Sample Category Title

The Euro is consolidating above fresh two-week low at 1.0650, hit last Friday in extension of steep bear-leg from 1.0905 peak. Support at 1.0650 marks Fibo 61.8% of 1.0493/1.0905 rally, close below which would generate bearish signal for test of next strong support at 1.0622 (top of daily Ichimoku cloud/100SMA). Consolidation is so far holding under previous key support at 1.0700 (daily Kijun-sen/base of thick hourly cloud), which is expected to ideally cap upside attempts, before bears resume. Clear break below 1.0650/22 would triggers further bearish acceleration below 1.0600 trough which may attract key short-term support at 1.0500 zone. Strong near-term bears may be delayed on sustained break above 1.0700 barrier that would signal extended correction.

Res: 1.0680, 1.0700, 1.0748, 1.0777
Sup: 1.0650, 1.0622, 1.0600, 1.0583

EUR/JPY - 118.90

Recent wave: wave v of (C) ended at 94.12 and major correction in wave A has ended at 149.79

Trend: Near term down

Original strategy:

Sell at 120.40, Target: 118.40, Stop: 121.00

Position: -
Target: -
Stop: -

New strategy :

Sell at 120.40, Target: 118.40, Stop: 121.00

Position: -
Target:  -
Stop:-

Although the single currency has remained under pressure and the decline from 122.89 top may extend further weakness to 118.50, loss of near term downward momentum should prevent sharp fall below indicated previous chart support at 118.25 and reckon 117.90-00 would hold on first testing, price should stay well above 117.40-50, risk has increased for a corrective rebound to take place soon.

In view of this, would not chase this fall here and would be prudent to sell euro on subsequent rebound as resistance at 120.44 should cap upside and bring another decline. Above 1121.00 would abort and suggest low is possibly formed, risk rebound to 121.50 but resistance at 121.84 should hold from here, bring another decline later.

Our latest preferred count is that wave (ii) is ABC-X-ABC which ended at 123.33 and wave (iii) is unfolding with wave iii ended at 100.77, followed by wave iv at 111.57 and wave v as well as the wave (iii) has ended at 97.04, followed by wave (iv) at 111.43 and wave (v) has ended at 94.12 which is also the end of the larger degree v, this also implied the major wave (C) has also ended there, hence major correction has commenced from there with (A) leg unfolding in its lower degree wave c which has possibly ended at 145.69. Under this count, A-B-C wave (B) has commenced with A leg ended at 136.23, wave B at 143.79 and wave C has possibly ended at 149.79.

Our larger degree count is that the decline from 139.26 is wave (C) and is sub-divided into a diagonal triangle i-ii-iii-iv-v with wave i - 105.44, wave ii- 123.33, wave iii - 97.03, wave iv - 111.43, followed by the final wave v as well as the end of wave (C) at 94.12, this also mark the bottom of larger degree wave B. Under this count, major rise in wave C has commenced as an impulsive wave with minor wave III ended at 145.69, wave V is still in progress for further gain to 150.00. Having said that, this so-called wave V could well be the first leg of larger degree 5-waver wave C and this wave C should bring at least a retest of wave A top at 169.97 (July 2008).

EUR/USD

Current level - 10677

My outlook remains negative, for a slide towards 1.0600 support area. Crucial on the upside is 1.0700 high.

Profit-taking affects gold curbing silver and platinum

USD/JPY

Current level - 111.36

The recent slide below 111.45 support zone has neutralized the positive bias and the situation here is neutral. Initial minor resistance lies at 111.70 and key support is projected at 110.70.

GBP/USD

Current level - 1.2544

The intraday bias is positive and only a break through 1.2430 crucial low will reinstate the bearish outlook for 1.2230.

AUD/USD – 0.7602

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 up

Original strategy :

Bought at 0.7645, stopped at 0.7605

Position: - Long at 0.7645
Target:  -
Stop: - 0.7605

New strategy :

Stand aside

Position: -
Target:  -
Stop:-

As aussie met renewed selling interest at 0.7680 last week and has slipped again, dampening our bullishness and test of support at 0.7585 cannot be ruled out, break there would signal top has indeed been formed at 0.7750 last month, bring further fall to 0.7530-40 but indicated support at 0.7491 should remain intact due to near term oversold condition, risk from there is seen for a rebound later.

In view of this, would not chase this fall here and would be prudent to stand aside in the meantime. Above 0.7650 would bring another bounce to 0.7680-85 resistance but break there is needed to revive bullishness and signal low is formed there and bring further gain to 0.7720-25, then retest of said resistance at 0.7750. Looking ahead, above this resistance would extend gain to 0.7778 (last year’s high), however, only break there would extend headway to 0.7840-50.

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.

During the Asian morning Tuesday, the Reserve Bank of Australia will announce its rate decision. The forecast is for the RBA to remain on hold once again, a view that we share given that the Bank's latest communications suggested that officials are keen to hold rates unchanged for some time. Even though we got some dovish signals from the latest meeting statement and minutes, those were balanced out by a repetition that high housing prices continue to pose risks to financial stability and that any more rate cuts could amplify such risks further.

Since that gathering, data showed that the unemployment rate rose in February, while retail sales for the same month unexpectedly fell. As such, although we do not expect these data to alter the Bank's overall bias, they tilt the risks towards a somewhat dovish narrative from policymakers. In such a case, we could see the Aussie coming under renewed selling interest.

AUD/USD tumbled during the Asian morning Monday after retail sales for February disappointed. The pair dipped below the 0.7625 (R1) barrier and during the early European morning, it looks to be headed towards the key support zone of 0.7600 (S1). Even though the pair trades within a downward sloping channel since the 17th of March, a clear break below 0.7600 (S1) is needed to confirm a forthcoming lower low on the 4-hour chart and make us more confident on more downside extensions. For now, we expect the rate to settle around that obstacle and wait for the RBA meeting tonight. A dovish tilt by the Bank could prove the trigger for such a dip.

Japan's Tankan survey signals improved business sentiment

The sentiment of Japanese firms improved further in Q1 according to the BoJ's quarterly Tankan business survey. The index measuring the sentiment of large manufacturers rose for a second consecutive quarter, though it missed its forecast, while the large non-manufacturers' figure rose in line with expectations. In our view, these prints are consistent with the BoJ keeping its current policy framework unchanged for the foreseeable future. The gradual improvement in business conditions diminishes the likelihood for any further easing, but the survey was not strong enough to fuel expectations for an eventual end to BoJ stimulus.

With regards to the yen, the currency has strengthened notably in the past weeks, perhaps due to fiscal-year-end demand by Japanese firms trying to repatriate funds. Considering that the fiscal year is officially over, it would be interesting to see whether this move is reversed in the coming weeks.

Another driver of JPY over the coming weeks may be incoming polls with regards to the French election, which have lately shown Le Pen losing ground versus her main rivals. If this continues, we would expect EUR/JPY to recover some of its recent losses, as European political risk diminishes and investors turn away from safe havens.

EUR/JPY traded lower on Friday, falling below the support (now turned into resistance) barrier of 119.10 (R1). The slide was stopped slightly above the key support obstacle of 118.50 (S1). Although the price structure on the 4-hour chart still suggests a short-term downtrend, given our proximity to that key hurdle, we prefer to stand pat for now. The fact that the rate rebounded several times in the past from that zone combined with the aforementioned fundamentals, make us cautious that another recovery may be on the cards. We prefer to wait for a clear close below 118.50 (S1) before we turn our eyes to the downside again.

Today's highlights:

From the UK, we get the manufacturing PMI for March. The forecast is for the index to have remained unchanged, in which case the reaction in GBP could be limited.

In the US, the ISM manufacturing PMI for March is due out. The figure is forecast to decline somewhat, but to still remain well above the 50 barrier that separates expansion from contraction. Although the reaction in USD may be negative, given that the index is expected to remain at a healthy level, we don't expect such a reaction to be major.

As for the rest of the week:

On Tuesday, during the Asian session, the RBA rate decision will be in focus, as we outlined above. On Wednesday, we get the US ADP employment report for March and later during the day, the Fed will release the minutes of the March FOMC meeting. On Thursday, we have a relatively light day, while on Friday, the US employment report for March will take center stage. We also get employment data for March from Canada.

AUD/USD

Support: 0.7600 (S1), 0.7580 (S2), 0.7550 (S3)

Resistance: 0.7625 (R1), 0.7650 (R2), 0.7680 (R3)

EUR/JPY

Support: 118.50 (S1), 117.70 (S2), 116.50 (S3)

Resistance: 119.10 (R1), 119.80 (R2), 120.35 (R3)

The first round of the French presidential election will be held on April 23 with the second round on May 7.

The forecast for the first-round vote for the three candidates: Le Pen, Macron and Fillion are 25.8%, 25.1% and 18.4% respectively. The chances for Macron and Le Peng getting into the second-round are 98% and 96% respectively, Fillion is facing an even more severe setback now as his wife is currently also under formal investigation associated with a fake parliamentary job.

Le Pen is the focus of the election because of her extreme right-wing policies and high probability to win the election. She takes a similar stance to Trump, the focus of her policies is French first, including anti-globalization, anti-immigrants, trade protectionism, making France leave the EU, repealing the Euro and reusing French Cyan etc.

Many French voters are in favour of Le Pen’s policies, due to France’s high unemployment rate and recent terror attacks; provoking citizens’ anti-foreigner sentiment.

France and Germany are the EU’s largest economies. If France also leaves the EU, following Brexit, then other member states will also likely follow, the EU will likely face the crisis of falling apart, which will result in a lower Euro.

Today UK Markit manufacturing PMI is to be released at 09:30 BST. The crucial US ISM Manufacturing and Prices Paid for March, to be released at 15:00 BST, will likely cause volatility for USD. The dollar index hit a 2-week high of 100.49 last Friday.

New York Fed president William Dudley will make a speech at 15:30 BST, followed by the FOMC member Harker at 20:00 BST, and the Richmond Fed president Jeffrey Lacker at 22:00 BST.

Weekly

    •    Last Candlesticks pattern: Shooting star 
    •    Time of formation: 03 May 2016
    •    Trend bias: Down

Daily

    •    Last Candlesticks pattern: Shooting star
    •    Time of formation: 3 May 2016
    •    Trend bias: Sideways

EUR/USD – 1.0868

Despite last week’s initial brief rise to 1.0906, lack of follow through buying and the subsequent much stronger-than-expected retreat formed a series of black candlesticks, suggesting top has indeed been formed at 1.0906 and downside risk remains for the fall from there to extend weakness towards support at 1.0600 but a daily close below there is needed to retain bearishness, bring test of the lower Kumo (now at 1.0585) and later towards support at 1.0525 but price should stay above pivotal support at 1.0493, bring rebound later due to near term oversold condition.

On the upside, whilst initial recovery to the Kijun-Sen (now at 1.0701) cannot be ruled out, price should falter well below the Tenkan-Sen (now at 1.0779) and bring another decline later. A daily close above the Tenkan-Sen would dampen this bearish view and suggest the fall from 1.0906 has ended instead, risk a stronger rebound to 1.0825-30 but price should falter well below said resistance at 1.0906, bring retreat later. In the unlikely event euro breaks above said last week’s high at 1.0906, this would extend the erratic rise from 1.0340 low to 1.0930-35 (61.8% Fibonacci retracement of 1.1300-1.0340), then towards 1.1000.

Recommendation: Stand aside for this week.

On the weekly chart, although the single currency opened higher last week, the subsequent deeper-than-expected retreat formed a long black candlestick, suggesting top has possibly been formed at 1.0906, hence consolidation below this level would be seen with mild downside b tis for test of 1.0600 support, break there would add credence to this view and bring further fall to 1.0525. Looking ahead, only a break of indicated pivotal support at 1.0493 would signal the rebound from 1.0340 has ended at 1.0906, bring further fall to key support at 1.0454, a sustained breach below this level would provide confirmation, then further fall to 1.0390-00 and later retest of this January low would follow.

On the upside, expect recovery to be limited to 1.0730-40 and bring another decline. Above 1.0780 would risk tabour to 1.0825-30 but price should falter well below said resistance at 1.0906, bring another decline later. Only a break of 1.0906 would revive near term bullish view for the erratic rise from 1.0340 low to bring retracement of recent decline to 1.0930-35 (61.8% Fibonacci retracement of 1.1300-1.0340) and possibly 1.1000, however, reckon upside would be limited to 1.1050-60 and price should falter below 1.1100-10, risk from there is seen for a retreat to take place later.

Weekly

    •    Last Candlesticks pattern: Marubuzo
    •    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 – 111.39

Although the greenback recovered after finding support at 110.11 and consolidation above this level would be seen, reckon upside would be limited to 112.20 and bring another decline later, below said support at 110.11 would signal the decline from 118.66 top has resumed and may extend weakness to 109.90-95 (50% Fibonacci retracement of 101.19-118.66), then 109.50, however, downside would be limited to 109.00 and previous support at 108.55 should hold from here, price should stay well above dynamic support at 107.85-90 (61.8% Fibonacci retracement of 101.19-118.66) and bring rebound later.

On the upside, expect recovery to be limited to 112.00 and bring another decline. Above previous support at 112.26 (now resistance) would risk test of 112.81-90 (current level of the Kijun-Sen and previous resistance) but a daily close above there is needed to signal low is possibly formed, risk a stronger rebound to 113.54 resistance, a break above there would add credence to this view, then further gain to 114.00-10 would follow.

Recommendation : Hold short entered at 111.50 for 109.50 with stop above 112.30.

On the weekly chart, as the greenback has recovered after holding above the Kijun-Sen (now at 109.91), suggesting minor consolidation above this level would be seen, however, reckon upside would be limited to 112.26 (previous support) would limit upside and bring another decline later, below 109.90-95 (current level of the Kijun-Sen and 50% Fibonacci retracement of 101.19-118.66) would extend the retreat from 118.66 to 109.00 but reckon support at 108.55 would limit downside and price should stay above 107.85-90 (61.8% Fibonacci retracement), risk from there is seen for a rebound later.

On the upside, although initial recovery cannot be ruled out, reckon upside would be limited to 112.00-10 and bring another decline. Above previous support at 112.26 (now resistance) would defer and suggest a temporary low is formed, bring test of the Tenkan-Sen (now at 112.81), a weekly close above there would add credence to this view, then further gain to 113.54 resistance and then 114.00-10 would follow but price should falter well below resistance at 115.51.

Daily Pivots: (S1) 139.13; (P) 139.60; (R1) 140.24; More...

Intraday bias in GBP/JPY remains mildly on the upside for the moment. Fall from 142.79 is likely completed. Break of 140.60 resistance should confirm near term reversal and target 142.79 resistance first. Break there will send the cross through 144.77 resistance to 148.42 high. On the downside, below 137.51 minor support will extend the fall from 142.79 towards 136.44 support. But still, price actions from 148.42 are forming a consolidation pattern. We'd expect support from 50% retracement of 122.36 to 148.42 at 135.39 to contain downside and bring rebound.

In the bigger picture, price actions from 122.36 medium term bottom are still seen as a corrective pattern. Main focus is on 38.2% retracement of 195.86 to 122.36 at 150.42. Rejection from there will turn the cross into medium term sideway pattern. Or, sustained break of 50% retracement of 122.36 to 148.42 at 135.39 will turn outlook bearish for a test on 122.36 low. Though, sustained break of 150.42 will extend the rebound towards 61.8% retracement of 195.86 to 122.36 at 167.78.

USD/CHF - 1.0020

Most recent candlesticks pattern : N/A

Trend                                    : Near term up

Tenkan-Sen level                  : 1.0016

Kijun-Sen level                    : 1.0013

Ichimoku cloud top                 : 0.9995

Ichimoku cloud bottom              : 0.9967

Original strategy :

Buy at 0.9950, Target: 1.0050, Stop: 0.9915

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 0.9950, Target: 1.0050, Stop: 0.9915

Position : -

Target :  -

Stop : -

As the greenback has continued trading with a firm undertone, suggesting recent rise from last week’s low at 0.9813 is still in progress and bullishness remains for this move to extend gain to previous support at 1.0060 (now resistance), however, loss of upward momentum should prevent sharp move beyond resistance at 1.0109, risk from there has increased for a retreat to take place later. 

In view of this, would not chase this rise here and would be prudent to buy dollar on pullback as said support at 0.9948 should limit downside. Below 0.9931 (50% Fibonacci retracement of 0.9831-1.0031) would abort and signal top is formed instead, bring correction to 0.9905-10 (61.8% Fibonacci retracement) but reckon previous resistance at 0.9869 would hold from here.