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Daily Pivots: (S1) 1.2850; (P) 1.2875; (R1) 1.2908; More...

Intraday bias in GBP/USD remains neutral for the moment. With 1.2830 minor support intact, another rise could be seen. However, firstly, price actions from 1.1946 are viewed as a corrective pattern. Secondly, bearish divergence condition is seen in 4 hour MACD. Hence, in case of another rise, we'd start to look for reversal signal again above 1.2987. Meanwhile, break of 1.2830 will indicate short term topping. In such case, intraday bias is turned back to the downside for 1.2614 resistance turned support first.

In the bigger picture, fall from 1.7190 is seen as part of the down trend from 2.1161. There is no sign of medium term reversal yet. Sustained trading below 61.8% projection of 2.1161 to 1.3503 from 1.7190 at 1.2457 will target 100% projection at 0.9532. Overall, break of 1.3444 resistance is needed to confirm medium term bottoming. Otherwise, outlook will remain bearish.

A note on lower timeframe confirming price action...

Waiting for lower timeframe confirmation is our main tool to confirm strength within higher timeframe zones, and has really been the key to our trading success. It takes a little time to understand the subtle nuances, however, as each trade is never the same, but once you master the rhythm so to speak, you will be saved from countless unnecessary losing trades. The following is a list of what we look for:

• A break/retest of supply or demand dependent on which way you're trading.
• A trendline break/retest.
• Buying/selling tails ... essentially we look for a cluster of very obvious spikes off of lower timeframe support and resistance levels within the higher timeframe zone.
• Candlestick patterns. We tend to only stick with pin bars and engulfing bars as these have proven to be the most effective.

EUR/USD

Weekly gain/loss: – 67 pips

Weekly closing price: 1.0931

The previous week's action saw the single currency dive lower from 1.1016/1.0954 (red zone), which is made up of two weekly 127.2% Fib extensions taken from the lows 1.0340/1.0493.As you can see though, it was not smooth sailing for the bears as the 2016 yearly opening level at 1.0873 elbowed its way into the spotlight, consequently erasing around 50% of the week's losses.

As can be seen from the daily chart, support at 1.0850 also played a huge role in last week's bullish recovery! The week ended with the pair printing a near-full-bodied bullish close which could point towards further upside this week back up to the trendline resistance extended from the high 1.1616.

A strong decline in the US dollar sparked by lower-than-expected US Inflation data and Retail sales figures on Friday helped lift H4 price out from within 1.0850/1.0873 (the combined daily support and weekly 2016 yearly opening level). Well done to any of our readers who managed to jump aboard this move as it was a noted zone to look for buying opportunities from! With price seen concluding the week looking as though it wants to grapple with the mid-level resistance at 1.0950, where does one go from here?

Our suggestions: 1.0950 is a reasonably attractive neighborhood for shorts due to the following confluence:

A H4 trendline resistance taken from the low 1.0820.

A H4 61.8% Fib resistance pegged at exactly 1.0950.

A H4 supply base at 1.0996-1.0966.

The 127.2% weekly Fib extension is seen at 1.0954.

Therefore, there's a chance we may see a bounce from our small green box at 1.0966/1.0950 this morning. As tempting as it may be to place pending sell orders here, however, we'd strongly advise against this. Our reasoning stems from seeing 1.1000 lurking just above. This large psychological line not only sits within the upper limits of the weekly Fib ext. zone (see above), it also converges closely with the said daily trendline resistance! For that reason, waiting for a reasonably sized H4 bearish rotation candle to form within the noted green zone (preferably a full-bodied candle) is recommended.

So, with the above taken on board, we have two areas to keep an eyeball on this morning:

The above noted green area which comprises of attractive confluence.

If the 1.0950 region fails to hold, 1.1000 will likely be the next barrier on the hit list!

Data points to consider: No high-impacting news events on the docket today.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: 1.0966/1.0950 ([waiting for a reasonably sized H4 bear candle, preferably a full-bodied candle, to form before pulling the trigger is advised] stop loss: ideally beyond the candle's wick). 1.1000 (stop loss: 1.1020).

GBP/USD

Weekly gain/loss: – 94 pips

Weekly closing price: 1.2882

After spending a week or so lingering around the underside of a weekly supply zone coming in at 1.3120-1.2957, the bears decided to join the party last week. Breaking a four-week bullish phase, this has brought the weekly support line at 1.2789 back into view, and could, given its history, potentially halt further selling this week. So do make sure to keep note of this line, traders!

In saying that though, as we slide down to the daily timeframe, there's immediate support seen nearby around the 1.2843 region. Also of interest here is the reasonably attractive buying tail printed on Friday, which could signify that the bulls may come into the market sooner than we initially thought.

A brief look at recent dealings on the H4 chart reveals that the candles remain in a somewhat restricted state. Not only is the unit confined between the mid-level support at 1.2850 and the1.29 handle, there's also two converging trendlines to contend with (1.2804/1.2965).

Our suggestions: We still believe downside is the more favored route this morning, given the weekly supply currently in play and also with May's opening level sitting directly above 1.29 at 1.2927 further restricting upside. At the time of writing, our team's focus is on looking for a decisive H4 close beyond 1.2850/H4 trendline support. A close beyond this angle, followed with a retest as well as a lower-timeframe sell signal (see the top of this report for ideas on how to use the lower timeframes for entry) would, in our opinion, be enough confirmation to sell (intraday), targeting the 1.28 neighborhood (sits just above the aforementioned weekly support level).

Data points to consider: No high-impacting news events on the docket today.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: Watch for H4 price to engulf 1.2850 and then look to trade any retest seen thereafter ([waiting for a lower-timeframe sell signal to form following the retest is advised] stop loss: dependent on where one confirms this level).

AUD/USD

Weekly gain/loss: – 29 pips

Weekly closing price: 0.7385

The AUD/USD sustained further losses last week, bringing price down to within close proximity of a weekly trendline support extended from the low 0.6827/2016 yearly opening level at 0.7282. The week, however, concluded forming a moderately sized weekly buying tail, which could portend a retest at the weekly resistance area drawn from 0.7524-0.7446.

The story on the daily chart, nonetheless, shows price came within a cat's whisker of connecting with the support zone at 0.7284-0.7326 on Tuesday, and rallied higher. Be that as it may, the week did conclude with price chalking up a beautiful-looking selling wick, highlighting the possibility that shorts may come into the picture today/early this week.

For those who read Friday's report you may recall that our team underlined the likelihood of shorts coming into the market between 0.7415/0.74. The area comprised of the following: a 0.74 handle, a H4 trendline resistance extended from the low 0.7475, an AB=CD 127.2% H4 Fib ext. at 0.7409 taken from the low 0.7328 and a 38.2% H4 Fib resistance at 0.7415 pegged from the high 0.7556. As you can see, price slightly surpassed our sell zone, but held firm overall.

Our suggestions: In view of the daily selling wick and recent interaction with a highly confluent H4 sell zone, our team believes further selling may be on the cards, despite the weekly buying tail. With that being the case, we're going to be watching for price to retest 0.7415/0.74 this week. This – coupled with a H4 bearish rotation candle, preferably a full-bodied candle, would be enough evidence, in our view, to short from here, targeting the said daily support area.

Data points to consider: Chinese Industrial production figures at 3am GMT+1.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: 0.7415/0.74 ([waiting for a reasonably sized H4 bear candle, preferably a full-bodied candle, to form before pulling the trigger is advised] stop loss: ideally beyond the candle's wick).

USD/JPY

Weekly gain/loss: + 70 pips

Weekly closing price: 113.33

The USD/JPY market enjoyed another relatively successful week, with the latest advance marking the fourth consecutive weekly bullish close. For all that though, weekly supply at 115.50-113.85 did a superb job in holding back the buyers last week, consequently forming a rather strong-looking selling wick. We know there's a lot of ground to cover, but this rejection could be the beginnings of a downward move in the form of a weekly AB=CD correction (see black arrows) into the weekly support area marked at 105.19-107.54.

Leaving the daily resistance area at 115.62-114.60 unchallenged last week, an area seen lodged around the upper edge of the said weekly supply, price turned lower and now looks to be heading in the direction of a daily support area drawn in at 111.35-112.37. Also of particular interest here is that this area holds a 38.2% Fib support at 111.96 marked from the low 108.13.

Since late Wednesday, after striking a high of 114.36, the H4 candles have been receding lower. This downside momentum was intensified on Friday following lower-than-expected US Inflation data and Retail sales figures. With the unit ending the week breaking below and retesting the underside of the mid-level number 113.50, we see little stopping price from reaching out and testing the 113 handle today.

Our suggestions: Knowing that weekly sellers are likely in play right now; would you want to be long at 113? We for sure would not! Instead of looking to buy from here, we're actually looking for price to retest 113.50 for a second time for a possible shorting opportunity. Should this come to fruition, we'd move stops to break even upon connecting with 113, but not look to take partial profits until we meet with H4 demand at 112.39-112.71. 113 is extremely vulnerable, in our opinion, due to the fact that weekly sellers will likely be pushing this market lower this week.

Data points to consider: No high-impacting news events on the docket today.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: 113.50 reigon ([waiting for a reasonably sized H4 bear candle, preferably a full-bodied candle, to form before pulling the trigger is advised] stop loss: ideally beyond the candle's wick).

USD/CAD:  

Weekly gain/loss: + 61 pips

Weekly closing price: 1.3708

Over the course of the last two weeks, the weekly candles have been sandwiched between the 2016 yearly opening level seen at 1.3814 and support chiseled in at 1.3588, leaving upside momentum somewhat weakened. A violation of 1.3814 could lead to a colossal move up to supply drawn from 1.4666-1.4428. Yet, a move seen below the current support, however, would place the 2017 yearly opening base line at 1.3434 on the radar.

Down to the daily timeframe, price action is a tad messy as the unit seesaws around the underside of supply coming in at 1.3859-1.3700, which holds the said 2016 yearly opening level within. The next downside target in view is a support zone formed at 1.3598-1.3559 that houses the current weekly support level.

Since the beginning of the week, the USD/CAD has been seen consolidating between 1.3750/1.3650. Beneath this range is a round number seen at 1.36, which happens to sit two pips above the daily support area at 1.3598-1.3559 (the next downside target on the daily scale). Above, however, sits the 1.38 handle. This level is attention-grabbing due to it being positioned just below the 2016 yearly opening level seen on the weekly chart at 1.3814, and also seeing as how it connects with a H4 AB=CD 127.2% ext. marked at 1.3797(taken from the low 1.3647).

Our suggestions: Of course, the current H4 range is an area that could be traded and may very well work out beautifully.

With that being said though, given our conservative nature, we would not be looking to sell this piece until price has connected with the above noted 2016 yearly opening level (essentially around the 1.38 region seen circled in green on the H4 chart). The reason being, apart from the merging confluence with the H4 127.2% ext. and weekly 2016 yearly opening level, is that this line is firmly located within the upper limits of the said daily supply and thus allows the trader to conservatively place stops above this area.

Also of note is the 1.36 handle. Boasting a daily support zone positioned a few pips below at 1.3598-1.3559 (houses a weekly support at 1.3588) 1.36, in our opinion, is worthy of attention.

Data points to consider: No high-impacting news events on the docket today.

Levels to watch/live orders:

• Buys: 1.36 region is a worthy place for longs which requires no additional confirmation (stop loss: conservative at 1.3557).
• Sells: 1.3814/1.38 region is an ideal place for shorts as we believe this area requires no additional confirmation (stop loss: conservative at 1.3861).

USD/CHF

Weekly gain/loss: + 210 pips

Weekly closing price: 1.0081

After crossing swords with the weekly support level at 0.9861 two weeks back, a strong succession of bids flooded the market last week. Despite price failing to sustain gains beyond the 2016 yearly opening level at 1.0029 after touching gloves with a weekly supply zone at 1.0170-1.0095, the pair still ended the week strongly!

Winding down to the daily chart, we can see that since the 27th March the Swissy has been capped by a supply base drawn from 1.0107-1.0072 (glued to the underside of the aforementioned weekly supply) and a daily support area coming in at 0.9842-0.9884 (houses the said weekly support level). Last week's rejection from the noted supply base is a testament to this consolidation.

The aftermath of Friday's disappointing US Inflation data and Retail sales figures drove the pair southbound. Several H4 tech supports were wiped out during the onslaught, with price stabilizing only after whipsawing through parity (1.0000) and testing H4 demand penciled in at 0.9975-0.9987

Our suggestions: While both the weekly and daily charts indicate further selling could be upon us, we cannot justify shorting into both 1.0000 and the noted H4 demand. It would take a decisive H4 close beyond these barriers to confirm bearish intent down to May's opening line at 0.9943.

So, with that in mind, longs are out of the question given the bigger picture, and shorts are only considered (our opinion) to be valid on a H4 close beyond the noted H4 demand.

Data points to consider: No high-impacting news events on the docket today.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: Watch for H4 price to engulf demand at 0.9975-0.9987 and then look to trade any retest seen thereafter ([waiting for a reasonably sized H4 bearish candle to form following the retest is advised, preferably in the shape of a full-bodied candle] stop loss: ideally beyond the candle's wick).

DOW 30

Weekly gain/loss: – 138 points

Weekly closing price: 20885

Following three consecutive weekly gains, weekly action chalked up nice-looking bearish engulfing candle last week not too far from record highs at 21170. Whether this will amount to further selling is difficult to forecast as so far this year, the index has recorded healthy gains.

Looking at the daily chart, it's clear to see that there was not a single bullish day recorded last week, even though price connected with a support area pegged at 20714-20821. The resistance area seen above at 21022-20933, in our opinion, looks worn out, as twice we've seen the unit surpass its upper boundaries. However, should the bears continue to drive lower this week and take out the current support zone, the next hurdle on the radar falls in at 20527-20626.

Bouncing across to the H4 chart, we can see that movement is currently restricted by May's opening level at 20929 and March's opening base line drawn in at 20824. May's level is, as you can see, bolstered by a 61.8% H4 Fib resistance at 20967 (upper green zone) taken from the high 21078, and March's level closely converges with a 38.2% H4 Fib support at 20807 drawn from the low 20371 (lower green zone).

Our suggestions: To our way of seeing things, there's equal opportunity to trade this market both long and short, as both green zones highlight confluence from both H4 and daily structures (see above). To play on the safe side though, both H4 zones require a reasonably sized H4 rotation candle (preferably a full-bodied candle) before we'd look to commit since a fakeout through these areas are highly likely to be seen.

Data points to consider: No high-impacting news events on the docket today.

Levels to watch/live orders:

• Buys: 20807/20824 ([waiting for a reasonably sized H4 bull candle, preferably a full-bodied candle, to form before pulling the trigger is advised] stop loss: ideally beyond the candle's tail).
• Sells: 20967/20929 ([waiting for a reasonably sized H4 bear candle, preferably a full-bodied candle, to form before pulling the trigger is advised] stop loss: ideally beyond the candle's wick).

GOLD

Weekly gain/loss: Little change

Weekly closing price: 1228.0

After the yellow metal drove into the walls of weekly demand at 1194.8-1229.1 two weeks ago, the bulls have registered some interest here last week. In the event that this area continues to be respected and price rallies, there's a good chance that the market could retest the two weekly Fibonacci extensions 161.8/127.2% at 1313.7/1285.2 taken from the low 1188.1 (green zone).

Bolstering the current weekly demand is a daily support area at 1216.7-1225.7 (strengthened by a trendline support extended from the low 1180.4). The next upside hurdle from this angle can be seen around a resistance area pegged at 1265.2-1252.1.

Although the H4 candles are showing strength from the support zone at 1218.5-1223.4, intensified by Friday's disappointing US Inflation data and Retail sales figures, there's still an awful amount of wood to chop through seen marked with a green circle at 1236.0/1228.0. Therefore, despite what the higher-timeframe structures suggest at the moment, going long right now might not be such a good idea.

Our suggestions: While entering long may be attractive in respect to the bigger picture, buying into the mess seen on the H4 chart is just too risky for our liking! For that reason, our desk has decided to remain on the sidelines today and will look to reassess structure going into Tuesday's open.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: Flat (stop loss: N/A).

Currency pair EUR/USD

The EUR/USD indeed completed wave 1 (brown) as expected last week after breaking above the resistance trend line (dotted orange). Price could now be challenging the potential Fibonacci resistance of wave 2 (brown).

The EUR/USD could be building an ABC (blue) zigzag within wave 2 (brown) after it broke above the resistance trend lines (dotted orange).

Currency pair USD/JPY

The USD/JPY broke below the support trend line (dotted blue) of the uptrend channel (blue/resistance), which could indicate the completion of the wave 5 (brown). The bearish break could indicate the start of a larger bearish ABC correction (brown).

The USD/JPY is building a bearish trend channel (orange/blue lines) after completing 5 bearish waves (brown). Price could now be retracing with a potential wave B (brown).

Currency pair GBP/USD

The GBP/USD broke below the support line (dotted green), which could indicate a larger retracement or reversal such as a wave 1 (green).

The GBP/USD broke above the resistance level (dotted orange) after completing 5 bearish waves (blue). Price could now be building an ABC (blue) zigzag within wave 2 (green).

Daily Pivots: (S1) 0.9967; (P) 1.0026; (R1) 1.0066; More.....

Intraday bias in USD/CHF remains neutral for the moment. On the upside, break of 1.0107 resistance will be in line with the view that correction from 1.0342 has completed at 0.9812. In such case, further rally would be seen to retest 1.0342 high. However, break of 0.9977 will dampen this view and turn bias back to the downside for 0.9858 first.

In the bigger picture, we're still maintaining that firm break of 1.0342 key resistance is needed to confirm underlying bullish momentum in the pair. However, the corrective nature of the fall from 1.0342 is starting to give the medium term outlook a bullish favor. Hence, in stead of looking for topping signal around 1.0342, we'd now pay closer attention to upside acceleration as USD/CHF approaches this level again.

Daily Pivots: (S1) 113.03; (P) 113.49; (R1) 113.78; More...

Intraday bias in USD/JPY remains neutral as consolidation from 114.36 continues. In case of deeper decline, downside should be contained by 112.08 cluster support (38.2% retracement of 108.12 to 114.36 at 111.97) and bring rally resumption. We're holding on to the view that corrective fall from 118.65 is completed with three wave down to 108.12. Above 114.36 will target 115.49 resistance first. Break there should resume whole rise from 98.97 to 125.85 high.

In the bigger picture, price actions from 125.85 high are seen as a corrective pattern. It's uncertain whether it's completed yet. But in case of another fall, downside should be contained by 61.8% retracement of 75.56 to 125.85 at 94.77 to bring rebound. Meanwhile, break of 115.49 resistance will extend the rise from 98.97 to retest 125.85. Overall, rise from 75.56 is still expected to resume later after the correction from 125.85 completes.

Daily Pivots: (S1) 0.7359; (P) 0.7390; (R1) 0.7416; More...

Intraday bias in AUD/USD remains neutral as the consolidation from 0.7382 continues. Upside of recovery should be limited below 0.7555 resistance to bring another fall. Below 0.7382 will target 0.7144/7158 support zone. However, there is no clear sign of larger down trend resumption yet. Hence we'll be cautious on strong support from 0.7144/58 to contain downside and bring rebound. On the upside, firm break of 0.7555 will argue that fall from 0.7748 is completed and turn bias back to the upside.

In the bigger picture, we're still treating price actions from 0.6826 low as a correction pattern. And, as long as 38.2% retracement of 0.9504 to 0.6826 at 0.7849 holds, long term down trend from 1.1079 is expected to resume sooner or later. Break of 0.6826 low will target 0.6008 key support level. However, firm break of 0.7849 will indicate that rise from 0.6826 is developing into a medium term rebound, rather than a sideway pattern. In such case, stronger rise should be seen to 55 month EMA (now at 0.8115) and above.

The forex markets open the week rather steadily. New Zealand Dollar trades mildly higher after better than expected retail sales data. Canadian Dollar is also lifted mildly by rebound in oil price, which sees WTI back at 48.60, comparing to this month's low at 43.76. The Japanese Yen shows little reaction to another missile launch by North Korea while markets await the result of an emergency UN security meeting. Euro also shows little reaction to German CDU's win in an important state election. Meanwhile, UK is stepping up its rhetoric ahead of the Brexit negotiation. The focus of the week, though, will be on data from UK, Eurozone, Canada and Australia.

North Korea fired another missile test, UNSC to hold emergency meeting

In Asia, North Korea said today that it had successfully conducted a newly development mid-to-long range missile test over the weekend. The official KCNA news agency said that "the test-fire aimed at verifying the tactical and technological specifications of the newly developed ballistic rocket capable of carrying a large-size heavy nuclear warhead." Meanwhile, the Pacific Command of US military said that the type of missile fired was "not consistent with an intercontinental ballistic missile." The US and Japan called for an emergency meeting of the United Nations Security Council on North Korea. The meeting will be held Tuesday afternoon.

CDU won election in the most populous state in Germany

In Germany, Chancellor Angela Merkel's Christian Democratic Union had an important victory in elections in the state of North Rhine-Westphalia yesterday. The CDU is projected to get 33% of votes. Social Democratic Party came second with 31.4%. Meanwhile, the populist Alternative for Germany got 7.4% percent in their first run for NRW parliament. NRW is the most populous state in Germany and it's seen as a important indicator for the results in September's national election. Merkel and CDU are seen as given a strong start to their campaign for September.

Brexit Minister Davis: EU format of negotiation "illogical"

In UK, Brexit Minister David Davis criticized that the EU's format of negotiation is "illogical". He referred to the sequence of talks on dealing with citizen's rights, border between Northern Ireland and the Republic of Ireland and then a financial settlement. And, after completing that, the discussions on future relationships could start. He especially pointed out that without knowing UK's general border policy, free trade agreements, there is no way to handle the border of Irelands. Davis also blasted that "the simple truth is that we are leaving, we are going to be outside the reach of the European court."

China data indicates slower Q2

The batch of data released from China today is generally weaker than expected. Retail sales rose 10.7% yoy in April, down from prior month's 10.9% yoy and missed consensus of 10.8% yoy. Fixed asset investment rose 8.9% yoy, down from prior 9.2% and missed consensus of 9.1%. Industrial production rose 6.5% yoy, down from prior 7.6% yoy and missed expectation of 7.0% yoy. The set of data is in-line with recent PMIs, which showed loss of momentum in Q2 after a solid Q1.

Also released in Asian session, Japan domestic CGPI rose 2.1% yoy in April. Australia home loans dropped -0.5% in March. New Zealand retail sales rose 1.2% qoq in Q1. Swiss PPI, US Empire State manufacturing and NAHB housing index will be featured later in the day.

For the week ahead...

A number of economic data will be released from UK including CPI, employment and retail sales. Headline CPI is expected to jump further to 2.6% yoy in April. Currently, it's generally expected that BoE won't act before conclusion of the Brexit negotiation. But the markets would also be keen to see how the inflation numbers turn to to be and how they would stretch MPC member's tolerance. Meanwhile, Eurozone GDP, German ZEW will also be watched. In Asian pacific, RBA minutes and Australia employment, Japan GDP will be the highlight. Meanwhile, in North American, the main focus will be Canada CPI and retail sales.

Here are some highlights for the week ahead:

• Tuesday: RBA minutes; Japan tertiary industry index; Italy GDP; UK CPI, PPI; Eurozone GDP, trade balance; German ZEW; US housing starts and building permits, industrial production
• Wednesday: New Zealand PPI; Australia wage price index; UK employment; Eurozone CPI final; Canada manufacturing sales
• Thursday: Japan GDP; Australia employment; UK retail sales; US jobless claims, Philly Fed survey
• Friday: German PPI; Eurozone current account; Canada CPI, retail sales

USD/CAD Daily Outlook

Daily Pivots: (S1) 1.3668; (P) 1.3705; (R1) 1.3745; More....

USD/CAD dips mildly today but it's staying in tight range below 1.3793. Intraday bias remains neutral for the moment. Outlook is unchanged that choppy rise from 1.2460 is seen as a corrective move. Hence, in case of another rally, we'd expect upside to be limited by 1.3838 fibonacci level to bring reversal. Meanwhile, break of 1.3534 resistance turned support will suggest that rise from 1.2968 has completed. In such case, intraday bias will be turned back to the downside for medium term channel (now at 1.3176).

In the bigger picture, price actions from 1.4689 medium term top are seen as a correction pattern. The first leg has completed at 1.2460. Rise from 1.2460 is seen as the second leg and would end at around 61.8% retracement of 1.4689 to 1.2460 at 1.3838. Break of 1.3222 should indicate the start of the third leg while further break of 1.2968 should confirm. Nonetheless, sustained trading above 1.3838 would pave the way to retest 1.4689 high.

Economic Indicators Update

Daily Pivots: (S1) 1.3668; (P) 1.3705; (R1) 1.3745; More....

USD/CAD dips mildly today but it's staying in tight range below 1.3793. Intraday bias remains neutral for the moment. Outlook is unchanged that choppy rise from 1.2460 is seen as a corrective move. Hence, in case of another rally, we'd expect upside to be limited by 1.3838 fibonacci level to bring reversal. Meanwhile, break of 1.3534 resistance turned support will suggest that rise from 1.2968 has completed. In such case, intraday bias will be turned back to the downside for medium term channel (now at 1.3176).

In the bigger picture, price actions from 1.4689 medium term top are seen as a correction pattern. The first leg has completed at 1.2460. Rise from 1.2460 is seen as the second leg and would end at around 61.8% retracement of 1.4689 to 1.2460 at 1.3838. Break of 1.3222 should indicate the start of the third leg while further break of 1.2968 should confirm. Nonetheless, sustained trading above 1.3838 would pave the way to retest 1.4689 high.

STOCKS

Dow (20896.61,-0.11%) continues to remain in a sideways consolidation within 20780-20980 region as mentioned least week. Immediate support near 20780 is expected to hold in the near term. Only in case of a break below 20780, we may expect a fall towards 20600-20400 levels.

Dax (12770.41,+0.47%) is just above support near 12690 and while that holds, we could see a bounce back towards 12800 and higher in the near term. Near term looks bullish while above 12690.

Shanghai (3088.62, +0.17%) tested 3020 last week before bouncing back sharply from there. It is trying to inch up towards 3130-3170 levels which could be tested in the near term before a sharp fall is seen.

19610-20010 is the immediate region of trade for Nikkei (19842.15, -0.21%) in the near term. Only a break out on either side of the range could give a clear directional view for the medium term.

Nifty (9400.90, -0.23%) came off from levels below our resistance zone of 9460-9500 and while that holds, we could expect a correction towards 9270 in the coming sessions before a bounce back towards 9400. .

COMMODITIES

Muted price action has been seen in Gold (1229) as the same traded within the 1220-31 region last week. If the rise continues we may possibly see a test of 1255-65 levels in this week. A failure to break above 1265 could keep the price range-bound in the 1220-1265 regions. A Close below 1220 could open up 1186 levels as well.

Similar kind of trading pattern has been seen in silver (16.49) also. The scrip is highly oversold in near term chart, thus a possibility of a rise towards 16.80-95 levels can’t be ruled out.

Copper (2.53) is hovering around its crucial resistance of 2.53-55 and if these levels break then we might see a bounce towards 2.60 regions in very short term time period. We will remain bearish on copper while t is trading below 2.67-72 levels in the medium term time frame.

Sideways consolidation in the broader ranges of 49.50-51.50 for Brent and 46.80-49.30 for WTI continues as expected. Holding above the interim resistances of 51.50 in Brent and 49.30 in WTI implies strength in oil prices in the extreme short term. Still, the bulls will be assured of strength of Brent (51.40) and WTI (48.25) only when a firm closing above 53 and 51 are made by both Brent and WTI respectively.

FOREX

Slightly worse than expected US Retail Sales and Inflation data has weakened Dollar. It may take another couple of sessions to clear up if it is only a correction or a complete reversal.

Dollar Index (99.22) has lost the bullish momentum with a break below 99.25 it remains to be seen if a recovery emerges from 99.00-98.85 or not. Trend neutral in the range of 99.00-100.00 and a clear break from this range is required to get a directional move.

Similar loss of bullish momentum is visible in Dollar Yen (113.34) too, though it is still trading above the near term support of 113.10. The price action here may determine if another bounce towards 115.00-50 will come or not. Prefer to wait for a session and watch.

It has been a day of very sharp gains for Euro (1.0931) last Friday but for sustained strength, it needs a clear break above 1.0940-50. Otherwise a turnaround to the downside can’t be ruled out. With EURJPY (123.86) also stalling around an intermediate resistance around 124.20-50, it would be prudent to watch the price action of Euro at the current levels before taking a firm directional call.

Pound (1.2892) bounced back from the previous week’s low near 1.2825 and kept the trend still up in line with expectations. It has been moving sideways roughly in the range of 1.2800-1.3000 which may take a few more sessions before resolving.

Aussie (0.7395) tested the upper end of the range of 0.7325-0.7425 but the sharp rejection from there implied persistent weakness. As discussed last week, a resumption of the major downtrend may be expected this week for the target/support of 0.7300-0.7290 from where a significant recovery may be expected.

Dollar Rupee (64.30) ended the week in an indecisive manner as it closed with no specific directional clue. The narrow range of 64.25-45 is the neutral zone as a break above 64.45 will denote strength and a break below 64.25 may provide fresh downside momentum. It must be noted that the Indian CPI for April has come at 2.99% against 3.81% in March.US April CPI has just come at 2.99% which brings the inflation differential down to 0.79% only, making Rupee depreciation more difficult.

INTEREST RATES

The Japan yields have come off a bit from near term channel resistance as mentioned last week. The 5Yr (-0.13%), 10Yr (0.04%) and the 30Yr (0.83%) are down from -0.12%, 0.05% and 0.84% respectively and may come off in the near term. Immediate movement could be on the downside.

The UK yields continue to fall as expected. The 5yr (0.50%) could head towards 0.40% while the 10Yr (1.09%) and the 20YR (1.66%) could head towards 1% and 1.5% respectively.

The German-US 2yr (-1.98%) is rising again but is trading within very narrow region of -1.95% and -2% and a break on either side would indicate the further direction in Euro. The German-US 10yr (-1.93%) is headed higher and could rise towards -1.90% in the next few sessions.

USDCHF - With the pair retaining its upside pressure by closing higher the past week, more strength is likely. On the downside, support lies at the 0.9950 level. A turn below here will open the door for more weakness towards the 0.9900 level and then the 0.9850 level. On the upside, resistance resides at the 1.0050 level where a break will clear the way for more strength to occur towards the 1.0100 level. Further out, resistance comes in at the 1.0150 level. Its weekly RSI is bullish and pointing higher suggesting further upside. All in all, USDCHF faces further recovery risk in the new week.