Sample Category Title

Currency pair USD/JPY

Yesterday the USD/JPY broke as expected above the 110 resistance (dotted red) of the bull flag chart pattern. Price has continued with its bullish extension in wave 3 (brown) and has now arrived at the 261.8% Fibonacci target which could create a potential retracement.

Yesterday the USD/JPY broke as expected above the 110 resistance (dotted red) of the bull flag chart pattern. Price has continued with its bullish extension in wave 3 (brown) and has now arrived at the 261.8% Fibonacci target which could create a potential retracement.

Currency pair EUR/USD

The EUR/USD broke above the resistance trend line (dotted red) and has hit the first target at 1.0950. The second target is the psychological round level of 1.10. A break above that could see the EUR/USD extend towards the 78.6% Fibonacci level of wave 2 (green).

The EUR/USD bullish breakout confirmed that the expected wave 4 and 5 (pink) were correct. Price is now stopping at 1.0950 but a new breakout above the trend lines (dark red) could see price challenge 1.10, which is a new resistance level and a bounce or break spot. Bears could probably better wait for price to break below the support trend line (blue).

Currency pair GBP/USD

The GBP/USD bull flag chart pattern (red/blue lines) remains intact as long as price stays in between those levels. A break above resistance (red) could see price challenge the next Fibonacci level whereas a break below support (blue) could find a bounce at 1.27 support.

The GBP/USD has respected the 38.2% Fibonacci retracement level but a break below the 61.8% Fibonacci level invalidates wave 4 (purple). A break above the bull flag (red) could see a wave 5 (purple) develop.

GBP/USD - 1.2817

Most recent candlesticks pattern   : N/A

Trend                                 : Near term up

Tenkan-Sen level                 : 1.2825

Kijun-Sen level                    : 1.2824

Ichimoku cloud top              : 1.2808

Ichimoku cloud bottom        : 1.2800

Original strategy :

Buy at 1.2710, Target: 1.2850, Stop: 1.2675

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 1.2710, Target: 1.2850, Stop: 1.2675

Position : -

Target :  -

Stop : -

Cable has continued trading within near term established range and further sideways trading is in store, whilst another test of Friday’s low at 1.2757 cannot be ruled out, reckon downside should be limited to 1.2700-10 (50% Fibonacci retracement of 1.2515-1.2906) and bring another rally, a break of indicated minor resistance at 1.2859 would signal the pullback from 1.2906 has ended, bring retest of this level, above there would extend recent upmove to 1.2920-30 (2 times extension of 1.2365-1.2575 measuring from 1.2500), then 1.2950 but loss of upward momentum should prevent sharp move beyond 1.2990-00 (1.236 times projection of 1.2109-1.2616 measuring from 1.2365 and psychological resistance). 

In view of this, would not chase this rise here and would be prudent to buy cable on subsequent pullback as downside should be limited to 1.2710 (50% Fibonacci retracement of 1.2515-1.2906), bring another rise. Below 1.2700 would defer and signal top has been formed, risk correction to 1.2660-65 (61.8% Fibonacci retracement of 1.2515-1.2906) and price should stay well above 1.2608-16 (previous resistance now support).

EUR/USD - 1.0903

Most recent candlesticks pattern   : N/A

Trend                      : Near term up

Tenkan-Sen level              : 1.0923

Kijun-Sen level                  : 1.0911

Ichimoku cloud top             : 1.0865

Ichimoku cloud bottom      : 1.0809

Original strategy  :

Bought at 1.0900, Target: 1.1000, Stop: 1.0865

Position : - Long at 1.0900

Target :  - 1.1000

Stop : - 1.0865

New strategy  :

Exit long entered at 1.0900

Position : - Long at 1.0900

Target :  -

Stop : -

Despite intra-day marginal rise to 1.0951, lack of follow through buying and current retreat suggest consolidation below this level would be seen and downside risk remains for retracement to 1.0870-75, break there would suggest an intra-day top is formed, bring further fall to 1.0850 but reckon support at 1.0821 would hold from here, bring another rise later.

In view of this, would be prudent to exit long entered at 1.0900 and stand aside for now. Only above said resistance at 1.0951 would extend recent upmove from 1.0340 low to 1.0975-80 and possibly towards 1.1000 which is likely to hold on first testing due to loss of momentum, risk from there is seen for a retreat later.

USD/JPY - 111.27

Most recent candlesticks pattern   : N/A

Trend                      : Near term up

Tenkan-Sen level              : 111.28

Kijun-Sen level                  : 110.85

Ichimoku cloud top             : 109.95

Ichimoku cloud bottom      : 109.74

Original strategy  :

Buy at 110.40, Target: 111.40, Stop: 110.05

Position :  -

Target :  -

Stop : -

New strategy  :

Buy at 110.70, Target: 111.70, Stop: 110.35

Position :  -

Target :  -

Stop : -

The greenback surged after finding renewed buying interest at 109.59 and broke above previous resistance at 110.60, adding credence to our view that recent rise from 108.13 low is still in progress and bullishness remains for this move to bring at least a strong retracement of early downtrend, hence further gain to resistance at 111.58 would be seen, break would extend gain towards 111.90-00, however, overbought condition should prevent sharp move beyond another previous resistance at 112.20.

In view of this, would not chase this rise here and would be prudent to buy dollar on subsequent pullback as previous resistance at 110.60 should limit downside, bring another rally. Below 110.30-35 (61.8% Fibonacci retracement of 109.59-111.51) would defer and suggest top is possibly formed, risk weakness to 109.80 but break of support at 109.59 is needed to provide confirmation.

Last week the US President Trump stated on twitter that he will “unveil his major tax reform plan on Wednesday April 26”. Trump intends to dramatically cut corporate tax from the current rate of 35% to 15%, and will likely make tax exemption on US corporate overseas earnings.

After the failure of his healthcare bill proposal on March 24, markets have, to an extent, lost confidence in Trump's leadership. Therefore, his tax reform plan is crucial to demonstrate to the markets the capability of the Trump administration and to regain market confidence. The healthcare bill failure resulted in USD plunging to a 4-and-a-half-month low with USD further weakening post Trump's recent “strong dollar” statement on April 12.

The tax reform bill will still need Congress's approval to pass. If Trump is unable to get enough support again, it will likely lead to substantial market disappointment likely to initiate a USD and Equity sell off.

Q1 US corporate earnings have generally outperformed expectations. To date there have been more than 90 S&P 500 listed companies announcing their results with 74.7% reporting better-than-expected profits. Only 19.5% of these companies reported lower-than-expected profits mainly because of individual factors instead of market or macroeconomic factors.

The outperforming corporate earnings pushed US stocks up. Tuesday evening, the Dow Jones index hit a 6-week high of 21022, The S & P 500 index hit a 8-week high of 2392.15.

A further 190 S&P 500 listed companies will report earnings this week including some major components such as: Microsoft, Amazon, Intel, and Alphabet. The mega-caps Apple and Facebook will report earnings next week.

Overall US corporate earnings growth for Q1 is forecasted to be 13.7% surpassing the 10% growth seen in Q4. If US corporate earnings continue to outperform, and Trump's tax cut or tax reform bill proposal is passed by Congress, we can expect USD and the US stock market to move higher.

'We see a genuine recovery in core inflation as a quite distant prospect, which biases the RBA to ease again.'

Australian consumer headline inflation growth missed forecasts in the three month to March, while core inflation rose in line with expectations, official figures revealed on Tuesday. The Australian Bureau of Statistics reported that its headline CPI came in at 0.5% in the Q1 of 2017, unchanged from the preceding quarter, while market analysts anticipated an increase of 0.6% during the reported quarter. On an annual basis, headline inflation climbed 2.1%, missing markets' expectations for a 2.2% rise. Nevertheless, the Trimmed Mean CPI, the ABS' core inflation measure, advanced 0.5% on a quarterly basis, in line with forecasts. Year-over-year, core inflation rose 1.9%, surpassing expectations for a 1.8% climb. Despite the rise in the core inflation rate, analysts stated that overall inflation was modest and driven by some temporary factors, such as the change in crude oil prices, forcing the Reserve Bank of Australia to remain on hold for an undefined period of time. Prices for education, health and transport climbed 3.1%, 2.0% and 1.5%, respectively. However, the following gains were offset by price declines in other categories. Prices for clothing and footwear dropped 1.4%, for furnishings, household equipment and services prices fell 1.0% and for recreation and culture prices plunged 0.7%.

'Investors' focus is now shifting to the European Central Bank's meeting later this week.'– Stefania Spezzati, Bloomberg

Pair's Outlook

On Wednesday morning the common European currency had reached the 1.0950 mark against the US Dollar. Initially it might seem that the pair will surge to the weekly R3 and the 50.00% Fibonacci retracement level, which are both located at 1.0978. However, the pair faces the upper trend line of the long term ascending channel pattern. On Wednesday the trend line was located at the 1.0958 mark. Due to that reason a bounce off from the resistance level is possible. In that case the pair would retreat back to the 1.0880 level, where close by the weekly R2 and the monthly R1 are residing.

Traders' Sentiment

Traders remain bearish on the pair, as 60% of open positions are short. In addition, 53% of trader set up orders are to sell the Euro.

'The pound's euphoric rally on last week's snap election news could be at further risk if the market loses confidence in the election's ability to make for easier negotiations with the EU.' – LMAX (based on Business Recorder)

Pair's Outlook

On Tuesday, the Cable behaved in accordance with expectations, having appreciating, but with the 1.2850 psychological level limiting the intraday gains. Consequently, since the pair reached its consolidation trend's upper border, a bearish development is now likely to prevail. The 1.2750 mark is the intraday bottom floor, but the exchange rate could also struggle moving below 1.2780. However, technical indicators are unable to confirm the possibility of the negative, as they keep giving bullish signals in the daily timeframe. As a result, we should not rule out the chance of the Pound breaking the 1.2850 handle and reclaiming the 1.29 mark, although this scenario is highly unlikely.

Traders' Sentiment

Traders remain relatively neutral, with 51% of all open positions being long and the other 49% being short the Sterling against the US Dollar.

'It's too early to say that the dollar will keep trending higher and head above the peak it saw in March [115.51 on March 10].' – Bank of Tokyo-Mitsubishi UFJ (based on Reuters)

Pair's Outlook

Yesterday the Buck slightly exceeded expectations, as it managed to appreciate beyond the 111.00 level against the Japanese Yen. With the breach of this mark the US Dollar now has the opportunity to continue outperforming the Yen. However, before reaching the descending channel's upper boundary, there is still one resistance the pair has to pierce on its path, namely the cluster around 112.15, formed by the 55-day SMA, the upper Bollinger band and the monthly pivot point. On the other hand, after Tuesday's strong rally the Greenback could take a breath and ease on gains, but ultimately no significant changes in either direction are expected today due to absence of solid market movers.

Traders' Sentiment

For the fifth consecutive time market sentiment worsened, with 62% of all open positons now being long (previously 68%).

'Over the past two sessions, the momentum for gold to move ahead has actually faded away. We can see that risk appetite has increased after the easing situation in North Korea and French election results.' – Mark To, Wing Fung Financial Group (based on Reuters)

Pair's Outlook

The yellow metal's price has reached the second weekly support, which is located at the 1,263.56 level. If the bullion passes the support level, the commodity price is most likely going to retreat down to the combined support of the 200-day SMA at 1,263.35 and the weekly S3 at 1,252.84 level. On the other hand a rebound might occur. In the case of a rebound the bullion's price is most likely going to surge up to the 20-day SMA, which is located at the 1,269.90 level, and afterwards the weekly S1 at 1,274.27 would be the next target.

Traders' Sentiment

Trader open positions are 55% bearish. However, 60% of trader set up orders are to buy the metal.