.7636 would confirm 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 looking to buy aussie on dips as 0.7590-95 should limit downside and bring another rise. Below 0.7560-65 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.

Daily Pivots: (S1) 0.7578; (P) 0.7604; (R1) 0.7622; More....

No change in AUD/USD's outlook. With 0.7523 minor support intact, further rise is still expected for 0.7748 resistance and above. At this point, there is no clear sign of range breakout at. Hence, we'd be cautious on topping again as it approaches medium term fibonacci level at 0.7849. Meanwhile, break of 0.7523 will argue that rebound from 0.7328 is possibly completed. In that case, intraday bias will be turned back to the downside for 0.7370 support.

In the bigger picture, we're still treating price actions from 0.6826 low as a corrective pattern. And, as long as 38.2% retracement of 0.9504 to 0.6826 at 0.7849 holds, long term down trend from 1.1079 is expected to resume sooner or later. Break of 0.6826 low will target 0.6008 key support level. However, firm break of 0.7849 will indicate that rise from 0.6826 is developing into a medium term rebound, rather than a sideway pattern. In such case, stronger rise should be seen to 55 month EMA (now at 0.8116) and above.

Daily Pivots: (S1) 1.3187; (P) 1.3222; (R1) 1.3253; More....

USD/CAD's consolidation from 1.3164 temporary low is still in progress and intraday bias remains neutral. Another recovery could be seen. But upside should be limited by 1.3387 support turned resistance and bring fall resumption. We're holding on to the view that corrective rise from 1.2460 has completed at 1.3793 already. Below 1.3164 will target 1.2968 cluster support, 61.8% retracement of 1.2460 to 1.3793 at 1.2969.

In the bigger picture, price actions from 1.4689 medium term top are seen as a correction pattern. The first leg has completed at 1.2460. Rise from 1.2460 is seen as the second leg and has completed at 1.3793, ahead of 61.8% retracement of 1.4689 to 1.2460 at 1.3838. Break of 1.3222 should now indicate the start of the third leg while further break of 1.2968 should confirm. In that case, USD/CAD should decline through 1.2460 support to 50% retracement of 0.9406 to 1.4869 at 1.2048.

The Euro fell near recent lows at 1.1130/40 zone after recovery attempts were repeatedly capped by 20SMA and hawkish comments from Fed policy maker William Dudley boosted the dollar.

Monday's long red daily candle and 10/20SMA bear cross weigh on near-term action which puts last week's low at 1.1132 and more significant 1.1121/09 supports (Fibo 38.2% of 1.0839/1.1295 upleg / 30 May low) under renewed pressure.

Fresh near-term bears were so far contained by bull-trendline, connecting 1.1109/1.1132 lows and rising daily Kijun-sen, however, negative near-term studies and daily technicals gaining bearish momentum, see risk of further weakness.

Firm break below 1.1121/09 pivots is required to signal bearish resumption and open next targets at 1.1067 and 1.1013 (Fibo 50% and 61.8% retracement of 1.0839/1.1295 upleg respectively).

Limited upside action is seen as focus is turning lower, with extended upticks expected to stay below widening hourly cloud (cloud base is currently at 1.1178).
Falling 10SMA is maintaining downside pressure.

Alternative scenario needs bullish acceleration and close above 20SMA / daily Tenkan-sen (1.1207/13 respectively) to neutralize rising downside risk.

Res: 1.1165, 1.1178, 1.1193, 1.1207
Sup: 1.1140, 1.1132, 1.1121, 1.1109

Daily Pivots: (S1) 1.1122; (P) 1.1167 (R1) 1.1192; More....

EUR/USD continues to trade in consolidative trading in range of 1.1109/1295. Intraday bias remains neutral at this point. Focus stays on 1.1298 key resistance. Decisive break there 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.

Investors fell in love again with tech stocks. The sector which was held responsible for the pullback in equities in the last two weeks is driving indices to record highs. Suddenly valuations are no longer a worrying factor, and Fed tightening is less of a concern. It seems like bargain hunters were waiting for the opportunity to dive in. Although many market participants considered tech stocks either expensive or bubble-like after the S&P 500 information technology sector soared 22% from the beginning of the year to 9 June, it still doesn't make sense to compare this rally with the tech bubble burst in 2000. The current leaders in the sector are the FAAMG's 'Apple, Alphabet, Microsoft, Amazon, and Facebook'. Their aggregate average forward P/E ratio stands at around 23.5, which is less than half the forward P/E for big tech stocks in 2000. Cash balances are more than six times higher than the levels of 2000 and cash flows are in a much better shape. Although valuations are not comparable to 2000, they are still high in contrast to previous levels. Given that earnings are expected to continue growing at a rapid pace, the overstretched valuations are justified, and any dip will be seen as an opportunity to buy.

Comments from New York Fed President William Dudley provided the dollar with a boost yesterday. He seemed confident that inflation would return as the jobs market pushes wages higher. More interestingly, he said that he is not paying too much attention to signals of concern from bond markets, which has been flattening for some time. Fixed income traders were sending negative messages more recently, the most obvious being that they don't believe the tightening cycle path will continue as expected. Although yields on ten-year bonds moved higher after Dudley's comments, they are still not signaling high confidence in economic growth. Thus, economic data in the next couple of weeks should be robust enough to convince bond investors that the economy is on the right track, and for the dollar to continue appreciating. Fed Vice Chair Stanley Fischer is due to speak today. If he shares Dudley's views, the dollar is likely to continue rallying.

Brexit talks began yesterday. The first day of the negotiations ended calmly with both sides agreeing to focus on Britain's exit bill and the rights for EU citizens living in the UK and vice versa. It will probably take some time for negotiations to start influencing the Pound's direction. Instead, investors today will focus on what BoE's Mark Carney has to say after three MPC policymakers voted to raise interest rates last week. Rising prices and falling wages is one of the biggest challenges a central bank can face, and investors need more clarity on what tools are available to tackle these problems.

The US dollar was firmer on the back of hawkish comments from Federal Reserve officials. Sterling held onto Monday's losses as all eyes turn to the mansion House speeches later by Bank of England Governor Mark Carney's speech and UK Chancellor Philip Hammond. The aussie rose despite mixed RBA minutes.

The greenback rose to a 3-week high against the yen at 111.76 as higher US Treasury yields helped lift the US currency. Comments from New York Fed President William Dudley and Chicago Fed President Charles Evans on Monday suggested the US central bank will continue on its rate hike path. Vice-Chair Stanley Fischer speaks later today.

The aussie rebounded after Australia's central bank released minutes of its latest policy meeting. The minutes showed the RBA remains concerned about high household debt and its threat to financial stability but despite this, the central bank gave a relatively upbeat assessment of the economy, suggesting to markets that it will not cut rates in the near future. This helped the Australian dollar rebound to eventually rise above the key $0.7600 level by late session trading.

The pound will be in focus today as the UK's finance minister and Bank of England governor are due to speak later at Mansion House. Any hint by Governor Carney that suggests he sees no rush to raise interest rates would be negative for the pound. Meanwhile, markets are eager to see what Philip Hammond will say regarding Brexit. Cable touched a session low of $1.2722 before rising towards $1.2750.

The euro traded near lows of $1.1140, close to 2-week low of $1.1131 touched on June 15.

In commodities, gold fell to $1242.76 an ounce, its lowest in a month, while WTI crude oil continued to trade below the key $45 a barrel level.