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'It appears that large fund selling in the Far East overnight is also putting pressure on the price of gold, and this move has kept the Wall Street gold traders guarding their long positions.' – Walter Pehowich, Dillon Gage Metals (based on Reuters)

Pair's Outlook

As forecasted before the yellow metal has retreated to the support of the 61.80% Fibonacci retracement level, above which it remained on Thursday morning. The retracement level is located at the 1,278.73 level. It is supported by the monthly R1 at 1,275.52 and the weekly PP at 1,274.84. It is most likely that after finding support during the late hours of Wednesday trading the bullion's price will resume the surge, which was stopped short before reaching the 1,300 mark. The reason for that is the fact that there are no resistance levels up to the 1,300 level.

Traders' Sentiment

SWFX traders are bearish on the metal, as 56% of open positions are short. However, 64% of trader set up orders are to buy the metal.

Cable bounced back above 1.2800 after correction from fresh multi-month high at 1.2904 was contained by thickening hourly cloud at 1.2770 that sidelines immediate threats of deeper pullback.

Bullish technical studies and positive sentiment on early election decision keep the pair supported.

However, the downside would remain vulnerable as daily studies are overbought, but no firmer bearish signal seen so far.

Hourly cloud (spanned between 1.2773 and 1.2708) marks significant support and break below it would signal further easing which would expose key support at 1.2620 (200SMA).

Tuesday's high at 1.2859 marks the first pivot ahead of key 1.2904 barrier, break of which would unlock psychological 1.3000 barrier.

Res: 1.2859, 1.2904, 1.2950, 1.3000
Sup: 1.2800, 1.2770, 1.2755, 1.2708

The pair is trading in extended consolidation around 200SMA (currently at 108.85) after recent bear-leg from 111.56 (10 Apr high) found footstep just above 108.00 round-figure support. Near-term action is directionless and entrenched within 108.30/109.20 range, as studies on lower timeframes are neutral. Larger picture, however, shows bearish, with current consolidation seen as a pause of larger downtrend which eyes initial target at 107.84 (Fibo 61.8% of larger 101.17/118.65 rally) and may extend further down on break of the latter. Limited upside is seen for now, with falling 10SMA (currently at 109.33) reinforcing initial 109.20 barrier and extended upticks expected to hold below daily Tenkan-sen (currently at 109.84) and former lows at 110.10.

Res: 109.20, 109.33, 109.84, 110.10
Sup: 108.70, 108.30, 108.11, 107.84

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



Aussie did meet renewed selling interest at 0.7611 (we recommended in our previous update to sell at 0.7570 and a short position was entered) earlier this week and has slipped, retaining our bearishness for the fall from 0.7750 top to bring 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, however, reckon downside would be limited to 0.7300-10 and bring rebound later.

On the upside, whilst initial recovery to 0.7560-65 cannot be ruled out, reckon the Kijun-Sen (now at 0.7612) would cap upside and bring another decline later. Only a daily close above the Kijun-Sen 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 0.7620.



On the weekly chart, as aussie recovered after finding support at 0.7473 (just held above the Kijun-Sen at 0.7468) and consolidation above this level would be seen, however, if our view that top has been formed at 0.7750 is correct, upside should be limited to 0.7590-00 and bring another decline, below the Kijun-Sen (now at 0.7468) would add credence 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, expect recovery to be limited to 0.7575-80 and the Tenkan-Sen (now at 0.7612) should hold, bring another decline later. Above resistance at 0.7641 would risk test of resistance at 0.7680 but only a sustained breach above this level would signal the retreat from 0.7750 has ended instead, bring another bounce towards this level. Looking ahead, only 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.

The Euro rallied in early European trading, probing above key near-term barrier at 1.0738 (daily Kijun-sen) which capped gains in past two days.

Wednesday's consolidation of Tuesday's strong rally was contained by former strong barrier, now support at 1.0700, keeping near-term bulls intact.

Also, US dollar is weaker on lowered expectations on rate hike in June, which gives additional support to Euro, few days ahead of French election.

Outcome of the first round of election will be the main driver for the single currency, which is expected to come under stronger pressure in case anti-EU candidates win on Sunday.

Until then, the pair is expected to remain bid and extend gains, driven by bullish technicals and weaker dollar.

Daily close above Kijun-sen would be seen as bullish signal for extension towards 1.0776 (Fibo 61.8% of 1.0905/1.0568 descend).

Conversely, repeated close below Kijun-sen line would signal prolonged consolidation with near-term risk expected to shift lower.

Res: 1.0759, 1.0776, 1.0800, 1.0825
Sup: 1.0720, 1.0700, 1.0685, 1.0657

USD/CHF - 0.9960

Most recent candlesticks pattern : N/A

Trend                                    : Near term down

Tenkan-Sen level                  : 0.9970

Kijun-Sen level                    : 0.9973

Ichimoku cloud top                 : 1.0004

Ichimoku cloud bottom              : 0.9985

Original strategy :

Sold at 1.0000, Target: 0.9900, Stop: 1.0030

Position : - Short at 1.0000

Target :  - 0.9900

Stop : - 1.0030

New strategy  :

Hold short entered at 1.0000, Target: 0.9900, Stop: 1.0010

Position : - Short at 1.0000

Target :  - 0.9900

Stop : - 1.0010

As the greenback has remained under pressure after recent selloff, adding credence to our bearish view that recent decline from 1.0108 top is still in progress and bearishness remains for further weakness to 0.9943-48 (1.236 times projection and previous support) and then 0.9926 (61.8% Fibonacci retracement of 0.9813-1.0108) but reckon 0.9900-05 (1.618 times projection) would hold on first testing, bring rebound later.

In view of this, we are holding on to our short position entered at 1.0000. Above previous support at 1.0008 would defer and risk rebound to 1.0020-30 but still reckon indicated resistance at 1.0067 would remain intact.

WTI Crude was exposed to sharp losses on Wednesday, with prices tumbling towards $50 after an unexpected weekly climb in U.S gasoline supplies compounded with existing oversupply fears. Although some losses were clawed back during early trading on Thursday as investors attempted to look beyond the oversupply dilemma and focus on the slight drop in U.S Crude inventories, the bias remains tilted to the downside. With anticipation likely to heighten ahead of the scheduled 25 May conference when OPEC and Non-OPEC oil producers will meet, oil price sensitivity could become a dominant theme moving forward. Although OPEC remains optimistic that production cuts with non-members may uplift oil prices, the resurgence of U.S shale continues to sabotage the cartel's efforts to stabilize the saturated markets.

While some investors remain optimistic over OPEC extending its production cut by another six months to battle oversupply woes, questions may be raised if such measures could reduce the global supply glut and revive oil bulls. The sentiment towards oil remains bearish and when factoring in how Donald Trump's pro-drilling rhetoric and deregulations may continue to negatively impact oil markets, further losses could be expected. From a technical standpoint, bears have conquered the $52 support level with prices almost clipping $50. Previous support at $52 could transform into a dynamic resistance that opens a path towards $50 and potentially lower.

Global stocks on the defense

The combination of depressed oil prices and a sense of anxiety ahead of the French presidential elections this weekend has left investors edgy and stock markets on the defense. Although Asian shares have displayed a touch of resilience during early trading on Thursday, the upside could be limited if participants start to depart from riskier assets amid the uncertainty. European markets are expected to open slightly pressured as investors observe from a safe distance; this sense of caution could potentially limit gains on Wall Street. With the Trump rally losing momentum and geopolitical tensions weighing on global sentiment, stock markets are in desperate need of inspiration to fuel the bull rally.

Sterling hovering around 1.2800

Sterling has staged an awe-inspiring rebound this week off the back of U.K Prime Minister Theresa May shocking markets by announcing early elections. However, questions should be raised whether the rally is sustainable. With political risks and uncertainty revolving around Brexit remaining a dominant theme when dealing with Sterling, the bullish rally could face some headwinds down the road. Investors may direct their attention towards BoE governor Mark Carney who is scheduled to deliver a speech today. With the Brexit saga gaining traction and UK economic data displaying some signs of weakness over the past months, it will be interesting to hear Carney's thoughts on these developments. From a technical standpoint, the GBPUSD has broken above the 1.2775 resistance level, with the next level of interest at 1.3000.

In an alternative scenario, repeated weakness below 1.2775 could open a path lower towards 1.2600.

GBP/USD - 1.2788

Most recent candlesticks pattern   : N/A

Trend                                 : Near term up

Tenkan-Sen level                 : 1.2805

Kijun-Sen level                    : 1.2815

Ichimoku cloud top              : 1.2775

Ichimoku cloud bottom        : 1.2711

Original strategy :

Buy at 1.2710, Target: 1.2850, Stop: 1.2675

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 1.2755, Target: 1.2855, Stop: 1.2720

Position : -

Target :  -

Stop : -

Although cable has rebounded after finding support at 1.2770 and gain to 1.2855-60 cannot be ruled out, break there is needed to signal the pullback from 1.2906 has ended, bring retest of this level, break 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 near term 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). If said resistance continues to hold, then further consolidation would take place and another retreat to 1.2755-60 (38.2% Fibonacci retracement of 1.2515-1.2906) cannot be ruled out before prospect of a rally.

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 1.2740-50. Below 1.2710 (50% Fibonacci retracement) would defer and signal top has been formed, risk correction to 1.2660-65 (61.8% Fibonacci retracement of 1.2515-1.2906) but price should stay well above 1.2608-16 (previous resistance now support).

EUR/USD - 1.0738

Most recent candlesticks pattern   : N/A

Trend                      : Near term down

Tenkan-Sen level              : 1.0729

Kijun-Sen level                  : 1.0724

Ichimoku cloud top             : 1.0707

Ichimoku cloud bottom      : 1.0676

Original strategy  :

Buy at 1.0675, Target: 1.0775, Stop: 1.0640

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 1.0685, Target: 1.0785, Stop: 1.0650

Position : -

Target :  -

Stop : -

As the single currency has risen again after brief pullback, suggesting recent upmove from 1.0570 is still in progress and upside bias remains for further gain to 1.0775-80 (61.8% Fibonacci retracement of 1.0906-1.0570) and possibly towards 1.0800, however, loss of near term upward momentum should prevent sharp move beyond 1.0825-30, risk from there is seen for a retreat to take place later.

In view of this, would not chase this rise here and would be prudent to buy euro on pullback as 1.0675-85 should limit downside. Only below support at 1.0635 would abort and signal top is formed instead, risk weakness towards 1.0602 support.

USD/JPY - 108.90

Most recent candlesticks pattern   : N/A

Trend                      : Near term down

Tenkan-Sen level              : 108.90

Kijun-Sen level                  : 108.92

Ichimoku cloud top             : 108.68

Ichimoku cloud bottom      : 108.65

Original strategy  :

Bought at 108.45, Target: 109.45, Stop: 108.30

Position :  - Long at 108.45

Target :  - 109.45

Stop : - 108.30

New strategy  :

Hold long entered at 108.45, Target: 109.45, Stop: 108.30

Position :  - Long at 108.45

Target :  - 109.45

Stop : - 108.30

As dollar has eased after faltering below indicated resistance at 109.22, suggesting further consolidation would take place, however, reckon downside would be limited to 108.45-50 and bring another bounce to said resistance, break there would add credence to our view that a temporary low has been formed at 108.13, bring retracement of recent decline to 109.40-45 (previous resistance and 38.2% Fibonacci retracement of 111.58-108.13) but reckon upside would be limited to 109.86-87 (50% Fibonacci retracement and previous resistance) and price should falter below 110.25-30 (61.8% Fibonacci retracement), bring retreat later.

In view of this, we are holding on to our long position entered at 108.45. Below 108.30-32 would risk retest of 108.13 support (this week’s low) but break there is needed to signal recent decline has resumed and extend weakness to 107.75-80 later.