Sample Category Title

Weekly

    •    Last Candlesticks pattern: Marubozu
    •    Time of formation: 14 Nov 2016
    •    Trend bias: Down

Daily

    •    Last Candlesticks pattern: Shooting star
    •    Time of formation: 15 Feb 2017
    •    Trend bias: Down

USD/JPY – 112.71

The greenback has maintained a firm undertone after staging a strong rebound from 108.13, suggesting this rise is still in progress for retracement of early downtrend, hence mild upside bias is seen for further gain to 113.35-40 (50% Fibonacci retracement of 118.66-108.13), then towards 114.00-10, however, reckon upside would be limited to 114.60-65 (61.8% Fibonacci retracement) and price should falter well below key resistance at 115.51, bring retreat later.

On the downside, whilst initial pullback to 112.05-10 cannot be ruled out, reckon the Tenkan-Sen (now at 111.96) would limit downside and bring another rise later. Below support at 111.04 would defer and risk test of the Kijun-Sen (now at 110.59), however, a daily close below there is needed to signal top is possibly formed, bring correction of recent upmove to 110.00 first. Only a daily close below said support at 109.59 would suggest top is possibly formed instead, bring weakness to 108.85-90 but break there is needed to signal the rebound from 108.13 has ended, then retest of this recent low would follow. Looking ahead, dollar needs to penetrate this level to revive bearishness and extend the erratic decline from 118.66 top to 107.85-90 (61.8% Fibonacci retracement of 101.19-118.66) and possibly 107.40-50.

Recommendation : Buy at 111.70 for 113.70 with stop below 110.70.

On the weekly chart, last week’s rally formed another white candlestick and current firmness adds credence to our bullish view that low has been formed at 108.13 last month, hence consolidation with upside bias remains for further gain to 113.35-40 (50% Fibonacci retracement of 118.66-108.13), then towards 114.60-65 (61.8% Fibonacci retracement), however, reckon upside would be limited and price should falter well below resistance at 115.51. Looking ahead, only a break of 115.51 would retain bullishness and signal the entire correction from 118.66 has ended at 108.13), bring further rise to 119.50, then 120.00-10 but resistance at 121.69 should remain intact.

On the downside, expect pullback to be limited to 112.00-05 and the Tenkan-Sen (now at 111.67) should hold, bring another rise later. Below last week’s low at 111.21 would defer and suggest top is possibly formed, risk weakness to 110.45-50 but only break of indicated previous support at 109.59 would add credence to this view, bring further fall to previous resistance at 109.49. A drop below this level would provide confirmation, bring weakness to 108.80-85, break there would bring retest of 108.13 support, once this level is penetrated, this would revive bearishness an extend recent selloff from 118.66 to 107.85-90 (61.8% Fibonacci retracement of 101.19-118.66), then towards 107.00, however, reckon downside would be limited to 106.50-55 (61.8% Fibonacci retracement of 99.01-119.52) and previous resistance at 105.53 (now support) should remain intact.

Key Points:

• Last week saw substantial losses accrue.
• A period of moderation could now be on the cards.
• Fundamentals should be in command this week.

The AUD went plunging lower last week which could mean that a correction is now on the cards. However, given the voracity of the slip, we may see new lows tested before the bulls can take back control of the embattled pair. As a result of this, a look at both what was driving price action last week and what is set to drive prices this week is now more than warranted.

Taking a look at last week first, the Aussie dollar spent initial sessions of last week surging higher as a result of not only some softer US figures but also the Cash Rate decision from the RBA. Nevertheless, this buoyancy was not to last as a subsequent uptick in the US ADP NFP figure to 177K and an accompanying jump in the ISM Non-Manufacturing PMI to 57.5 saw a sentiment swing back towards the USD, despite the Fed also electing to keep rates static. Ultimately, this saw the pair tumble by over 100 pips but, unlike the wider market, these losses failed to moderate in the proceeding sessions as the Australian Trade Balance of 3.11B kept selling pressure intact as the week closed.

As for what lies ahead fundamentally, there are a number of Australian news items to watch out for but the Retail Sales and MI Inflation Expectations figures are likely to be the major risk events. This stems largely from the fact that the AUD has never truly shaken-off the recessionary fears that weighed on it following the negative GDP results over the past few months. As a result of this, if we see Retail Sales fall short of the forecasted 0.3% outcome or if the Inflation Expectations suggest that the RBA’s target band is not going to be reached, losses could extend.

On the technical front, the AUD still remains beholden to a declining trend line but losses should moderate somewhat in the coming week if the fundamentals come in on target, potentially leading to a near-term ranging phase. Specifically, the AUD is currently in conflict with a robust historical reversal zone which could remain intact unless the economic results miss the mark substantially. This being said, the EMA, MACD, and Parabolic SAR readings all remain bearish which will severely limit chances of a strong recovery occurring.

Overall, at best, we expect to see modest gains for the week to come but significant downside risks are also in play. Due to this, keep a watchful eye on the news feed as it will only take a slight push from the fundamental side of things to see the bears seize on the very bearish technical bias.

Key Points:

• Official Bank Rate decision pending.
• RSI Oscillator strongly overbought.
• Watch for a pullback towards the 1.29 handle in the coming week.

The Cable had another week in the green as the pair largely followed out forecast from last week and rose to challenge resistance at 1.2965 following some strong gains in the UK Manufacturing and Services PMI figures. In addition, the uncertainty around the U.S. Fed's path to rate hikes also buoyed the pair and saw it close the week out around the 1.2977 mark. Subsequently, it makes sense to review last week's events given that there is plenty of question as to whether the pair can retain its current level in the week ahead.

The Cable provided a strong performance last week as the currency reacted to some gains in the UK Manufacturing and Services PMI's to 57.3, and 55.8, respectively. This saw a fairly constant appreciation for the GBP which was further buoyed by the vacillation from Fed Chair Yellen over future rate hikes. It appears that the lack of forward guidance from the Federal Reserve is impacting the greenback's strength and, therefore, benefitting the GBP. Subsequently, the pair rallied through most of the week to close right in the middle of a key zone of resistance at 1.2977.

Looking ahead, the Cable is likely facing a frenetic week with the release of the Bank of England's decision on interest rates, as well as the NIESR GDP Estimate, due for release. The BoE's monetary policy committee is likely to keep the official bank rate on hold at 0.25% but expect plenty of forward guidance from the bank, especially considering that inflation continues to rise. Additionally, the NISER GDP Estimate is due out on Friday and is estimate at 0.4% q/q which is likely to be relatively accurate this time around. However, any deviation could cause a spike of volatility for the pair.

From a technical perspective, the pair's rally has taken it to a key zone of resistance around 1.2965-75 and the RSI and Stochastic Oscillators are now strongly within reversal territory. Subsequently, our initial bias is bearish for a corrective pullback towards support around the 1.29 handle in the coming week. However, keep a close watch on volatility from the BoE and NIESR GDP releases as they may impact the pair's trend direction. Support is currently in place for the pair at 1.2754, 1.2830 1.2625. Resistance exists on the upside at 1.2965, 1.3121, and 1.3335.

Ultimately, the Cable is in for a volatile ride with plenty of fundamental decisions due out over the next week. In particular, watch the positioning ahead of the Bank of England's decision on interest rates as the statement following the event will be critical moving forward. I suspect that the likely course of events is a small pop before the Cable declines back towards support around the 1.29 handle.

Daily Pivots: (S1) 1.0962; (P) 1.0981 (R1) 1.1015; More....

Intraday bias in EUR/USD remains on the upside. Current rise would target 100% projection of 1.0339 to 1.0828 from 1.0569 at 1.1058. However, rise from 1.0339 is still seen as a corrective move. Hence we'd expect strong resistance from 1.1058 projection to limit upside and bring near term reversal. On the downside, break of 1.0874 support will turn bias back to the downside for 1.0569 support first.

In the bigger picture, as long as 1.1298 key resistance holds, whole down trend from 1.6039 (2008 high) is still expected to continue. Break of 1.0339 low will send EUR/USD through parity to 61.8% projection of 1.3993 to 1.0461 from 1.1298 at 0.9115. However, considering bullish convergence condition in weekly MACD, break of 1.1298 will indicate long term reversal.

Daily Pivots: (S1) 1.2921; (P) 1.2952; (R1) 1.3005; More...

Intraday bias in GBP/USD remains on the upside and current rise should target 161.8% projection of 1.2108 to 1.2614 from 1.2365 at 1.3184. At this point, price actions from 1.1946 are still interpreted as a correction pattern. Therefore, we'd expect strong resistance below 1.3444 to bring larger down trend resumption. On the downside, break of 1.2830 support will indicate short term topping. In such case, intraday bias will be turned back to the downside for 1.2614 support.

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.

Daily Pivots: (S1) 0.9847; (P) 0.9875; (R1) 0.9895; More.....

Further decline is expected in USD/CHF for 0.9812 support and below. However, price actions from 1.0342 are seen as a correction. Break of 0.9812 should be brief and we will look for bottoming signal below there. On the upside, break of 0.9956 resistance will suggest that fall from 1.0107 is completed and turn bias back to the upside for this resistance.

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) 112.23; (P) 112.52; (R1) 112.95; More...

Intraday bias in USD/JPY remains neutral as consolidation from 113.04 temporary top continues. We'd holding on to the view that corrective fall from 118.65 could be completed with three waves down to 108.12. Further rise is expected as long as 110.86 support holds. Above 113.04 will target 115.49 resistance. Firm break there will resume larger rally from 98.97 to 125.85 high. However, break of 110.86 support will keep USD/JPY inside near term falling channel and will turn bias back to the downside for 108.12 and below to extend the decline from 118.65.

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) 1.3594; (P) 1.3693; (R1) 1.3745; More....

Intraday bias in USD/CAD remains neutral for consolidation below 1.3793 temporary top first. As noted before, whole rally from 1.2460 is seen as a corrective pattern. Hence, in case of another rise, we'll be cautious on topping at around 1.3838 fibonacci level. Meanwhile, consider bearish divergence condition in 4 hour MACD, break of 1.3534 support will argue that rise from 1.2968 is already completed. In such case, intraday bias will be turned back to the downside for 1.3222 support.

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.

Daily Pivots: (S1) 0.7378; (P) 0.7402; (R1) 0.7437; More...

Intraday bias in AUD/USD remains neutral for consolidation above 0.7366 temporary low. Upside of recovery should be limited below 0.7555 resistance and bring fall resumption. Break of 0.7366 will turn bias back to the downside for 0.7144/7158 support zone. We'll be cautious on bottoming there. On the upside, break of 0.7555 resistance will argue that fall from 0.7748 has completed and will 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.

Daily Pivots: (S1) 1.4778; (P) 1.4844; (R1) 1.4886; More...

Intraday bias in EUR/AUD remains on the upside for next medium term fibonacci level at 1.5455. On the downside, touching 1.4649 minor support will turn bias neutral and bring consolidation. But retreat should be contained by 1.4442 support and bring rise resumption.

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.