Sample Category Title
Elliott Wave Trade Ideas Performance Update
5 positions were entered last week with total loss of 59 points and the positions are listed below.
22 May : USD/CAD - Long at 1.3530, exited at 1.3470 (- 60 points)
1 Jun : AUD/USD - Long at 0.7405, exited at 0.7406 (+ 1 points)
1 Jun : GBP/USD - Short at 1.2920, exited at 1.2920 (0 point)
2 Jun : GBP/JPY - Short at 143.65,
2 Jun : EUR/GBP - Short at 0.8735,
| AUD EUR/JPY EUR/GBP CAD GBP GBPJPY
Jan - 15 -275 - 35 -120
Feb + 140 -17 - 40 +11
Mar - 20 +115 +132 - 19
Apr + 30 - 40 +120 + 45
May - 55 +100 - 60 -65 -60
Jun + 1
Jul
Aug
Sep
Oct
Nov
Dec
Y-T-D + 136 - 232 +117 + 98 -65 - 15
Sterling Boosted by Election Poll; Gold Hits 6-Week High
The dollar was mixed against its major counterparts. The euro slipped and the pound rallied despite soft UK data. Oil prices erased earlier gains while gold hit a six-week high.
The pound rose to its highest level against the dollar in over a week after an election poll showed the Torie's lead was back in double digits. The ICM poll showed an eleven-point lead for Prime Minister Theresa May's Conservative Party over the opposition Labour Party just days before the June 8 national elections. The poll helped lift the pound to $1.2940 as markets shrugged off weak UK data which showed both the services and composite PMI readings were weaker than forecast in May, at 53.8 and 54.4 respectively, and lower than April's readings. The data highlighted a renewed slowdown in business activity growth across the UK services sector.
After a steady start to the session, the euro slipped against the dollar to a low of $1.1233 but remained close to six-month highs. There was little market reaction to Eurozone data that showed business activity maintained growth in May. The Eurozone services PMI rose to 56.3 in May versus the 56.2 preliminary report. The composite index was unchanged from the flash estimate at 56.8. The main risk event for the euro will be the ECB policy decision this Thursday.
The US released the ISM non-manufacturing PMI for May, which came in at 56.9 versus the 57.1 expected. In the prior month the index came in at 57.5. The dollar fell against the yen after the softer data to touch a low of 110.40 yen.
The Canadian dollar erased gains made against the greenback earlier in the day as the oil-linked currency moved in line with crude prices. WTI oil prices were lifted above $48 a barrel ahead of European session trading in reaction to news of a diplomatic spat in the Middle East which saw Saudi Arabia and other Gulf nations cut diplomatic ties with Qatar. Oil prices failed to hold gains and slipped to $46.90 a barrel, helping the USD / CAD reverse back up to $1.3500 from $1.3461.
Gold prices rallied to a six-week high of $1283.27 an ounce, buoyed a relatively weaker dollar following Friday's disappointing US jobs data which diminished the odds of further Fed rate hikes later in the year. The dollar index hovered near seven-month lows.
Nonmanufacturing Sector Momentum Retreats in May as Employment and Prices Send Mixed Signals
The Institute for Supply Management's (ISM) non-manufacturing index weakened in May, falling 0.6 points to 56.9. The headline print came in slightly below market consensus which called for a more modest pullback to 57.1. Nonetheless, the index remains well in expansionary territory.
Survey details were a mixed bag, with half of the sub-indicators deteriorating on the month and the other half improving. Business activity (-1.7 to 60.7), new orders (-5.5 to 57.7), imports (-4.5 to 48.5) and new export orders (-11 to 54.5) all weakened on the month. But perhaps the most striking pullback was that of the prices paid sub-index (-8.4 to 49.2) which fell into contractionary territory for the first time in 14 months.
Not all was bad news however. In an encouraging twist the employment sub-index improved by a massive 6.4 points to 57.8, after having flirted with the 51-point threshold in the prior two months. Backlog of orders, inventories and inventory sentiment also improved on the month.
Despite the pullback, comments on business conditions and the overall economy remained positive. Moreover, all but one of the 18 non-manufacturing industries reported growth in May, with educational services being the only exception.
Key Implications
While its manufacturing cousin recorded a small uptick in May, the ISM nonmanufacturing index disappointed by falling slightly below market consensus. The performance among the ten sub-indicators was evenly split, but the declines were certainly more pronounced. Yet, despite the pullback the index is still well in expansionary territory, while industry comments remain largely sanguine and almost all industries still reported growth in May.
The most troublesome aspect of the report is the prices paid sub-index which saw a sharp turn downward and moved into contractionary territory for the first time in fourteen months. A similar pullback was recorded in last week's manufacturing survey prices sub-index. Although the latter remains well above the 50-point threshold, both are lower from year-ago levels and point to receded inflationary pressures. On the other hand, the significant improvement in the employment sub-index is a very welcome development which helps ease some of concerns related last week's below-consensus payrolls report.
Overall, we believe that today's report is unlikely to prevent the Fed from going ahead with its interest rate hike at next week's meeting, with market consensus still pricing in a June move. That said, alongside a few other soft reports of late, it diminishes the probability of additional rate hikes during the rest of the year.
Yen Ticks Lower as US Services Report Shy of Forecast
USD/JPY has edged higher on Monday. In the North American session, USD/JPY is trading at 110.40. On the release front, the US ISM Non-Manufacturing PMI pointed to a slowdown in the services sector, dropping to 56.9 points. This was a bit short of the estimate of 57.1 points. Later in the day, Japan releases Average Cash Earnings, which is expected to rebound with a gain of 0.3%. On Wednesday, Japan releases Final GDP for the first quarter. The Japanese economy has been improving, and the markets are expecting a strong showing, with the estimate standing at 0.6%.
The markets have become accustomed to strong employment data out of the US, so a soft Nonfarm Payroll report for May was certainly a surprise. The US economy produced just 131 thousand jobs in May, well short of the forecast of 181 thousand. Wage growth remains soft, and edged down from 0.3% to 0.2%. The unemployment rate dropped to 4.3%, but this reading can be largely explained by a decline in the participation rate. The disappointing employment reports are unlikely to alter the Fed's plan to raise rates next week, but policymakers remain cautious, and if upcoming data misses expectations, additional rate hikes could be in jeopardy.
Is a June rate hike in the US a done deal? The markets seem to think so. The Federal Reserve holds its policy meeting on June 14, and the odds of a quarter-point increase continue to climb. According to the CME Group, the odds of a hike have climbed to 96%, up from 88% just a week ago. The markets have priced in a June move, and a dismal Nonfarm Payroll report has failed to put a dent in market confidence in a June rate hike. Traders should note that ahead of the March hike, the odds of a rate hike were also close to 100%, and the dollar actually lost ground after the Fed followed through with a quarter-point increase. An increase in interest rates represents a vote of confidence in the US economy, but the Fed continues to have some concerns. Inflation remains stubbornly low, despite a labor market that remains close to capacity. Fed policy makers are also scratching their heads over soft consumer spending, which has not kept pace with high levels of consumer confidence. As for additional rate hikes in the second half of 2017, the markets are skeptical, with the odds of a September rate hike at just 26%.
Candlesticks and Ichimoku Trade Ideas Performance Update
5 positions were entered among all 4 currency pairs with total profit of 40 points and the positions are listed below:
22 May : USD/CHF - Long at 0.9700, exited at 0.9800 (+ 100 points)
25 May : USD/JPY - Long at 111.50, exited at 111.15 (- 35 points)
25 May : GBP/USD - Long at 1.2960, exited at 1.2925 (- 35 points)
1 Jun : GBP/USD - Short at 1.2910, exited at 1.2900 (+ 10 points)
1 Jun : EUR/USD - Long at 1.1205,
| JPY EUR CHF GBP
Jan + 167 - 85 - 10 + 50
Feb + 200 +150 +93 - 59
Mar -23 -70 -23 - 35
Apr + 65 + 93 + 50 - 40
May - 65 - 35 + 100 -175
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Y-T-D + 343 + 48 +210 -249
Trade Idea Wrap-up: USD/CHF – Sell at 0.9685
USD/CHF - 0.9648
Most recent candlesticks pattern : N/A
Trend : Near term down
Tenkan-Sen level : 0.9649
Kijun-Sen level : 0.9643
Ichimoku cloud top : 0.9682
Ichimoku cloud bottom : 0.9678
Original strategy :
Sell at 0.9685, Target: 0.9585, Stop: 0.9720
Position : -
Target : -
Stop : -
New strategy :
Sell at 0.9685, Target: 0.9585, Stop: 0.9720
Position : -
Target : -
Stop : -
Dollar’s recovery after marginal fall to 0.9622 suggests minor consolidation would be seen and corrective bounce to the Ichimoku cloud (now at 0.9678-82) cannot be ruled out, however, reckon upside would be limited to 0.9690-00 and bring another decline later, below said support at 0.9622 would extend recent decline to 0.9600-05 (50% projection of 1.0100-0.9692 measuring from 0.9808) but oversold condition should limit downside to 0.9570 and price should stay well above support at 0.9550, bring rebound later.
In view of this, we are looking to sell dollar on recovery as 0.9685-90 should limit upside. Only break of resistance at 0.9720 would abort and signal a temporary low is formed instead, bring a stronger rebound to 0.9750 and then 0.9770 but price should falter below resistance at 0.9808.
Trade Idea Wrap-up: GBP/USD – Stand aside
GBP/USD - 1.2923
Most recent candlesticks pattern : N/A
Trend : Near term down
Tenkan-Sen level : 1.2902
Kijun-Sen level : 1.2898
Ichimoku cloud top : 1.2878
Ichimoku cloud bottom : 1.2876
New strategy :
Stand aside
Position : -
Target : -
Stop : -
Although sterling has rebounded today in part due to cross-buying in pound and gain to 1.2940-45 (61.8% Fibonacci retracement of 1.3048-1.2769) and possibly towards 1.2970 cannot be ruled out, as broad outlook remains consolidative, reckon overbought condition would limit upside to 1.3000 and price should falter below 1.3015 resistance, bring retreat later.
In view of this, would not chase this rise here and would be prudent to stand aside for now. Below 1.2880-85 would bring test of 1.2845-50 but break of latter level is needed to signal top is formed, bring test of 1.2830 support, once this level is penetrated, this would signal the rebound from 1.2769 has ended, bring further fall to 1.2800, however, said support at 1.2769 should remain intact.
Trade Idea Wrap-up: EUR/USD – Hold long entered at 1.1205
EUR/USD - 1.1249
Most recent candlesticks pattern : N/A
Trend : Up
Tenkan-Sen level : 1.1257
Kijun-Sen level : 1.1260
Ichimoku cloud top : 1.1244
Ichimoku cloud bottom : 1.1243
Original strategy :
Bought at 1.1205, Target: 1.1305, Stop: 1.1235
Position : - Long at 1.1205
Target : - 1.1305
Stop : - 1.1235
New strategy :
Hold long entered at 1.1205, Target: 1.1305, Stop: 1.1235
Position : - Long at 1.1205
Target : - 1.1305
Stop : - 1.1235
As euro has retreated after marginal rise to 1.1285, suggesting minor consolidation below this level would be seen, however, reckon 1.1235-40 would contain downside and bring another rise later, above said resistance at 1.1285 would extend recent upmove to another previous chart resistance at 1.1300, break there would encourage for headway to 1.1340-45 but overbought condition should limit upside to chart point at 1.1366.
In view of this, we are holding on to our long position entered at 1.1205. Only below support at 1.1202 would abort and signal top is formed instead, risk weakness towards indicated support at 1.1164, once this level is penetrated, this would signal recent upmove has ended, bring further fall to 1.1130-40 first.
Trade Idea Wrap-up: USD/JPY – Sell at 111.00
USD/JPY - 110.48
Most recent candlesticks pattern : N/A
Trend : Down
Tenkan-Sen level : 110.55
Kijun-Sen level : 110.52
Ichimoku cloud top : 111.07
Ichimoku cloud bottom : 111.07
Original strategy :
Sell at 111.00, Target: 110.00, Stop: 111.35
Position : -
Target : -
Stop : -
New strategy :
Sell at 111.00, Target: 110.00, Stop: 111.35
Position : -
Target : -
Stop : -
As the greenback recovered after marginal fall to 110.31, suggesting consolidation above this level would be seen and corrective bounce to 110.80 cannot be ruled out, however, reckon the Ichimoku cloud (now at 111.07) would limit upside and bring another decline later, below said support at 110.31 would extend recent decline to previous support at 110.24 but break there is needed to provide confirmation that early selloff from 114.37 top has resumed for weakness to 109.90-00 first.
In view of this, would not chase this fall here and would be prudent to sell dollar on recovery as 111.00 should limit upside. Only above 111.35-40 would abort and signal low is formed, bring another bounce towards Friday’s high of 111.71.
Trade Idea: EUR/GBP – Hold short entered at 0.8735
EUR/GBP - 0.8701
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 :
Sold at 0.8735, Target: 0.8610, Stop: 0.8775
Position : - Short at 0.8735
Target : - 0.8610
Stop : - 0.8775
New strategy :
Hold short entered at 0.8735, Target: 0.8610, Stop: 0.8775
Position : - Short at 0.8735
Target : - 0.8610
Stop : - 0.8775
Although euro rose to as high as 0.8771 earlier today, as the single currency has retreated, retaining our view that consolidation below this level would be seen and mild downside bias remains for test of 0.8680-85, break there would suggest top is possibly formed, then test of indicated support at 0.8655 would follow, however, break of latter level is needed to add credence to this view, bring retracement of recent rise to 0.8600-10 later.
In view of this, we are holding on to our short position entered at 0.8735. Above 0.8771 would extend recent rise from 0.8312 low to previous resistance at 0.8788, however, reckon upside would be limited to 0.8800-10 due to weakening of upward momentum.
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.
