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US oil price ticked higher on Tuesday but so far holds below 200SMA ($49.10) which was broken on Monday's acceleration to $48.57 low.

The price steadies as rising production in several countries balanced expectations of output cut extension for the next six months.

Technical studies remain firmly bearish on daily chart and see immediate downside risk while the price remains below 200SMA.

Extension below last week's low at $48.19 would risk return to key supports at $47.07.

Meantime, the price may hold in extended consolidation, with extended upticks to be capped by daily cloud base at $49.69, reinforced by falling Tenkan-sen.

Conversely, penetration into thick daily cloud and violation of psychological $50.00 barrier would sideline immediate downside risk.

Res: 49.10, 49.67, 50.00, 50.18
Sup: 48.54, 48.19, 47.79, 47.07

GBP/USD – 1.2892

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 :

Buy at 1.2850, Target: 1.3000, Stop: 1.2790

Position: -
Target:  -
Stop: -

New strategy :

Buy at 1.2770, Target: 1.2960, Stop: 1.2710

Position: -
Target:  -
Stop:-

As cable has retreated after rising to 1.2965 late last week, suggesting a minor top is formed there and consolidation below this level would be seen with initial downside bias for correction to 1.2805-10, however, reckon support at 1.2757 would contain downside and bring another rise later, above said resistance at 1.2965 would confirm recent upmove has resumed and extend gain to psychological resistance at 1.3000 but overbought condition should limit upside and 1.3050 and price should falter below 1.3100. We are keeping our view that the wave c as well as larger degree wave B has ended at 1.2109, hence impulsive wave C has commenced from there with wave i of C ended at 1.2616, follow by a correction to 1.2365 (end of wave ii) and wave iii rally is unfolding, hence further gain to indicated upside targets would be seen. 

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 initial pullback to 1.2845-55 and possibly support at 1.2805 cannot be ruled out, price should stay above support at 1.2757 and bring another rise later. A drop below this level would defer and signal a temporary top is formed instead, risk correction of recent upmove to 1.2700-10 later. 

'Le Pen is trying to reassure people on the euro.' – Bruno Cautres, SciencesPo (based on Bloomberg)

Pair's Outlook

During the early hours of Tuesday's trading session the common European currency was scoring gains against the US Dollar, as the currency exchange rate passed the 1.09 mark. The pair faces no technical resistance up to the 1.0958 level, where the weekly R1 is located at. Moreover, just above that level of significance there are other levels, which are strengthening the weekly R1. On the other hand the currency pair might retreat by the end of the day, as the closest support is the weekly PP, which is a lone level at 1.0890.

Traders' Sentiment

SWFX traders remain bearish on the pair, as 61% of open positions are short. In addition, 54% of trader set up orders are to sell.

'If this week's remaining U.S. indicators continue to be weak, such expectations that have supported the dollar could crumble easily.' – IG Securities (based on Business Recorder)

Pair's Outlook

As was anticipated, the GBP/USD currency pair made a U-turn on Monday, falling back under the 1.29 mark. However, the second support, namely the weekly S1 at 1.2829, was not reached yesterday, but the Cable is likely to put that demand level to the test today. Technical indicators, on the other hand, are unable to confirm this outlook, but they are no longer giving distinctly bullish signals in the daily timeframe either. Ultimately, the Sterling should weaken through the week and find support around 1.27, but a number of fundamentals, especially the US NFP, could provide the given pair with a solid boost, in which case the 1.30 handle could easily be overcome.

Traders' Sentiment

Traders retain a neutral outlook towards the Pound, as 51% of all open positions are short. The share of buy orders surged from 40 to 66%.

GBP/JPY - 144.55

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:

Buy at 142.30, Target: 144.30, Stop: 141.70

Position: -
Target: -
Stop: -

New strategy :

Buy at 142.55, Target: 145.00, Stop: 141.95

Position: -
Target:  -
Stop:-

As sterling has continued moving higher after last week’s rally, adding credence to our bullish count that recent upmove from 135.60 has resumed and upside bias remains for this move to extend further gain to 145.00-10, then 145.35-40, however, near term overbought condition should prevent sharp move beyond 146.00-10 and reckon 147.00-10 would hold, price should falter well below previous chart resistance at 148.45, bring retreat later.

In view of this, would not chase this rise here and would be prudent to buy sterling on pullback as 142.50-55 should limit downside. Below previous resistance at 142.10-15 would defer and suggest top is possibly formed, bring correction to 141.60-65, then 141.20-25, however, reckon downside would be limited to 140.55-60 and support at 140.10 should remain intact, bring another upmove later.

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.


'Dollar/yen is holding up, despite the weaker U.S. GDP.' – Mizuho Securities (based on Reuters)

Pair's Outlook

Although the immediate resistance was not pierced yesterday, the USD/JPY currency pair still took a large step towards reaching the descending channel's upper boundary. Yesterday's rally was limited by the 55-day SMA, but the Buck is expected to disregard this resistance today and, thus, easily reclaim the 112.00 major level. Such a bullish development would leave the US Dollar with just one other supply area on its path, formed by the weekly R1 and the upper Bollinger band circa 112.40. Once this zone is overcome, the given pair could reconfirm the channel's down-trend; however, a breakout from the pattern is unlikely, due to a number of other levels bolstering the trend-line.

Traders' Sentiment

Today 51% of all open positions are long (previously 53%), whereas 69% of all pending orders are to purchase the Greenback.

EUR/USD – 1.0915

EUR/USD:   Wave (c) of 2 ended at 1.3993 and wave 3 of III has commenced for weakness to 1.0411 (1.236 of wave 1), then 1.0000.

As the single currency has maintained a firm undertone after last week’s gap-up opening and previous resistance at 1.0906 was penetrated, adding credence to our view that the erratic rise from 1.0340 (tentatively wave v of larger defer wave 3) low is still in progress, hence bullishness remains for this move to extend further gain to 1.1000, above there would encourage for subsequent rise to 1.1050, 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 strong resistance at 1.1300, bring retreat later. 

Our preferred count on the daily chart remains that a wave (II) from 1.2329 ended at 1.5145 with A-leg ended at 1.4720, followed by wave B at 1.2457, the wave C from there was also a 3 legged move and is labeled as (a): 1.3739, (b): 1.2885, the wave iii of the 5-waver (c) from 1.2885 has ended at 1.4339 and wave iv is a triangle ended at 1.3878 and wave v formed a top at 1.5145. The decline from there is a 5-waver (C) with minor wave (i) of I of (C) ended at 1.4218 with wave (ii) ended at 1.4580, wave (iii) ended at 1.3267 and wave (iv) ended at 1.3692 and wave (v) ended at 1.1876, this is also the low of wave I of (C) and wave II ended at 1.4940, hence wave III is now in progress with a diagonal wave 1 ended at 1.2042, the breach of previous support at 1.1876 (wave I trough) adds credence to our view that the wave 2 has ended at 1.3993, wave 3 has commenced for further weakness to 1.0411, then towards 1.0000.

On the downside, althopugh pullback to 1.0830-35 cannot be ruled out, reckon previous resistance at 1.0778 would turn into support and contain euro’s downside, bring another rise later. Below 1.0735-40 would defer and risk test of support at 1.0678-82 but only a drop below there would suggest top is formed instead, bring weakness to 1.0635-40, then 1.0602 support. Looking ahead, only a daily close below 1.002 would provide confirmation and revive bearishness for test of 1.0570 support first. 
 
Recommendation: Buy at 1.0780 for 1.0980 with stop below 1.0680. 

Euro's long-term uptrend started from 0.8228 (26 Oct 2000) with an impulsive structure. The rise from 0.8228 to 0.9593 (5 Jan 2001) is labeled as wave I, the retreat to 0.8352 (6 Jul 2001) is wave II and the rally to 1.3670 (31 Dec 2004) is wave III. Wave IV from there ended at 1.1640 (15 Nov 2005), the subsequent upmove to 1.6040 (July 15, 2008) is treated as wave V, the major selloff from the record high of 1.6040 to 1.2329 (October 27, 2008) signals a reversal has taken place with (I) leg ended at 1.2329 and once (II) ended at 1.5145, wave (III) itself is an extended move with I: 1.1876 and complex wave II ended at 1.4902, wave III has commenced with wave 1 and 2 ended at 1.2042 and 1.3993 respectively, wave 3 of III is now unfolding for weakness towards parity.

'The geopolitical concerns are receding but there are still chances of them coming back again.' – Richard Xu, HuaAn Gold (based on Reuters)

Pair's Outlook

The yellow metal continued on its path lower on Tuesday morning, as the metal's price was about to reach a strong support cluster near the 1,250 mark. The support cluster is most likely going to pause the decline of the bullion's price. The cluster is made up of the 55 and 200-day SMAs together with the weekly S2 and the 50.00% Fibonacci retracement level. If the metal rebounds it would most likely surge up to the weekly S1, which is located at the 1,260.48 level. On the other hand the upcoming last round of French election can still cause fundamental shifts.

Traders' Sentiment

Traders remain bearish on the metal, as 52% of open positions are short on Tuesday. However, 67% of set up orders are to buy.

Spot Gold is holding near fresh three-week low at $1253, posted after Monday’s strong fall, driven by stronger dollar that eventually broke below near-term $1260/$1270 congestion, signaling extension of pullback from $1295 (17 Apr high).

Fresh bears broke below pivot at $1258 (Fibo 38.2% of $1197/$1295) and now pressuring another strong support at $1252 (200SMA).

Close below $1253/52 pivots is needed to signal further downside which may extend through rising 55SMA towards targets at $1240/36 (bull-trendline connecting $1122/97 lows / daily cloud top).

The price may hold in near-term consolidation above 200SMA on oversold daily slow stochastic, with former congestion floor at $1260 offering solid resistance and extended upticks to stay capped under 10/20SMA bear-cross that is forming at $1269.

Res: 1260, 1264, 1269, 1271
Sup: 1252, 1247, 1240, 1236

USD/JPY - 112.10

USD/JPY – Wave V of larger degree circle V has possibly ended at 75.31 and major correction has commenced and already met indicated target at 125.00.

As the greenback has continued moving higher after last week’s gap-up opening, suggesting a low has been formed at 108.13 earlier and consolidation with mild upside bias is seen for the rebound from there to extend further gain to 113.00, however, a daily close above dynamic resistance at 113.35-40 (50% Fibonacci retracement of 118.66-108.13) is needed to retain bullishness and suggest the entire fall from 118.66 has ended at 108.13, then further gain to 114.00 and possibly 114.60-65 (61.8% Fibonacci retracement) cannot be ruled out but price should falter below key resistance at 115.15, bring retreat later.

Our preferred count is that, triangle wave IV (with circle) ended at 101.45 and the circle wave V brought dollar down to the record low of 75.31 in 2011 and the subsequent rebound signal major correction has commenced with A leg ended at 84.19, followed by wave B at 77.14 and impulsive wave C is now unfolding (indicated upside target at 125.00 had been met) for gain towards 127.00 level. In the event dollar drops below support at 99.01, this would confirm medium term decline from 125.86 top (2015 high) has resumed for subsequent weakness to 98.00 and possibly 97.00.

Under this count, this wave C is unfolding as impulsive waves with (1) (2), 1 2 ended at 80.67, 79.07, 82.84 and 81.69 respectively, hence the extended wave 3 has ended at 103.74 and wave 4 correction of recent upmove should bring weakness to 92.57, then towards 90.88 but psychological support at 90.00 should limit downside and bring another rally later in wave 5, indicated target at 125.00 had been met and gain to 127.00 cannot be ruled out but reckon price would falter below 130.00.

On the downside, whilst initial pullback to 111.50-60 cannot be ruled out, reckon downside would be limited to 111.00-10 and bring another rise later. Below previous resistance at 110.60 (now support) would defer and suggest the rebound from 108.13 has possibly ended, bring weakness to 110.00, however, still reckon downside would be limited to 109.55-60 and price should stay well above said recent low at 108.13, bring another rebound later. 

Recommendation: Buy at 111.10 for 113.10 with stop below 110.10.

On the monthly chart, we have changed our preferred count that an impulsive wave is unfolding with major wave III with circle ended at 79.75, then followed by wave IV with circle and is labeled as a triangle with A: 147.64 (11 August, 1998), B: 101.25, C: 135.20, D: 101.67 and E leg ended at 124.14 to end the wave IV with circle. Hence, wave V with circle commenced from there and hit a record low of 75.31, however, the subsequent strong rebound signals this circle wave V has possibly ended there, hence gain to (indicated upside target at 122.00 and 125.00 had been met), the retreat from 125.86 suggests wave A of major correction has ended there and wave B correction back to 99.00, then 95.00 would be seen, however, reckon downside would be limited to 90.00, bring another rebound in wave C next year.