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'The narrowing in the polls has clearly dented sterling's performance and continues to weigh on the currency, and is probably likely to do so in the near term.' – Barclays (based on Business Recorder)

Pair's Outlook

Thursday ended with the Cable remaining flat, despite downside volatility initially prevailing. The 1.29 major level has proven to be a might foe, as the Pound struggled to climb over it through all of the week. With today's US NFP data due, the GBP/USD pair could breach the broadening rising wedge's support line, leaving the 1.28 psychological demand level to limit the losses. However, technical studies are still unable to confirm this possibility, meaning there is a chance the pair could burst through the 1.29 mark, thus, prolonging the wedge pattern.

Traders' Sentiment

Market sentiment is still neutral, as 51% of all open positions are long. At the same time, the number of orders to acquire the Sterling dropped from 57 to 53%.

'A stronger dollar and firming U.S. equity markets, along with weaker oil are all headwinds that could hamper gold's advance over the short-term.' – Edward Meir, INTL FCStone (based on Reuters)

Pair's Outlook

The yellow metal suffered its biggest losses of the week on Friday morning. Once more the commodity price had retreated below the support of the weekly PP, which is located at the 1,261.80 level. Due to that fact it can be assumed that the metal once more faces the possibility of falling down to the levels near the 1,250 mark. Although, on Friday morning the closest support level after the weekly PP was the 55-day SMA at 1,255.90. However, during the week gold had retreated more than once below the weekly support and rebounded just near the 1,260 level, which might possibly occur once more.

Traders' Sentiment

SWFX traders have decreased their bullish sentiment, as 51% of open positions are long. In addition, 57% of set up orders are to buy the metal—a slight decrease from 58% on Thursday.

GBP/USD – 1.2865

 
GBP/USD – Wave 4 is unfolding as an (A)-(B)-(C) and could have ended at 1.7192

 
The British pound only slipped to as low as 1.2769 (we recommended in our previous update to buy at 1.2760 and missed our long entry) before finding renewed buying interest there and has rebounded, however, reckon upside would be limited to 1.2960-70 and resistance at 1.3015 should hold, bring further consolidation below recent high at 1.3048 ahead of UK election. Only a daily close above 1.3015 would signal pullback from 1.3048 has ended, bring retest of this level, break there would extend recent upmove from 1.1986 low to 1.3140-50 (38.2% Fibonacci retracement of 1.5018-1.1986) and possibly 1.3200, however risk from there has increased for a retreat later. 

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 possibly ended at 1.7192, below support at 1.4232 would add credence to this count, then further fall to 1.4000 level would follow but reckon downside would be limited to 1.3655 support and price should stay above previous support at 1.3500.

On the downside, expect pullback to be limited to 1.2830 and bring another recovery. Below 1.2830 would bring test of 1.2757-69 support area, break there would signal a temporary top has been formed, bring retracement of recent rise to previous resistance at 1.2706 (now support), then towards 1.2650-60 but previous resistance at 1.2616 (tentatively wave i top) should remain intact.
 
Recommendation: Stand aside for this week.

 
Longer term - Cable's rise from 1.0520 (Feb 1985) to 2.0100 (September 1992) is seen as [A], the decline to 1.3682 is labeled as (B) and (C) wave rally has ended at 2.1162 (9 Nov, 2007) which is also the top of larger degree wave B with circle. The selloff from there is a 5-waver with wave (A) ended at 1.3500 (23 Jan 2009), wave (B) itself is labeled as A: 1.6733, triangle wave B: 1.4813 and wave C as well as top of wave (B) ended at 1.7192 (2014), hence the selloff from there is an impulsive wave (C) with wave I : 1.4566, wave II 1.5930, an extended wave III is unfolding and already exceeded our downside target at 1.3500 and 1.3000, hence weakness to 1.2500 and possibly 1.2000 cannot be ruled out, however, price should stay well above psychological level at 1.0000.

GBP/JPY – 143.55




 

GBP/JPY – Wave 5 as well as wave (III) has possibly ended at 116.85




 

Although sterling’s retreat from 148.10 turned out to be stronger than expected which signals a temporary top has been formed there, as the British pound found support at 141.50 earlier this week and has rebounded, suggesting consolidation above this level would be seen and recovery to 144.00-10 and possibly 144.90-00 cannot be ruled out, however, key resistance at 145.45 would remain intact, bring further consolidation. Only a daily close above this level would suggest the fall from 148.10 has ended, bring further gain to 146.00, then towards 147.00-10 but a sustained breach above latter level is needed to retain bullishness and signal correction from 148.10 has ended, bring retest of this level first. 






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.


 


On the downside, expect pullback to be limited to 142.50-55 and bring another rebound. Below 142.00 would bring another test of said support at 141.50 but only break there would signal the fall from 148.10 top is still in progress, bring a stronger retracement of recent rise to 141.00 and possibly towards previous resistance at 140.35, however, reckon downside would be limited to psychological level at 140.00, bring rebound later.  



Recommendation: Stand aside for this week.


The long-term downtrend from 570.99 (29 Feb 1980) is labeled as an impulsive wave with III with circle ended at 129.77 (20 Apr 1995) and the corrective rebound to 251.12 (20 Jul 2007) is treated as wave IV with circle and the wave V with circle selloff from 251.12 has possibly ended at 116.80 (almost reached our indicated target at 116.00) and major correction has commenced from there and indicated upside target at 183.90-00 (50% Fibonacci retracement of 251.10-116.85) had been met, reckon upside would be limited to 199.80-90 (61.8% Fibonacci retracement) and bring wave (V) decline in later part of 2017.

Cable eased below 1.2900 in early Friday's trading after upside attempts in past two days were repeatedly capped by 20SMA at 1.2920. Negative near-term signals are developing on formation of multiple bear-crosses (10/20 and 10/30 SMA's) as well as daily Tenkan-sen/Kijun-sen, which may trigger further weakness. Firm break below cracked initial support at 1.2862 (Fibo 38.2% of 1.2768/1.2920 recovery leg) would open way for further downside and expose next pivotal support at 1.2829 (Thursday's low/near Fibo 61.8%) and risk return to 1.2770 higher base. Alternative scenario requires sustained break above 1.2920 pivot to turn near-term bias higher. US Jobs data are in focus for firmer direction signals.

Res: 1.2900, 1.2920, 1.2941, 1.2981
Sup: 1.2855, 1.2829, 1.2800, 1.2768

The Euro was flat in Asia on Friday and holding just above 1.1200 handle, awaiting key release of the day, US Non-Farm payrolls data.

Forecast for NFP shows that US economy created 185.000 new jobs in May, which is below last month’s 211.000, however, numbers are seen solid and release at/above forecasted level would further strengthen expectations of US rate hike in June.

The notion is supported by upbeat US private sector jobs report that was released on Thursday and showed 253.000 jobs added in private sector in May, compared to 185.000 forecasted.

Overall bullish structure favors further upside and final break above 2017 high at 1.1268 for resumption of broader uptrend which was paused for 1.1268/1.1109 consolidation.

Near-term action remains supported by 10SMA (1.1204) which keeps immediate focus at the upside, with break above 1.1268 to open next targets at 1.1300/13.

However, extended daily studies keep in play the risk of fresh weakness on repeated rejection under 1.1286 pivot.

Such scenario requires firm break of 1.1200 support, to generate stronger bearish signal and expose key near-term support at 1.1100 (consolidation low / Fibo 38.2% of 1.0820/1.1268 upleg / rising 20SMA), loss of which would signal double-top and reversal.

Initial resistance lies at 1.1227 (hourly cloud top), ahead of 1.1256/68 pivots.

Res: 1.1227, 1.1256, 1.1268, 1.1300
Sup: 1.1204, 1.1188, 1.1160, 1.1100

On the updated 4h chart of GBPUSD, we can see that prices came lower last week with some aggressive decline on Friday to 1.2750-1.2800 area. Move can be impulsive, so we are considering idea of a top in place, thus more weakness may extend to much lower levels this week, especially after a wave 2 bounce. That said, any stronger rise back above 1.3012 may put bullish trend back in play.

GBPUSD, 4H

The U.S. dollar was bullish yesterday lifted by a stronger than expected private payrolls data. According to ADP/Moody's the private sector, hiring was robust with 253k jobs being added in May, beating estimates of 180k. The ISM's manufacturing PMI was largelystable, but data showed that wage pressures were building up.

This potentially builds up the possibility of a stronger payrolls data today. The market expectations for a rate hike by the Fed in June is all but confirmed and today's job numbers are most likely going to the prove the same.

The US Dollar Index snapped a two-day losing streak rising 0.3% on the day to close at 97.135. Technical resistance is seen at 97.50 which needs to be cleared to pave the way for further gains to the upside.

Besides the payrolls data, the UK's construction PMI is also due for release with data likely to show a weak print. This follows yesterday's manufacturing PMI which fell from 57.3 in April to 56.7 in May.

EURUSD intraday analysis

EURUSD (1.1216): The EURUSD closed bearish yesterday after testing the previous highs from last week at 1.1254. With prices, still above 1.1200, there is scope for the EURUSD to possibly push higher.

Any near-term gains are likely to see a test back to 1.1236 where resistance could be formed. But failure to breakout above 1.1236 will signal near-term declines towards 1.1100 at the very least. It is quite likely that EURUSD will remain broadly flat into next week's ECB monetary policy meeting.

GBPUSD intraday analysis

GBPUSD (1.2873):The British pound closed with a doji yesterday after price managed to continue rising following the bounce of 1.2800. We are watching the potential head and shoulders pattern that is likely to form.

A reversal is expected near 1.2937 or even at the current levels which will suggest the possible break down of 1.2800 support. This will give way for theprice to test 1.2600. However, most of the declines are likely to come by only next week, unless the markets react strongly to today's payrolls report.

XAUUSD intraday analysis

XAUUSD (1261.54): Gold prices continued to slip with price action yesterday currently trading below 1263.00 level of support and resistance. If price pulls back above 1263.00, expect another rally in gold that could see 1274.00 being tested firmly. In the near term, gold prices are likely to remain range bound within 1263 and 1274 with a breakout from this range likely to confirm the near-term continuation in prices. Below 1263, the next main support is at 1250, and above 1274, gold prices could be potentially eyeing the 1300 level.

EUR/JPY - 125.14

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 at 123.85, Target: 125.75, Stop: 123.25

Position: -
Target: -
Stop: -

New strategy :

Buy at 124.20, Target: 126.20, Stop: 123.60

Position: -
Target:  -
Stop:-

As the single currency has maintained a firm undertone after staging a strong rebound from 123.16, consolidation with upside bias remains for gain towards strong resistance at 125.82, however, break there is needed to confirm recent upmove has resumed and extend headway to 126.20-30 and possibly 126.60-70 but reckon 127.00-10 would hold from here.

In view of this, we are looking to buy euro on pullback as 124.10-20 should limit downside and bring another rise later. Below 123.65-70 would defer and suggest the rebound from 123.16 has ended, bring another test of said support at 123.16 but only break there would abort and shift risk back to downside for test of previous support at 122.56 which is likely to hold from here due to broad consolidative outlook.

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).

AUD/USD – 0.7382

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 down

Original strategy :

Exit long entered at 0.7405

Position: - Long at 0.7405
Target:  -
Stop: -

New strategy :

Stand aside

Position: -
Target:  -
Stop:-

As aussie has remained under pressure after meeting renewed selling interest at 0.7476, suggesting downside risk remains for the fall from 0.7518 to extend weakness to 0.7350, break there would add credence to our view that the rebound from 0.7329 has ended at 0.7518 last month, bring further fall towards this level. Only a drop below there would confirm recent decline has resumed and extend weakness to 0.7295-00 (76.4% retracement of 0.7158-0.7750).

In view of this, would be prudent to stand aside for now. above 0.7420-25 would bring another bounce to 0.7476 resistance but break there is needed to revive bullishness and signal the retreat from m0.7518 has ended, bring another rise towards this level first. 

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.