Sample Category Title

EUR/USD Sideways price action.

EUR/USD is trading mixed below strong resistance given at 1.1300 (09/11/2017 high). Hourly support is given at 1.1110 (22/05/2017 low) has been broken. Stronger support lies at 1.0842 (11/05/2017 low) and key support is given at 1.0494 (22/02/2017 low). Expected to show renewed bullish pressures.

In the longer term, the death cross late October indicated a further bearish bias. The pair has broken key support given at 1.0458 (16/03/2015 low). Key resistance holds at 1.1714 (24/08/2015 high). Expected to head towards parity.

GBP/USD Consolidating.

GBP/USD is now consolidating around former hourly support given at 1.2757 (21/04/2017 low). Hourly resistance lies at 1.3046 (18/05/2017 high). Expected to show further decline.

The long-term technical pattern is even more negative since the Brexit vote has paved the way for further decline. Long-term support given at 1.0520 (01/03/85) represents a decent target. Long-term resistance is given at 1.5018 (24/06/2015) and would indicate a long-term reversal in the negative trend. Yet, it is very unlikely at the moment.

USD/JPY Bearish pressures arise.

USD/JPY's short-term bearish pressures are back. The pair is bouncing lower. Hourly support can be found at 109.12 (07/06/2017 high). Strong support is located at 108.13 (17/04/2017 low). Hourly resistance is given at 112.13 (24/05/2017 high). Other key supports lie at a distance 106.04 (11/11/2016 low). Wide-open for further decline.

We favor a long-term bearish bias. Support is now given at 96.57 (10/08/2013 low). A gradual rise towards the major resistance at 135.15 (01/02/2002 high) seems absolutely unlikely. Expected to decline further support at 93.79 (13/06/2013 low).

Spot Gold bounced to $1270 high on Monday after last week's strong three-day acceleration from $1295 high found support at $1264 (Fibo 38.2% of $1214/$1296, 09 May/06 June rally, reinforced by rising 20SMA).

Correction from $1295 should be ideally contained here in order to keep overall bulls intact for fresh attempts towards psychological $1300. Traders keep an eye on the UK, as increased political uncertainty may increase demand for safe haven gold.

But ob the other side, rising pressure come from widely expected Fed's rate hike on Wednesday, when FOMC two-day meeting ends that may put gold price, sensitive on changes of US interest rates, under increased pressure.

Loss of $1264 handle would expose supports at $1258 (55SMA), $1255 (50% retracement) and $1245 (Fibo 61.8% of $1214/$1296).

Limited correction is expected with 10SMA/daily Tenkan-sen ($1275/$1277) expected to cap.

Res: 1270, 1275, 1277, 1281
Sup: 1264, 1258, 1255, 1245

GBP/USD – 1.2732

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 up

Original strategy :

Sell at 1.2800, Target: 1.2600, Stop: 1.2860

Position: -
Target:  -
Stop: -

New strategy :

Sell at 1.2820, Target: 1.2620, Stop: 1.2880

Position: -
Target:  -
Stop:-

As the British pound recovered after falling to 1.2635 on Friday, suggesting consolidation above this level would be seen and another bounce to 1.2780 cannot be ruled out, however, reckon upside would be limited to 1.2820-30 and bring another decline, below said support at 1.2635 would extend recent decline from 1.3048 for retracement of recent upmove to 1.2600 but near term oversold condition should limit downside to 1.2550 and reckon previous support at 1.2515 would hold from here.

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 1.2780-90 and 1.2830 should hold, bring another decline. Above 1.2860-70 would defer and suggest low is possibly formed instead, risk a stronger rebound towards 1.2900 but price should falter well below this week’s high at 1.2978 and bring another decline later.

The common European currency rebounded in the second half of Friday's trading against the US Dollar, and the pair extended the gains into Monday's trading. However, various signs are indicating that a reversal of the direction of the currency pair might soon occur. First of all the hourly chart reveals that the Euro has encountered the resistance of the 55-hour SMA at 1.1212 and the newly calculated weekly PP at 1.1216. In addition, a descending short term channel has been identified. In accordance with the pattern even if the rate passes the mentioned resistance levels, it will still face the combined resistance of the channel's upper trend line and the 100 and 200-hour SMAs. All of these resistance levels are slowly moving lower.

After Thursday's fall the Cable has entered a period of stagnation, which could just be a calm before the storm, with this week's Fed and BoE meetings due. Consequently, no significant changes are likely to occur ahead of those meetings, meaning the GBP/USD pair is likely to remain relatively unchanged and hold around the monthly S1 of 1.2758. Risks remain skewed to the downside, as that door got open by the election results in the UK, with the Pound now being exposed to the 1.25 area. Technical indicators suggest the Sterling is to weaken against the Buck today, but the 1.27 major level is expected to hold for the time being. In case this psychological support is breached, the next target will be the monthly S2 at 1.2624

The Greenback's attempts to recovery against the Yen are likely to be short-lived, as the recent breach from the triangle pattern on the daily chart suggests so. Furthermore, technical indicators are giving distinctly bearish signals, implying a slide back towards 109.22, namely the monthly S1, is possible. Ahead of this area the USD/JPY currency pair has no other solid demand areas, while a resistance line is in fact present. The US Dollar could easily weaken within the next two days and retest the mentioned demand level, but is expected to receive a strong boost from that point, with the Fed rate hike announcement on Wednesday acting as a catalyst.

The medium term channel did not manage to hold its ground, as the short term descending channel managed to pass through the support of the medium scale pattern. Due to that reason it can be expected that the decline of the yellow metal will continue in accordance with the short term channel on Monday. That would occur in the case if there are no fundamental events, which cause a run to safety or a depreciation of the US Dollar. In the case of a decline the next target for the bullion is the weekly S1, which is located at the 1,255.79 level. However, on the daily chart there are some additional support levels, which should be taken into account. On the other hand, if the metal rebounds, it might reach for the closest resistance level at the 1,276.85 level.

The pair is holding in extended consolidation between 100SMA (0.7556) and 200SMA (0.7527) which so far holds the downside after strong recovery rally stalled.

Overall bullish structure on daily chart could be dented on loss of 200SMA support, as slow stochastic is reversing from overbought territory and supporting the notion.

Plethora of strong supports provided by daily MA lies below and should limit extended corrective dips (converging 10/55SMA's at 0.7485/85 should ideally contain.

Otherwise, prolonged consolidation could be expected while 200SMA holds, with near-term focus to shift higher.

Firm break above 100SMA is needed to signal extension of bull-leg from 0.7369 (02 June trough) towards next barriers at 0.7588 (Fibo 61.8% of 0.7749/0.7328) and 0.7610 (17 Apr high).

Extended directionless trading could be seen as likely near-term scenario ahead of FOMC policy meeting release which is expected to give stronger direction signals.

Res: 0.7555, 0.7588, 0.7610, 0.7664
Sup: 0.7527, 0.7495, 0.7485, 0.7468

GBP/JPY - 139.80

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 up

Original strategy:

Sell at 141.30, Target: 139.30, Stop: 141.90

Position: -
Target: -
Stop: -

New strategy :

Sell at 141.30, Target: 139.30, Stop: 141.90

Position: -
Target:  -
Stop:-

As sterling has remained under pressure, suggesting the decline from 148.11 top is still in progress and bearishness remains for this move to extend further weakness to 139.20 support, break there would encourage for further subsequent weakness to 138.75-80, however, near term oversold condition should limit downside to 138.45-50 and price should stay above 138.00-10.

In view of this, would not chase this fall here and we are looking to sell sterling again on subsequent recovery as upside should be limited to 141.30-40 and bring another decline. Above 141.90-00 would defer and risk rebound to 142.40-50 but said resistance at 142.75 should limit upside and bring another selloff later.

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.


All eyes on Wednesday's FOMC meeting

The USD was trading broadly lower against its G10 counterpart on Monday morning as investors anticipated a busy week for central bankers. The Federal Reserve is set to release its monetary decision on Wednesday. After lifting rates in March, the FOMC is broadly expected to increase borrowing costs by another 25bps, which would bring the upper Federal Funds limit to 1.25%. While the decision is entirely priced in, investors are already looking towards the next move from the Fed.

Indeed, back in December last year, FOMC members hinted at three hikes in 2017. Should the Fed tighten this week, this would make the second hike this year, meaning the central bank needs to hike one last time to match its forecast. However, given the recent weakness in inflation, we do not expect the Fed to signal strongly a September move as it would put it in a difficult situation should the situation worsen. The FOMC could not appear too dovish as it would dampen investors' mood; therefore we expect the dots to show a third hike before year-end. However, we anticipate that both the statement and the following press conference will emphasise the need for caution.

Safe haven assets have been in solid demand this morning, suggesting that investors were quite reluctant to load on risk. USD/JPY reversed Friday's gains and returned to the 110 threshold, while the yellow metal rose 0.20% to $1,270.

Economic uncertainties still prevail in Japan

A set of data has been released this morning and it seems it is a never-ending story for Japan. April machine orders just collapsed at -.31% m/m while markets had estimated an increase of 0.5. This data is often used as a proxy for the capital expenditure.

Investors seem to be reluctant to invest domestically, due to several possible reasons including uncertainties about President Trump's trade policy and about Japan's economic future.This morning, the Japan producer price index came in flat at 0% and it represents the weakest PPI result in nine months. Already last week, the growth rate had been revised down to 0.3% from 0.5%.

The yen has slightly strengthened against the US dollar because of a risk-off sentiment in the market over the past few weeks. But we consider the economy in Japan is still struggling to recover. The sad reality is Japan has not succeeded in boosting private consumption, which accounts for 60% of the GDP.