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:

Sold at 124.00, Target: 122.20, Stop: 124.55

Position: - Short at 124.00
Target: - 122.20
Stop: - 124.55

New strategy :

Hold short entered at 124.00, Target: 122.20, Stop: 124.55

Position: - Short at 124.00
Target:  - 122.20
Stop:- 124.55

As the single currency has rebounded again after finding support at 123.53, suggesting caution on our near term bearishness and indicated resistance at 124.55 needs to hold to retain prospect of another retreat, below said support at 123.53 would bring a test of support at 122.92-98, break there would suggest a temporary top is possibly formed, bring further fall to 122.60 but break of 122.00-10 is needed to add credence to this view, bring retracement of recent upmove to 121.50 first.

In view of this, we are holding on to our short position entered at 124.00. Above said resistance at 124.55 would abort and signal recent upmove is still in progress and may extend further gain towards 125.00 level but loss of upward momentum should prevent sharp move beyond 125.40-50, risk from there is seen for another retreat 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).

AUD/USD – 0.7419

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 :

Buy at 0.7300, Target: 0.7500, Stop: 0.7240

Position: -
Target:  -
Stop: -

New strategy :

Buy at 0.7300, Target: 0.7500, Stop: 0.7240

Position: -
Target:  -
Stop:-

Although aussie has edged higher again and marginal gain from here cannot be ruled out, reckon previous support at 0.7440 would limit upside and bring another decline later, below said support at 0.7329 would extend one more fall to 0.7295-00 (76.4% retracement of 0.7158-0.7750), however, loss of downward momentum should prevent sharp fall below there and bring rebound later, above 0.7425-30 would bring subsequent gain to 0.7490-00 but break of 0.7510 is needed to signal low is formed, then test of resistance at 0.7556 would follow.

In view of this, we are inclined to turn long on next decline. Below 0.7245-50 would risk weakness to 0.7200-10, however, reckon previous support 0.7158 would contain downside and aussie may stage another strong rebound from there later this week. 

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.

The Euro remains firm at the beginning of the week and holding above the mid-point of 1.1020/1.0838 fall, following strong rally on Friday that neutralized threats of breaking below key support zone between 1.0850 and 1.0824.

Rising 20SMA contained pullback and is underpinning recovery rally which generated bullish signals on break above pivots at 1.0917/29 (10SMA / daily Tenkan-sen).

Technical studies on daily chart returned to full bullish setup and support further upside which may result on renewed attack at psychological 1.1000 barrier.

Weaker dollar on disappointing US data and rising tensions with North Korea may further inflate the single currency, together with overall positive sentiment in the Euro bloc after the victory of Emmanuel Macron in French presidential election.

Broken 10SMA offers immediate support at 1.0917, followed by 1.0900 level which should contain corrective dips and keep fresh near-term bullish structure intact.

Stronger bearish signal could be expected on extension below rising 20SMA (currently at 1.0870) which would re-expose pivotal supports at 1.0848 (Fibo 38.2% of 1.0568/1.1020 upleg), 1.0838 last week’s correction low) at 1.0824 (200SMA).

Res: 1.0951, 1.0977, 1.1000, 1.1020
Sup: 1.0917, 1.0900, 1.0870, 1.0848

Oil prices surged earlier today, following reports that Saudi Arabia and Russia have agreed to extend November’s oil-output cut until March 2018, a 9-month extension from the 6 months widely discussed previously. Although they hinted at a longer-than-anticipated extension, they agreed to keep the quantity of the cuts the same as decided in November. With only 10 days left until the meeting between major producers in Vienna, we think that the near-term outlook of the precious liquid is to the upside. We believe that further optimistic comments from the various oil ministers regarding the prospect of an extension into 2018 is likely to keep oil prices supported heading into that meeting. In addition, any chatter that there can be deeper production cuts could lift prices further.

WTI edged north during the Asian day Monday, breaking above the resistance (now turned into support) barrier of 48.50 (S1) to hit the longer-term prior upside support line taken from the low of the 5th of April 2016. More optimistic comments ahead of the Vienna meeting could push it back above the aforementioned line. If so, we would expect the bulls to aim for the 49.90 (R1) resistance hurdle, where a decisive break is possible to open the way for our next resistance of 51.00 (R2).

As for the bigger picture though, we remain skeptical as to whether a major healthy uptrend can be established. Even if we get a better-than-anticipated deal in Vienna, continued increase in US production is likely to keep a lid on any gains oil prices may record in the aftermath of that meeting. Looking at the daily chart of WTI, we see the 51.50 – 55.00 range as the area where shale producers may be attracted to increase production.

Dollar slips after disappointing economic data

The US dollar slipped on Friday, following the release of the nation’s CPI and retail sales data for April. The figures were disappointing overall, with the core CPI rate surprisingly declining and the headline rate falling by more than expected. Meanwhile, both the headline and the core retail sales rates rose by less than anticipated, though last month’s figures were revised somewhat higher. As a result, the probability for a June rate hike declined to 74%, which in our view is still an elevated level considering that there are 4 weeks to go until that gathering.

Moving forward, we think that investors may pay extra attention to incoming US data. Encouraging numbers may be a reason for the hike probability to rebound again. However, considering it’s already at an elevated level, any upside reaction in USD may be relatively modest. On the other hand, further signs of softness in economic indicators could raise doubts as to whether the Committee will indeed act in June, and may thereby bring the greenback under renewed selling interest.

USD/CAD traded south during the early European morning Monday. However, the rate has been oscillating between 1.3645 (S1) and 1.3750 (R1) since the 5th of May and as such, we would consider the near-term outlook to be flat for now. Even if we see the rate breaking below 1.3645 (S1), as long as it remains above the key barrier of 1.3600 (S2), we prefer to maintain a flat stance. The 1.3600 (S2) territory acted as the upper bound of the larger wide range between that hurdle and the psychological zone of 1.3000, which contained the price action from September 2016 until April 2017. Therefore, there is still a decent probability for a rebound from near 1.3600 (S2).

Today’s highlights:

During the European day, the economic calendar is empty, with no major events or indicators due to be released. From the US, we will get the Empire State manufacturing and the NAHB housing market indices, both for May. We have one speaker on the agenda: ECB Executive Board member Peter Praet.

As for the rest of the week, on Tuesday, the main event will probably be the release of the UK CPI data for April. On Wednesday, we get the nation’s employment figures for March. On Thursday, during the Asian morning, Australia’s employment data for April are due out, while from the UK, we get retail sales data for April. Finally on Friday, Canada’s CPI data for April will be in focus.

WTI

Support: 48.50 (S1), 47.50 (S2), 46.00 (S3)

Resistance: 49.90 (R1), 51.00 (R2), 51.50 (R3)

USD/CAD

Support: 1.3645 (S1), 1.3600 (S2), 1.3530 (S3)

Resistance: 1.3750 (R1), 1.3790 (R2), 1.3850 (R3)

Daily Pivots: (S1) 145.62; (P) 146.20; (R1) 146.61; More....

Intraday bias in GBP/JPY remains neutral for the moment. Consolidation from 148.09 could extend. But in case of deeper fall downside should be contained by 38.2% retracement of 135.58 to 148.09 at 143.31 and bring rise resumption. Break of 148.42 will target 150.42 long term fibonacci level first. Break there will pave the way to 100% projection of 122.36 to 148.42 from 135.58 at 161.64.

In the bigger picture, based on current momentum, rise from 122.36 bottom should be developing into a medium term move. Break of 38.2% retracement of 195.86 to 122.36 at 150.42 should pave the way to 61.8% retracement at 167.78. This will now be the favored case as long as 135.58 support holds.

Daily Pivots: (S1) 123.47; (P) 123.71; (R1) 124.12; More...

Intraday bias in EUR/JPY remains neutral for the moment as it's limited below 124.53. On the upside, break of 124.53 will extend rise from 114.84 and 109.03 to target 126.09 key resistance next. Break there will pave the way to 100% projection of 109.03 to 124.08 from 114.84 at 129.89. Nonetheless, considering bearish divergence condition in 4 hour MACD, a short term top could be in place. Break of 122.92 minor support will bring deeper pull back towards 38.2% retracement of 114.84 to 124.53 at 120.82.

In the bigger picture, focus is back on 126.09 support turned resistance. Decisive break there will confirm completion of the down trend from 149.76. And in such case, rise from 109.20 is at the same degree and should target 141.04 resistance and above. Meanwhile, rejection from 126.09 and break of 114.84 will extend the fall from 149.76 through 109.20 low.

Daily Pivots: (S1) 1.4705; (P) 1.4755; (R1) 1.4838; More...

Intraday bias in EUR/AUD remains neutral for consolidation below 1.4909 temporary top. More consolidations could be seen but downside should be contained by 1.4442/4649 support zone to bring rise resumption. Above 1.4909 will extend recent rally from 1.3624 to next medium term fibonacci level at 1.5455. Overall near term outlook is that whole correction from 1.6587 has completed at 1.3624 already after defending 1.3671 key support level.

In the bigger picture, price actions from 1.6587 medium term top are viewed as a corrective pattern. Such correction should be completed after defending 1.3671 key support. Rise from 1.3642 is now expected to target 61.8% retracement of 1.6587 to 1.3624 at 1.5455 and above. In any case, outlook will now stay cautiously bullish as long as 1.4309 resistance turned support holds.

Daily Pivots: (S1) 0.8441; (P) 0.8465; (R1) 0.8505; More...

Intraday bias in EUR/GBP remains neutral for the moment. The corrective structure of fall from 0.8529 to 0.8383 suggests that rebound from 0.8312 is still in progress. On the upside, break of 0.8508 will extend the rebound from 0.8312 to 0.8786 resistance next. Further break there will target 0.9304 high. On the downside, below 0.8383 will turn bias to the downside for 0.8303/8312 support zone instead. Overall, EUR/GBP is staying in the corrective pattern from 0.9304 which will extend for a while.

In the bigger picture, price actions from 0.9304 are viewed as a medium term corrective pattern. In case of deeper fall, we'd expect strong support from 0.8116 cluster support (50% retracement of 0.6935 to 0.9304 at 0.8120) to contain downside. Rise from 0.6935 (2015 low) will resume at a later stage to 0.9799 (2008 high). However, sustained break of 0.8116 could bring deeper decline to next key support level at 0.7564 before the correction completes.

Daily Pivots: (S1) 1.0912; (P) 1.0949; (R1) 1.0978; More...

Intraday bias in EUR/CHF remains neutral for consolidation first. Outlook is unchanged that corrective pattern from 1.1198 has completed already after defending 1.0653 fibonacci level. Downside of the current consolidation should be contained by 1.0791/0872 support zone to bring rise resumption. Firm break of 1.0999 resistance will pave the way for a retest on 1.1198 high.

In the bigger picture, the price actions from 1.1198 are seen as a corrective move. Current strong rebound is raising the chance that it's completed after defending 38.2% retracement of 0.9771 to 1.1198 at 1.0653. Decisive break of 1.0999 resistance will target a test on 1.1198 high. For now, this will be the preferred case as long as 1.0791 support holds.

Weekly

    •    Last Candlesticks pattern: Shooting star 
    •    Time of formation: 03 May 2016
    •    Trend bias: Down

Daily

    •    Last Candlesticks pattern: Shooting star
    •    Time of formation: 3 May 2016
    •    Trend bias: Sideways

EUR/USD – 1.0946

The single currency retreated after rising to 1.1025 and consolidation below this level would be seen, however, reckon downside would be limited and the Kijun-Sen (now at 1.0798) and should attract renewed buying interest and bring another rise later, above said resistance at 1.1025 would add credence to our bullish view that the erratic rise from 1.0340 low is still in progress and upside bias remains for this move to extend further gain to 1.1050-60 and possibly towards 1.1100, however, reckon upside would be limited to 1.1125-30 (61.8% Fibonacci retracement of 1.1616-1.0340) and price should falter well below previous chart resistance at 1.1300, bring strong retreat later.

On the downside, whilst initial pullback to 1.0870-75 cannot be ruled out, reckon downside would be limited to the Kijun-Sen (now at 1.0798) and bring another rise later to aforesaid upside targets. Below said support at 1.0778 would defer and risk weakness to the lower Kumo (now at 1.0700) but only break there would signal a temporary top is formed, bring further fall to 1.0675 but a daily close below 1.0609 would signal recent rise from 1.0340 has ended, risk test of key support at 1.0570 first. 

Recommendation: Buy at 1.0800 for 1.1000 with stop below 1.0700.

On the weekly chart, as the single currency has retreated after rising to 1.1025 last week and consolidation below this level would be seen and pullback to support at 1.0835-40 cannot be ruled out, however, reckon the Tenkan-Sen (now at 1.0798) would limit downside and bring another rise later, above said resistance at 1.1025 would extend recent rise from 1.0340 low for retracement of recent downtrend, hence further gain to the upper Kumo (now at 1.1070) but reckon upside would be limited to 1.1125-30 (61.8% Fibonacci retracement of 1.1616-1.0340) and 1.1200-10 would hold, price should falter well below strong resistance at 1.1366.

On the downside, expect pullback to be limited to support at 1.0839 and the Tenkan-Sen (now at 1.0798) should hold, bring another rise later. Only a drop below previous resistance at 1.0778 would abort and suggest top is formed instead, bring weakness to 1.0682-83 (current level of the Kijun-Sen and previous support). Below there would shift risk to the downside for further gall to 1.0570 support but only a weekly close below there would provide confirmation the aforesaid corrective rise from 1.0340 low has ended, then further decline towards key level at 1.0493 would follow.