Sample Category Title

GBP/USD – 1.3027

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 :

Sold at 1.2920, stopped at 1.2970

Position: - Short at 1.2920
Target:  -
Stop: - 1.2970

New strategy :

Buy at 1.2995, Target: 1.3150, Stop: 1.2935

Position: -
Target:  -
Stop:-

Current rally above indicated psychological level of 1.3000 confirms recent upmove has resumed and bullishness is seen for further gain to 1.3075-80, then 1.3100-10, however, near term overbought condition should limit upside to 1.3050-60 and price should falter well below 1.3100-10 today, risk from there is seen for a retreat to take place 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 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 downside, whilst pullback to 1.2991 (previous resistance turned support) cannot be ruled out, reckon 1.2935-40 would contain downside and bring another uqmove later. Below 1.2935-40 would abort and suggest top is possibly formed, risk weakness to 1.2905-10, break there would confirm and bring subsequent fall to indicated support at 1.2866 but last week’s low at 1.2844 should remain intact.

GBP/JPY - 143.90

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:

Bought at 144.50, stopped at 143.90

Position: - Long at 144.50
Target: -
Stop: - 143.90

New strategy :

Stand aside

Position: -
Target:  -
Stop:-

Sterling’s retreat from 148.10 turned out to be stronger-than-expected, dampening our bullishness and suggesting a temporary top has been formed there, hence downside risk is seen for the corrective fall from there to bring retracement of recent upmove, hence weakness to 143.20-30 and then 142.90-00 cannot be ruled out, however, reckon downside would be limited to 142.50 and price should stay above 142.00, bring another rise later.

In view of this, would be prudent to stand aside for now. Above 144.80-85 would bring recovery to 145.50 but only break of resistance at 145.90-95 would signal low is formed, then gain to 146.40-50 would follow, having said that, sterling needs to penetrate resistance at 147.10 to revive bullishness and signal correction from 148.10 has ended, bring eventual retest of this level.

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.


'The dollar fell a sixth day.' – Bloomberg

Pair's outlook

The EUR/USD currency pair seems to have encountered the resistance of a medium term ascending channel pattern, which broke through the previously active long term channel up. It is most likely that the pair will retreat down to the support of the weekly R2, which is located at the 1.1115 mark. However, it is yet to be seen whether that support is passed. Although, if that occurs the currency pair could retreat back to the support cluster near the 1.1050 mark. On the other hand the pair might make an attempt to break the resistance cluster near the 1.1190 level.

Traders' sentiment

SWFX traders continue to short the pair, as 61% of open positions are bearish. However, 53% of trader set up orders are to buy the Euro.

'If you get a poorer retail sales number and worry about what unemployment will do, you might see some of these gains reversed and take us back down toward $1.28, maybe even toward $1.27 in the shorter-term.' – Chris Beauchamp, IG (based on MarketWatch)

Pair's outlook

For the third consecutive day this week the British Pound was able to outperform the US Dollar yesterday, approaching dangerously close to the 1.30 mark. The goal remains unchanged, as the Sterling is required to pierce the consolidation trend's upper border in order to continue posting gains. As a result, risks of the pair shifting polarity persist, which would trigger another spark of bearish momentum and would eventually lead to a drop under 1.29, with the consolidation trend's lower border then in focus. Technical indicators keep giving mixed signals, unable to confirm this outlook.

Traders' sentiment

Once again market sentiment reached a perfect equilibrium, but the portion of orders to buy the Pound inched slightly higher in the last 24 hours, namely from 53 to 55%.

'At the very least the view is that Trump's economic policies will be delayed over this [latest US political turmoil], and the dollar is being sold.' – Matsui Securities (based on The Business Times)

Pair's outlook

The USD/JPY pair experienced a rather devastating blow on Wednesday, losing more than 200 pips amid continued political turmoil in the US. After such a large slump the Buck is likely to undergo a bullish correction, unless political pressure keeps weakening the Greenback. Moreover, the monthly PP and the weekly S3 around 110.45 are providing rather strong support, which could be sufficient for a recovery to prevail. The nearest resistance rests at 111.40, namely the weekly S2, most likely marking the intraday high. The base case scenario is a close somewhere between 110.50 and 111.50.

Traders' sentiment

There are 61% of traders holding short positions today (previously 66%), while the share of buy orders added 10% points, having risen to a total of 59%.

'Spot gold may retrace moderately to a support at $1,252 per ounce, before retesting a resistance at $1,264.' – Wang Tao, Reuters

Pair's outlook

On Thursday morning the yellow metal's price was in a retreat, as it had failed to break the resistance put up by the weekly R3, which is located at the 1,261.72 level. However, this retreat comes after scoring massive gains. During Wednesday's trading the bullion gained more than 2% and 2500 base points. Due to that it is normal that a period of consolidation is occurring. However, from a technical perspective on the daily chart gold is still set to gain additional ground in the near future, as the weekly R3 is a lone resistance.

Traders' sentiment

Traders are almost neutral in regard to the metal, as 51% of open positions are long. However, 68% of trader set up orders are to buy.

'For almost 18 months, the trend unemployment rate has been relatively stable, at around 5.7 to 5.8 per cent. We haven't seen this stability since the May 2007 to October 2008 period, when it remained around 4.2 to 4.3 per cent.' - Bruce Hockman, ABS Macroeconomic Statistics Division

The Australian unemployment rate dropped unexpectedly last month as companies created more new jobs. The Australian Bureau of Statistics reported on Thursday that companies added 37.4K new jobs to the economy in April, following a downwardly revised gain of 60K in the previous month and surpassing forecasts for an increase of 5,000 jobs. However, they were all part-time, while full-time employment lost 11.6K jobs in the reported month. Thus, the unemployment rate fell to 5.7% in April, whereas analysts expected the jobless rate to remain unchanged at 5.9%. The number of people looking for a full-time job dropped 12.3K to 514.2K, whereas the number of people looking for a part-time job fell 6,8000 to 218,000. Moreover, the participation rate remained unchanged at 64.8% in April, beating expectations for a decrease to 64.7%. Other data released by the Melbourne Institute showed that consumer inflation would probably climb 4.0% year-over-year in May, following the prior month's 4.1%. Back in the Q1 of 2017, the Bureau Statistics reported that its CPI advanced 2.1% on an annual basis.

'It is now hard to see where a pay revival in Britain will come from.' - Martin Beck, Oxford Economics

Pay growth in the United Kingdom dropped below inflation for the first time in more than two years, official figures revealed on Wednesday. The Office for National Statistics reported that wage growth, excluding bonuses, advanced 2.1% on an annual basis in the March quarter, the weakest gain since the three-month period to July 2016. Thus, pay growth adjusted for inflation dropped 0.2%, the first decline since the Q3 of 2014. Including bonuses, average hourly earnings increased 2.4% in the Q1 of 2017, after rising 2.3% in the three-month period to February. Nevertheless, the unemployment rate fell to 4.6%, the lowest in more than forty years, suggesting that the British labour market remained strong despite weak wage growth. Meanwhile, market analysts expected the jobless rate to remain unchanged at 4.5% during the reported month. However, the claimant count change rose a seasonally adjusted 19.4K in April, following an upwardly revised climb of 33.5K in the preceding month. If pay growth remains below inflation growth consumer spending will likely stop supporting economic growth in Britain.

'The numbers beneath the surface were rather mixed with gasoline stocks falling only slightly on weaker demand and sharply higher imports suggesting sufficient availability of crude oil internationally despite OPEC cuts.' - Carsten Fritsch, Commerzbank AG

Crude oil inventories in the United States dropped less than expected last week, a weekly report showed on Wednesday. The Energy Information Administration reported US crude stockpiles fell 1.8M barrels in the week ending May 12, following the preceding week's drop of 5.2M barrels and falling behind expectations for a 2.5M-barrel decline. US production fell 9K barrels per day to 9.305M barrels per day, the first drop in 13 weeks. Nevertheless, the production levels remained below the EIA's 2017 production target of 9.31M barrels per day. Wednesday's report also showed that US crude imports climbed 577K barrels per day last week, whereas exports advanced 400K barrels per day. Total US inventories decreased 3% to 520.8M barrels last week. The data suggested that the OPEC production cut deal started bearing fruit at last. Thus, oil prices jumped shortly after the release, with Brent futures hitting $52.45 per barrel and WTI futures climbing to $49.50 per barrel. In the meantime, gasoline inventories declined 413K barrels during the same week, while analysts held forests for a 731K-berrel plunge.

'The data overall should maintain confidence in the manufacturing sector, especially with a solid increase in new and unfilled orders.' - Tim Clayton, Economic Calendar

Canadian manufacturing sales rebounded in March but less than expected amid higher demand for motor vehicles and higher sales in the food industry. Statistics Canada reported on Wednesday that manufacturing sales rose 1.0% in March, following the preceding month's downwardly-revised fall of 0.6% and slightly missing analysts' expectations for a 1.1% gain. In volume terms, sales were up 0.2%. Data showed that sales rose in 16 out of 21 industries in the reported month, representing 71% of the total manufacturing sector output. The largest gain of 2.1% was posted by the transportation sector. The following increase of 2.1% was mainly driven by highest sales of vehicles and vehicle part. Furthermore, food sales climbed for the second straight time, rising 2.6% to a record high of C$8.9B. Sales of meat and dairy products contributed the most to the rise. New orders rose 2.6%, marking the fourth consecutive increase. Wednesday's data also showed that inventories advanced 1.2% to a record high of C$72.7B, with the inventory-to-sales ratio remaining unchanged at 1.35.