Sample Category Title

GOLD Short-term bearish in a bullish mediumterm trend.

Gold keeps on weakening since the yellow metal has faded near the hourly resistance at 1295 (18/04/2017 high). Support can be located at 1261 (intraday low). The road is wideopen for further decline.

In the long-term, the technical structure suggests that there is a growing upside momentum. A break of 1392 (17/03/2014) is necessary ton confirm it, A major support can be found at 1045 (05/02/2010 low).

SILVER Continued weakness.

Silver has broken strong support at 18.16 (rising trendline) indicating further downside risk. Strong support is given far away at 16.82 (15/03/2017 low). Strong resistance is given at a distance at 19.00 (09/11/2017 high). Expected to see continued bearish pressures.

In the long-term, the death cross indicates that further downsides are very likely. Resistance is located at 25.11 (28/08/2013 high). Strong support can be found at 11.75 (20/04/2009).

CRUDE OIL Consolidating below 50.

Crude oil has declined sharply, breaking the support at 50.71, yet now has paused. Support now lies at 48.87 (25/04/2017 low). Resistance for a short-term bounce can be found at 50.71 (old support) and 53.70 (12/04/2017 high).

In the long-term, crude oil has recovered after its sharp decline last year. However, we consider that further weakness are very likely. Strong support lies at 24.82 (13/11/2002) while resistance can now be found at 55.24 (03/01/2017 high).

AUD/USD – 0.7497

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

New strategy :

Stand aside

Position: -
Target:  -
Stop:-

Although aussie has slipped again after meeting resistance at 0.7556 earlier today and test of indicated support at 0.7473 cannot be ruled out, break there is needed to retain bearishness and signal recent decline from 0.7750 has resumed and extend weakness to 0.7450-55 (50% Fibonacci retracement of 0.7158-0.7750) but reckon downside would be limited to 0.7380-85 (61.8% Fibonacci retracement) and 0.7350 should hold, risk from there is seen for a rebound later.

On the upside, expect recovery to be limited to 0.7555-60 and price should falter well below resistance at 0.7592. Above 0.7592 would bring test of indicated previous resistance at 0.7611 would signal low has been formed at 0.7473, bring a stronger rebound to 0.7650 but resistance at 0.7680 should hold from here, price should stay well below 0.7700-10, bring another decline later. As near term outlook is still mixed, would be prudent to stand aside in the meantime. 

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 has reversed directions on Wednesday and has posted slight gains. Currently, the pair is trading at the 1.09 line. On the release front, the markets will have little data to analyze, with just one event on the schedule, Crude Oil Inventories. There’s plenty of activity on Thursday, as Germany releases Preliminary CPI and the ECB will make an interest rate announcement. In the US, the major indicators are Core Durable Goods Orders and unemployment claims.

The ECB meets for its monthly rate meeting on Thursday, but the markets are not expecting any dramatic news. The benchmark interest rate has been pegged at a flat 0.0% since March 2016, and no changes are expected. With the eurozone showing stronger inflation and growth numbers in the first quarter, there has been speculation that the ECB might taper its asset-purchase program, which runs until December, ahead of schedule. However, the ECB appears in no rush to make any monetary moves, particularly with the current French election and the German election in September.

The markets have been focused on the French presidential election, which began on Sunday. The first round winners, centrist Emmanuel Macron and far-right Marie Le Pen, will face off on May 7, with the winner becoming president. French voters will have a crystal-clear choice between the candidates, who want to take France in very different directions. Macron served as a minister under President Francois Hollande. He favors deregulation and is a staunch supporter of the European Union. Le Pen, who heads the National Front, has campaigned on a ‘France first’ platform, vowing to curb immigration and take France out of the eurozone. Hollande and Francois Fillon, who ran in the first round, have thrown their support behind Macron and asked voters to reject ‘extremism’. Macron is a heavy favorite to win the second round and become president, with polls giving him a comfortable lead of above 60%. Since opinion polls were accurate ahead of the first round of voting, the markets appear to relying on the current polls as well, meaning that a Macron victory has been priced in. Unless this sentiment drastically changes during the week, the election will be a non-event for the market. At the same time, nothing is a sure thing in politics, as underscored by the Brexit vote and the election of Donald Trump, two events which stunned the markets and triggered strong market movement.

US consumer confidence levels remain high, but there was some disappointment as CB Consumer Confidence dropped to 120.3 in April, missing the estimate of 123.7. The softer than expected reading boosted the euro in the Monday session. What is troubling analysts is that strong consumer confidence numbers have not translated into increased consumer spending, a key component of economic growth. This trend has been labeled the “hard/soft discrepancy” (confidence being ‘soft’, while actual spending being ‘hard’). This was underscored in March retail sales numbers, which came in at a flat 0.0%, shy of the forecast. Next up is Preliminary GDP on Thursday, which is expected at 1.3 percent. An unexpected GDP reading could have a sharp impact on EUR/USD.

Will the lights stay on in Washington this weekend? President Trump will have to punch in some overtime this week to avoid a shutdown of the federal government on Saturday. Congress must pass a spending bill which will fund the government until October, but the bill requires the backing of 60 senators. This means that the Republicans (who control 52 seats) will need the support of 8 Democrats. This has led to intensive bipartisan negotiations, and it’s reasonable to expect that these talks could go down to the wire, as both sides try to stick to their positions and try not to blink first. The last shutdown was in 2013, lasting 17 days. Another shutdown would be embarrassing for Trump, as it would start on his 100th day in office and would cast doubts on his ability to push his budget and tax plan through Congress.

EUR/JPY Strong bullish pressures.

EUR/JPY is back around 120.00. Key resistance stands at 123.31 (27/01/0217 high). Major support is given at 114.90 (18/04/2017low). Expected to see short-term bearish pressures.

In the longer term, the technical structure validates a medium-term succession of lower highs and lower lows. As a result, the resistance at 149.78 (08/12/2014 high) has likely marked the end of the rise that started in July 2012. Strong support at 94.12 (24/07/2012 low) looks nonetheless far away.

EUR/GBP Short-term bullish pressures.

EUR/GBP is slowly recovering after unsuccessfully challenged its key support at 0.8304. The pair now lies in a short-term bullish pattern. Yet, the technical structure is negative as long as the resistance at 0.8596 holds. Expected to show renewed weakness.

In the long-term, the pair has largely recovered from recent lows in 2015. The technical structure suggests a growing upside momentum. The pair is trading above from its 200 DMA. Strong resistance can be found at 0.9500 psychological level.

EUR/CHF Strengthening.

EUR/CHF continues to push higher, yet very slightly. However, despite the sharp increase and the bullish breakout which is very likely psychological, we believe that the medium-term pattern suggests us to see at some point renewed bearish pressures towards key support that can be found at 1.0623 (24/06/2016 low).

In the longer term, the technical structure is mixed. Resistance can be found at 1.1200 (04/02/2015 high). Yet,the ECB's QE programme is likely to cause persistent selling pressures on the euro, which should weigh on EUR/CHF. Supports can be found at 1.0184 (28/01/2015 low) and 1.0082 (27/01/2015 low).

USD/CHF Trading sideways.

USD/CHF keeps on declining despite strong volatility. The short-term technical structure is negative as long as prices remain below the hourly resistance at 1.0171 (07/03/2017). Monitor strong support given at 0.9814 (27/03/2017 low).

In the long-term, the pair is still trading in range since 2011 despite some turmoil when the SNB unpegged the CHF. Key support can be found 0.8986 (30/01/2015 low). The technical structure favours nonetheless a long term bullish bias since the unpeg in January 2015.

USD/CAD Lack of follow-through.

USD/CAD has broken key resistance given at 1.3599 (28/12/206 high). Yet, the pair has failed to go any higher. There is still a strong upside momentum. Hourly support can be found at 1.3411 (24/04/2017 high) then 1.3353 (20/01/2017 high). Expected to show renewed bullish pressures as long as the pair remains above 1.3411.

In the longer term, there is a golden cross with the 50 dma crossing the 200 dma indicating further upside pressures. Strong resistance is given at 1.4690 (22/01/2016 high). Long-term support can be found at 1.2461 (16/03/2015 low).

AUD/USD Continued decline.

AUD/USD is still trying to bounce off strong support at 0.7473 (12/04/2017 low). However, as long as prices remain below the resistance at 0.7608 (17/04/2017 high), the short-term technical structure is negative. Key resistance stands at 0.7681 (30/03/2017 high).

In the long-term, we are waiting for further signs that the current downtrend is ending. Key supports stand at 0.6009 (31/10/2008 low) . A break of the key resistance at 0.8295 (15/01/2015 high) is needed to invalidate our long-term bearish view.

Weekly 


    •    Last Candlesticks pattern: Shooting star
    •    Time of formation: 13 Mar 2017
    •    Trend bias: Down



Daily



    •    Last Candlesticks pattern: Bearish engulfing pattern
    •    Time of formation: 16 Feb 2017
    •    Trend bias: Near term down





Although the Australian dollar opened higher this week and rose to as high as 83.95 earlier this week, as this move is viewed as retracement of recent decline, reckon upside would be limited to the Kijun-Sen (now at 84.37) and bring retreat later, a daily close below the Tenkan-Sen (now at 82.72) would bring test of 82.00 but break of latter level is needed to signal the rebound from 81.49 low has ended, bring retest of this level later. A drop below this level would extend recent decline from 88.15 top to support at 81.10-15, however, near term oversold condition should limit downside and reckon 80.00 psychological support would hold from here, bring rebound later.

On the upside, whilst initial marginal recovery cannot be ruled out, reckon the Kijun-Sen (now at 84.30) would limit upside and bring another decline to aforesaid downside targets. Only a daily close above resistance at 84.41 would abort and suggest low is formed instead, risk a stronger rebound to 85.00-10 but said resistance at 85.75 should remain intact, bring another decline later. 



Recommendation: Hold short entered at 83.65 for 81.65 with stop above 84.65.

On the weekly chart, after finding support at 81.49 last week, aussie found good support there and has rebounded, suggesting consolidation above this level would be seen, however, still reckon upside would be limited to the Tenkan-Sen (now at 84.50) and bring another decline later, below the Kijun-Sen (now at 82.49) would bring weakness to 82.00 but break there is needed to signal the rebound from 81.49 has ended, bring retest of this level later. A drop below this level would extend the fall from 88.15 top to support at 81.10-15, a weekly close below there would retain bearishness and suggest the rise from 72.50 has ended, then further fall to 80.50 and possibly psychological support at 80.00 would follow.

On the upside, expect recovery to be limited to the Tenkan-Sen (now at 84.50) and bring another decline. A weekly close above this level would suggest low is formed instead, bring a stronger rebound to 85.00, then towards resistance at 85.75 but only break there would abort and signal low is formed instead, bring further subsequent gain to 86.00 and then 86.50-60, however, price should falter below resistance at 87.50.

EUR/USD Demand is increasing.

EUR/USD is pushing higher. Hourly support can be found at 1.0682 (21/04/2017 base) then 1.0576 (11.04.2017 low). Stronger support can be found at 1.0494 (22/02/2017 low). Resistance given at 1.0937 (24/03/2017 high) has been broken,

In the longer term, the death cross late October indicated a further bearish bias. The pair has broken key support given at 1.0458 (16/03/2015 low). Key resistance holds at 1.1714 (24/08/2015 high). Expected to head towards parity.

GBP/USD Consolidating above former resistance at 1.2775.

GBP/USD is consolidating lower after sharp bullish rally. Resistance stands at 1.2905 (18/04/2017 low). The pair is standing in a shortterm bearish momentum monitoring hourly support at 1.2757 (21/04/2017 low). A break of this support would confirm a weakening shortterm bullish momentum. Hourly resistance is located at 1.2905 (18/04/2017 reaction high).

The long-term technical pattern is even more negative since the Brexit vote has paved the way for further decline. Long-term support given at 1.0520 (01/03/85) represents a decent target. Long-term resistance is given at 1.5018 (24/06/2015) and would indicate a long-term reversal in the negative trend. Yet, it is very unlikely at the moment.

USD/JPY Targeting resistance at 112.20.

USD/JPY is drifting higher. Hourly resistance given at 110.64 (23/04/2017 high) has been broken. Stronger resistance can be found at 112.20 (31/03/2017 high). Closest support can be located at 108.13 (17/04/2017 low). Other key supports lie at a distant 106.04 (11/11/2016 low). Expected to show continued bullish pressures.

We favor a long-term bearish bias. Support is now given at 96.57 (10/08/2013 low). A gradual rise towards the major resistance at 135.15 (01/02/2002 high) seems absolutely unlikely. Expected to decline further support at 93.79 (13/06/2013 low).

Weekly
    •    Last Candlesticks pattern: Shooting doji
    •    Time of formation: 20 Feb 2017
    •    Trend bias: Sideways

Daily
    •    Last Candlesticks pattern: Bearish engulfing pattern
    •    Time of formation: 21 Mar 2017
    •    Trend bias: Near term down



Although aussie opened higher earlier this week and rose to as high as 0.7592, as the pair met resistance at 0.7592 and has retreated, retaining our view that further consolidation would be seen with mild downside bias for another fall to 0.7491 (last week’s low), however, break there is needed to signal the fall from 0.7750 top has resumed, bring retest of 0.7474, break there would extend this move for at least a strong retracement of the rise from 0.7158, hence further decline to 0.7450-55 (50% Fibonacci retracement of 0.7158-0.7750), then towards 0.7380-85 (61.8% Fibonacci retracement) would be seen but reckon downside would be limited to 0.7300-10.

On the upside, expect recovery to be limited to the Tenkan-Sen (now at 0.7551) and price should falter below resistance at 0.7592, bring another decline later. Only break of the Kijun-Sen (now at 0.7612, also just above resistance at 0.7611) would abort and signal first leg of decline from 0.7750 has ended, bring a stronger rebound to 0,7640-50 but resistance at 0.7680 should cap upside, price should falter below 0.7700-10, bring another decline later. 



Recommendation: Hold short entered at 0.7570 for 0.7390 with stop above 0.7595.



On the weekly chart, aussie has remained confined inside near term range and further consolidation is in store, however, reckon upside would be limited to 0.7592 resistance (this week’s high), bring another decline later to 0.7468-73 (current level of the Kijun-Sen and previous support), break there would add credence to our view that the rebound from 0.7158 has ended at 0.7750, then further fall towards 0.7380-85 (61.8% Fibonacci retracement of 0.7158-0.7750) would be seen, however, reckon downside would be limited to 0.7290-00, bring recovery later.

On the upside, although further sideways trading would take place, price should falter below this week’s high at 0.7592, bring another decline. Only break of 0.7612 would risk test of resistance at 0.7680 but a sustained breach above this level is needed to signal the retreat from 0.7750 has ended instead, bring another bounce towards this level. Looking ahead, a break of 0.7778 resistance would suggest a possible upside break of early established broad range, bring further rise to 2016 high at 0.7835, above there would confirm and encourage for headway to 0.7900 and later towards psychological level at 0.8000.

USD/CHF - 0.9943

Most recent candlesticks pattern : N/A

Trend                                    : Near term down

Tenkan-Sen level                  : 0.9936

Kijun-Sen level                    : 0.9938

Ichimoku cloud top                 : 0.9954

Ichimoku cloud bottom              : 0.9947

New strategy  :

Stand aside

Position : -

Target :  -

Stop : -

Although dollar retreated yesterday to as low as 0.9918, as the greenback has rebounded today, retaining our view that further sideways trading above this week’s low at 0.9893 would take place and another bounce to 0.9981 cannot be ruled out, however, break of 1.0000-08 resistance is needed to signal low is formed instead, bring rebound to 1.0025-30 (61.8% Fibonacci retracement of 1.0108-0.9893), however, price should falter below resistance at 1.0067.

As near term outlook is still mixed, would be prudent to stand aside in the meantime. Below said support at 0.9918 would bring retest of 0.9893 but break there is needed to confirm recent decline from 1.0108 has resumed and extend weakness to 0.9865-70 (2 times extension of 1.0108-1.0008 measuring from 1.0067), however, reckon support at 0.9831 would hold from here, bring rebound later.

AUD tumbled amid disappointing inflation data

The Australian dollar tumbled another 0.50% this morning amid disappointing first quarter inflation data. This report was the straw that broke the camel's back as investors have been betting heavily on a pick-up in inflation that would have forced the RBA to revise its dovish stance. The headline inflation gauge rose 2.1%y/y in the March quarter, compared to 2.2% expected and 1.5% in the December quarter of 2016. This sharp increase has been mostly fuelled by the recovery in commodity prices. The core measure - that excludes the most volatile components - increased to 1.5%y/y from 1.3%, well below the central bank target range of 2%-3%.

This disappointing report suggests that the RBA's next move will likely be a cut rather than a hike. AUD/USD lost more than 1.30% since Monday and is about to test the key support that lies at 0.7474 (low from April 12th). If broken, the door is wide open toward 0.7145 (low from May 2016). The risk is heavily skewed to the downside as investors will likely start to unwind their long AUD speculative positions - speculative net long positioning in the future market reached 37% of total open interest last week, according to data reported by the CFTC. In addition we likely see the resurgence of short US bonds positions as Trump's reflation trade is making a comeback against the backdrop of investors who are desperately willing to believe in an upcoming growth boost in the US. We believe that the USD debasement is coming to an end and the Aussie is the first in line for the sell-off.

Turkish rate decision expected as lira has room to head higher

While the French Presidential elections are still taking the major attention from markets, central banks are also coming back. The Turkish Central Bank will likely announce early this afternoon that it will maintain its stance on the rates.

The Benchmark Repurchase Rate should be maintained at 8% to mitigate inflation risk. According to the national Turkish institution, the inflation rate climbed to 11.29 y/y from 10.13%. In addition, the Central Bank Governor Murat Cetinkaya is expected to have a current account deficit of 4% for 2017, which would mean that a recovery is actually happening. Currency-wise, the Turkish lira remains at an elevated level, although not weaker than the level of 3.87 liras at the end of January.

In our view, the geopolitical and political uncertainties are one of the greatest driver of the currency at the moment. President Erdogan won the constitutional referendum and this increases his power and he main remain in office until 2029. Diplomatic relations with the EU though are at a low point. We believe that USDTRY has some room to head even higher in the medium-term.

Big risk in FX markets, hint of tapering

We are heading towards a structural shift that will profoundly change drivers in the FX market. However, we remain six months away from that reflection point. In the autumn, due to momentum in inflation data, we anticipate the ECB and BoJ will acknowledge the need for tapering of emergence measures and then head towards monetary policy nominalizations. In our view, getting the timing right of this point will be critical for success in the FX markets. But for now, traders should watch the ECB and BoJ to avoid any communication suggesting tapering.

For the ECB, we suspect it is way too early for tapering hints despite growing pressure from the German membership of the governing council. We expected the result of the BoJ two-day meeting to maintain its current monetary policy strategy. The pace of JGB purchased will remain at ¥80trn per year. With Japanese inflation a long way from the 2% target, there is not a current pressure to discuss policy adjustments, especially considering any hint of tapering will have a strong effect on USDJPY, which has only recently regained a bullish trend from an April correction.

With US short end yields heading higher on the back of President Trump's tax reform (is the Trump trade back in play?) and solid signals from the US economy (including yesterday's impressive New Home sales data) markets will begin repricing Fed rate hikes, which now sits at two. In the short term, we are cautiously bullish on USD especially against G10 currencies. Elsewhere, Canadian retail sales are expected to disappoint (0.0% from 2.25% m/m) putting additional pressure on the CAD.