Sample Category Title

AUD/USD – 0.7654

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, Target: 0.7800, Stop: 0.7585

Position: - Long at 0.7645
Target:  - 0.7800
Stop: - 0.7585

New strategy :

Hold long entered at 0.7645, Target: 0.7800, Stop: 0.7585

Position: - Long at 0.7645
Target:  - 0.7800
Stop:- 0.7585

As aussie has rebounded after falling to 0.7587, retaining our bullishness and consolidation with upside bias remains for gain to resistance at 0.7685, break there would signal low is formed there and suggest the retreat from 0.7750 (last week’s high) has ended, then retest of this level would follow, above this resistance would extend gain to 0.7778 (last year’s high), however, break there is needed to retain bullishness and extend headway to 0.7840-50 but price should falter below 0.7900.

In view of this, we are holding on to our long position entered at 0.7645. Only below 0.7585 would abort and signal top is formed instead, then further choppy trading would take place and risk is seen for pullback to 0.7530-40 but indicated support at 0.7491 should remain intact.

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.

Tuesday evening, March 28, the Scottish parliament has voted by 69 to 59, in favour of holding a second independence referendum. GBP/USD has slumped more than 220 points since Tuesday, from a psychological level at 1.2600, to 1.2376, breaking the support level at 1.2500. The bulls are currently attempting to recover the significant support level at 1.2400.

Scottish First Minister, Nicola Sturgeon and her SNP Party won the first round of the battle, helped by the support from the Green party. The proposal will be delivered to the UK parliament for voting. However, UK Prime Minister Theresa May has stated not long ago that the UK government will not approve the referendum during the 2-year Brexit negotiation process with the EU.

UK Prime Minister Theresa May, will trigger Article 50 of the Lisbon treaty today, March 29, starting the 2-year Brexit negotiation process with the EU. Theresa May will formally notify the EU Council President, Donald Tusk. Tusk is expected to present draft Brexit guidelines to the European Union's 27 member states, within 48 hours of the UK triggering Article 50. The member states are expected to hold a Brexit summit on April 29.

Brexit process uncertainties and a second Scottish referendum turmoil pose downward pressure on GBP and GBP crosses. The UK's economic prospects are still vague.

Although Trump's healthcare bill failure hit USD and US equities on Monday, US consumer confidence for March, released on Tuesday, soared to its highest level since 2000. The figure cushioned USD and pushed US equities up from a 6-week low. From the perspective of economic data, the US economy remains solid at present. US Q4 GDP final reading will be released this Friday March 31, with better-than-expected readings likely providing further support to USD.

It will take an extended period to see the concrete impacts caused by Trump's administration on the US economy, after more actions are put on the table, although it doesn't seem to be optimistic.

Today US pending home sales (Feb), will be released at 15:00 BST. It will be followed by the US EIA crude oil inventory at 15:30 BST. Oil prices have rebounded since March 27, helped by OPEC's 6-month output extension consideration.

Cable extends weakness below 1.2400 handle in early Wednesday's trading, after negative signal was generated on previous day's strong 1.2594/1.2439 fall that left long bearish daily candle.

Traders are nervous about today's Article 50 triggering that inspired recent strong sell-off (cable is down around 1.5% from Tuesday's opening until now).

Today's bearish extension broke below first pivot at 1.2420 (daily cloud top /100SMA) and eyeing next strong support at 1.2360 zone (daily cloud base, reinforced by Kijun-sen line), break of which would generate another strong bearish signal for further weakness.

Extended weakness below 1.2300 (Fibo 61.8% of 1.2107/1.2613 upleg) is needed to confirm reversal.

Near-term studies are firmly bearish while daily bulls were dented but still holding strong bullish momentum that keep alive hopes of fresh rallies. Current easing should be contained above daily cloud base to keep this scenario in play.

Return above daily cloud and lift above daily Tenkan-sen (1.2466) would generate stronger bullish signal.

Res: 1.2420, 1.2466, 1.2494, 1.2522
Sup: 1.2374, 1.2360, 1.2322, 1.2300

The Euro dipped below 1.0800 handle on Wednesday, in extension of Tuesday's strong fall, as long bearish candle, formed previous day, continues to weigh. Repeated failure to clear 200SMA (currently at 1.0875) generated bearish signal for current weakness. Initial supports, 5 SMA's at 1.0808 and 10SMA/4-hr cloud top at1.0787 are broken and pullback eyes next pivot at 1.0748 (Fibo 38.2% of 1.0493/1.0905 rally). Overall picture is bullish and correction is expected to ideally reverse above 1.0748 support. Otherwise, deeper correction could be expected on loss of 1.0748 Fibo 38.2% support, which would expose 1.0700 (50% retracement/daily Kijun-sen) and plethora of supports that lies below (20/55/30/100 SMA's in 1.0696/1.0627 zone).

Res: 1.0825, 1.0855, 1.0875, 1.0905
Sup: 1.0776, 1.0748, 1.0700, 1.0670

Aussie is currently making a sharp reversal down from around the 0.7748 level where a possible top for wave C) of E may have been found. This sharp decline is a confirmation that the previous five wave rise within wave C) is completed and that a minimum three wave reversal may now be in the cards. That said, at the moment we see price undergoing an intra-day rally, probably into wave 2) which may see limited upside in the near-term.

AUD/USD, 4H

EUR/CHF : 1.0717






EUR/CHF: Major wave 5 trough ended at 0.8426 and correction has commenced from there for subsequent gain towards 1.1400-1.1500.


The single currency remained confined within near term established narrow range and further sideways trading is in store, euro’s retreat from 1.0825 (this month’s high) has retained our bearish view for weakness to 1.0650-60, however, break of support at 1.0622 is needed to confirm early erratic decline from 1.1201 (2016 high) has resumed, bring subsequent selloff to 1.0550 and possibly towards 1.0500 but oversold condition should prevent sharp fall below latter level and reckon 1.0390-00 would hold from here, risk from there has increased for a rebound later.

To recap our preferred count, the decline from 1.6828 (end wave (B)) is labeled as the beginning of wave (C) which should unfold as an impulsive move with 1: 1.5326, 2: 1.6377 and wave 3 is sub-divided into (i): 1.4300, (ii): 1.5880 and wave (iii) is still unfolding with (1): 1.4577, (2): 1.5448 and wave (3) is an extended 3rd with i: 1.5006, ii: 1.5383, wave iii: 1.3073, then wave iv ended at 1.3925 and wave v at 1.3073, wave (4) ended at 1.3925 and wave (5) has ended at 1.2765 which also marked the low of wave (iii) and wave (iv) has ended at 1.3835 and wave (v) as well as larger degree wave 3 has ended at 1.0075. The selloff from 1.2650 signals wave 4 has ended there and we are taking a view that the wave 5 could also have ended 0.8426, hence consolidation is seen with mild upside bias for rebound to 1.1000 first, then towards 1.1400.

On the upside, expect recovery to be limited to 1.0750-60 and bring another decline. Only above said resistance at 1.0825 would abort and signal low has been formed, bring a stronger rebound to 1.0850 and later towards resistance at 1.0898 which is likely to cap euro’s upside, the pair shall head back south again from there.

Recommendation: Hold short entered at 1.0750 for 1.0550 with stop above 1.0825.

 
The long-term downtrend started from 1.9626 (Apr 1985) to 1.4166 (Sep 1995) is treated as wave (A) with A:1.6285 (Dec 1987), B: 1.9342 (May 1992) and C: 1.4166, then wave (B) ended at 1.6828 with A: 1.7147 (Feb 1997), B: 1.4398 (Sep 2001), C: 1.6828 (Nov 2007), therefore, wave (C) is now in progress with the breakdown indicated as above. This wave (C) already met indicated downside target at 1.1455/60 and 1.1300, it could have ended at 0.8426, consolidation with mild upside bias is seen for gain to 1.1000 and later towards 1.2000.

Sunrise Market Commentary

• Rates: US Treasuries sell-off in US trading; today's calendar uninspiring
  US Treasuries sold off during US trading yesterday following a batch of strong eco data. Recovering stock markets and a rising oil price weighted as well. Fed vice-chair Fischer dealt the final blow by confirming that the Fed intends to hike rates 2 more times this year, which isn't completely discounted yet. Today's uninspiring calendar suggests sentiment driven trading.
• Currencies: Dollar rebounds after exceptionally strong US consumer confidence
  Yesterday, the dollar initially didn't go anywhere. However, the reflation trade restarted and the dollar rebounded after an exceptionally strong US consumer confidence. Fed's Fisher confirming the scenario of two additional rate hikes was also USD supportive. Sterling is facing headwinds as UK PM May will trigger article 50 today, formally starting the Brexit procedure

The Sunrise Headlines

• The Dow Jones joined other US stock barometers in the black yesterday, snapping its longest losing streak since 2011. Indices ended around 0.75% higher. Overnight, Asian risk sentiment is more mixed.
• Fed Vice Chair Fischer said the FOMC's median estimate for two more rate hikes this year “seems about right.” He added the failure of the health-care bill on Friday may have changed his “internal calculus,” but not the overall outlook.
• BoE interest rate-setter McCafferty highlighted a weak outlook for the economy and said he did not know if he would vote to increase borrowing costs at the next meeting of the BoE's policymakers in May.
• The faltering campaign of French presidential candidate Francois Fillon suffered another setback when magistrates placed his wife under formal investigation over allegations that he paid her for a fake parliamentary job.
• The Scottish parliament has voted to demand a second independence referendum, raising the stakes in the constitutional impasse with a UK government that has already rejected such a vote.
• The official Article 50 exit process will begin today at just after 1.30pm in Brussels when Sir Tim Barrow, Britain's ambassador to the EU, presents Mrs May's letter of withdrawal to Donald Tusk, the European Council president.
• Today's eco calendar is thin with only US pending home sales and national EMU consumer confidence data. Central bank speakers are Fed Evans, Rosengren, Williams and ECB Praet. Finland and the US tap the market

Currencies: Dollar Rebounds After Exceptionally Strong US Consumer Confidence

Dollar shows tentative signs bottoming out

Yesterday, USD traders initially didn't find clear guide in the wake of the debacle of the US healthcare vote on Friday. Uncertainty and a further (modest) slide in core yields weighed on the dollar, especially on USD/JPY. However, market sentiment improved after a very strong US consumer confidence. Later in the session, Vice Fed Chair Fischer reiterated the mainstream Fed view for two more rate hikes this year. US bond yields turned north again and the dollar rebounded. USD/JPY finished the session at 111.15 (from 110.66). EUR/USD declined to the 1.08 area and finished the session at 1.0814 (from 1.0864).

Overnight, Asian equities show only most gains despite yesterday's rebound in the US. Oil trades off the recent lows and so does the dollar. The trade-weighted dollar (99.75 area) holds within reach of the yesterday's recovery top, but there are no follow-through gains. USD/JPY tries to extend gains north of 111, but still fails to regain the previous range bottom (111.36/60 area). Poor Japanese retail sales data hardly affected yen trading. EUR/USD hovers in a tight sideways range in the low 1.08 area. The resumption of the reflation trade is also slightly supportive for the likes of the Aussie dollar (AUD/USD 0.7640 area) despite the overall USD rebound.

Today, there again no important eco data in EMU and in the US. Fed members Evans, Rosengren and Williams are scheduled to speak. Recent appearances suggest they will confirm the mainstream Fed's scenario of two additional rate hikes this year. So, global risk sentiment will probably set the tone for USD trading today

Yesterday, the dollar made a U-turn as exceptionally strong US consumer confidence removed investors' disappointment on last Friday's US healthcare vote. Yesterday, we advocated that a good US consumer confidence could help to reverse doubts on the reflation trade, but that more positive (US) news was needed to restore confidence in the dollar. The dollar yesterday made a lofty attempt to put a short-term bottom in place. However, except in a scenario of further equity gains, there is probably too little on the agenda today to trigger more USD gains. So, we look out whether the dollar stays away from this week's correction lows. If the US currency succeeds to do so in a session devoid of important news, it would be a first indication that the downside of the dollar becomes better protected. For now, we are in no hurry to aggressively add USD long exposure. Especially the technical picture of USD/JPY still looks fragile. For EUR/USD we look out where the USD/EMU (German) interest rate differential halts its narrowing trend of the recent past.

From a technical point of view, the picture of USD/JPY remains fragile as it dropped below the 111.60/36 support. Next support kicks in at 108.84 (50% retracement of the MT up-move). EUR/USD is extensively testing 1.0829/1.0874resistance. A break beyond this level would deteriorate the MT picture for the dollar. Chances on a break of this level have grown, but we don't expect a real protracted rally of the euro against the dollar. The interest rate differential between the US and Germany/Europe makes EUR/USD longs costly. At the same time, we also don't see the euro as the perfect safe haven currency

EUR/USD: test of 1.0874 resistance is rejected, at least for now

EUR/GBP

Sterling in the defensive going into formal start of Brexit

There were no eco data in UK yesterday. Sterling trading was driven by technical considerations. Investors were looking forward to today's formal start of the Brexit procedure. Sterling traded with a positive bias early in the session, but returned (modest) gains against the dollar and the euro later. Scotland's demand for a second independence vote was a slight additional negative for sterling. Later in the session, cable dropped quite sharply, but this move in the first place mirrored the overall comeback of the dollar. Cable finished the session at 1.2450 (from 1.2559 on Monday evening). EUR/GBP close the day at 0.8684 (from 0.8650).

This morning, the sterling remains under pressure in Asia as markets look out for the UK triggering article 50 of the Lisbon treaty around noon today. EUR/GBP regained the 0.87 barrier. Cable is trending further below 1.24. Later today, the UK money supply and lending data will be published, but the focus will be on the letter of UK PM May to EU president Tusk. Markets will look for clues that might give any indication of the start of the Brexit procedure. (e.g. will the EU insist on starting with the penalty for the UK?). We expect sterling to stay in the defensive going into the start of a complicated process.

Two weeks ago, sterling found a better bid after the early March decline. Some time ago, EUR/GBP cleared 0.8592 resistance, improving the MT technical picture. However, (substantially) higher than expected UK inflation probably put a decent floor for sterling short-term. We changed our short-term bias on EUR/GBP from positive to neutral. Further consolidation in the 0.85/0.88 area might be on the cards. Longer term, Brexit-complications remain a potential negative for sterling. We are not convinced that the BoE will raise rates anytime soon, even not after this months' higher inflation data.

EUR/GBP: sterling rebound shows tentative signs of slowing going into the startof BRexit

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AUD/USD     –  0.7652




AUD/USD – Wave 5 of C and (B) has possibly ended at 1.1081




Although aussie retreated after marginal rise to 0.7750 and consolidation below this level would take place with initial downside bias, reckon 0.7580-85 would limit downside and bring rebound later, above said resistance at 0.7750 would extend recent rise from 0.7158 to previous chart resistance at 0.7778 but break there is needed to retain bullishness and signal another leg of major corrective upmove from 0.6827 low is underway for headway to 0.7835 resistance first, then 0.7900, however, psychological resistance at 0.8000 should hold from here.


We are keeping our count that top has been formed at 1.1081 (wave 5 of V) and major correction (A-B-C-X-A-B-C) has commenced, indicated downside targets at 0.7945 (61.8% Fibonacci retracement of entire rise from 0.6007-1.1081) and 0.7750 had been met and downside bias is seen for further weakness to 0.6800, then 0.6700 but reckon 0.6500 would hold from here.



Our preferred count is that the rally from 0.6007 to 0.7270 (7 Jan 2009) is marked as wave A, the retreat to 0.6248 (2 Feb 2009) is wave B and the subsequent upmove is labeled as wave C with wave (iii) and wave (iv) ended at 0.8265 and 0.7700 respectively and wave (v) as well as 3 ended at 0.9407, then wave 4 ended at 0.8066 (instead of 0.8578). The wave 5 has met our indicated projection target of 1.1060 and could ended at 1.1081, this level is now treated as the peak of wave (C) as well as larger degree wave B, hence major fall in wave C has commenced, our initial downside target at psychological support at 0.7000 has just been met and further weakness to 0.6500 would be seen later.



On the downside, expect pullback to be limited to 0.7580-85 and 0.7555 should hold, bring another rise later. A daily close below 0.7555 would defer and risk weakness towards support at 0.7491 but only a drop below latter level would abort and signal the aforesaid rise from 0.7158 has ended, bring further fall to 0.7450, then towards 0.7400. 



Recommendation: Hold long entered at 0.7600 for 0.7800 with stop below 0.7550



Our alternate count on the daily chart treated the top formed in 2008 at 0.9851 could be a larger degree wave I and was followed by a deep and sharp correction in wave II to 0.6007 and wave III is unfolding from there.

The long-term uptrend started from 0.4775 (2 Apr 2001) with an impulsive structure. Wave I is labeled as 0.4775 to 0.9851 (15 Jul 2008), wave II has ended at 0.6007 (Oct 2008) and wave III is still in progress which may extend further gain to 1.1265.

The British pound took a serious hit yesterday, after a cocktail of economic and political news. The first piece of news came from the BoE. Ian McCafferty, one of the most hawkish members of the MPC, said that the UK economy is not ready for hikes right now. These cautious comments may have come as a surprise to investors, and may have pushed back expectations regarding the timing of a potential BoE tightening.

Then, it was all political news. The Scottish Parliament voted in favor of a second independence referendum. Nonetheless, the UK government quickly announced that it will not allow something like that for a while, at least not until a deal between the UK and the EU is reached.

Later in the day, it was Theresa May's turn. The PM signed the Article 50 letter, starting the official process for leaving the EU. This marks the beginning of two years of negotiations between the two sides. Today, PM May will speak before Parliament, and EU Council President Donald Tusk will hold a press conference in response to May's letter. As such, we expect the pound to remain exposed to comments from these two officials.

GBP/USD tumbled, falling below the inside swing low of 1.2555 (R3) to hit support at the prior resistance line taken from back at the peak of the 2nd of February. We expect investors to await near that area, or at least stay above the support of 1.2340 (S1), until we get any key remarks from May or Tusk.

Looking ahead, we expect sterling's forthcoming direction to be determined to a large extent by headlines around the negotiations, especially on the subject of trade. Signs that the UK is likely to end up with no free trade agreement could lead to further downside in the pound. Nonetheless, given that much of the "hard Brexit" rhetoric may already be priced into the battered pound, we believe that the political risks surrounding GBP are likely asymmetrical. Any positive developments during the negotiation process could generate a bigger upside reaction than the corresponding downside in case of the anticipated "hard Brexit" outcome.

EUR/GBP shot up yesterday, breaking above the upper bound of a falling wedge formation that contained the price action since the 9th of March. This has turned the short-term outlook to the upside and as such we expect the rate to challenge once again the 0.8735 (R1) resistance soon. A break above that line is possible to aim for our next obstacle of 0.8760 (R2), marked by the peak of the 16th of March.

US dollar makes a comeback

The other currency to experience a big movement yesterday was the greenback, which recovered some lost ground. Although there was no clear fundamental catalyst behind the recovery, we see three factors that could be behind the move. Firstly, Fed Vice Chair Fischer confirmed that he expects another two rate hikes this year, which may have eased the concerns of some investors following the not-so-hawkish hints from Chair Yellen after the March FOMC meeting. Secondly, the Conference Board consumer confidence index unexpectedly surged to a level last seen in 2000, and finally, the fact that Q1 is almost over means that there may have been some end-of-quarter USD demand, as investors rebalance their portfolios.

With regards to the greenback, we think that its outlook remains neutral right for now. We will reevaluate our view when we get hints with regards to the timing of the next rate hike, and updates on the timing and size of Trump's tax reforms. We believe that short-term paths in USD pairs will depend primarily on the counterparts. For example, we expect USD to underperform EUR, which is likely to remain supported on speculation that the era of ultra-loose monetary policy in the Eurozone is approaching an end. On the other hand, we expect it to outperform CAD, given a very dovish BoC.

As for today's economic indicators

During the European day, the calendar is relatively light. From Sweden, we get the consumer and manufacturing confidence indices, both for March. Nonetheless, neither of these indicators is usually a major market mover.

From the US, we get pending home sales for February. The forecast is for the figure to have risen, a rebound from the previous month.

As for the speakers, we have four on the schedule: Chicago Fed President Charles Evans, Boston Fed President Eric Rosengren, San Francisco Fed President John Williams and ECB Executive Board member Peter Praet.

GBP/USD

Support: 1.2340 (S1), 1.2300 (S2), 1.2245 (S3)

Resistance: 1.2425 (R1), 1.2470 (R2), 1.2555 (R3)

EUR/GBP

Support: 0.8700 (S1), 0.8675 (S2), 0.8620 (S3)

Resistance: 0.8735 (R1), 0.8760 (R2), 0.8790 (R3)

Weekly

   

•    Last Candlesticks pattern: Shooting star 
   

•    Time of formation: 12 Dec 2016 
   

•    Trend bias: Down



Daily
   

•    Last Candlesticks pattern: Shooting star 
   

•    Time of formation: 1 Nov 2016 
   

•    Trend bias: Up



As assize’s decline has accelerated after break indicated support at 85.85, suggesting top has been formed at 88.15 earlier and consolidation with downside bias is seen for the erratic decline from there to bring retracement of medium term upmove, hence further fall to 83.75 would be seen, however, a daily close below there is needed to retain bearishness and extend fall from 88.15 to 83.00-10 but near term oversold condition should limit downside to 82.50-60 and 82.00 should remain intact, price should stay well above support at 81.10-15, bring rebound later.

On the upside, whilst initial recovery to 84.90-00 cannot be ruled out, reckon upside would be limited to the Kiun-Sen (now at 85.66) and bring another decline later. Only a daily close above previous support at 85.85 (now resistance) would abort and signal low is formed instead, bring a stronger rebound to 86.20 and possibly towards the upper Kumo (now at 86.68) but upside should be limited to 87.00 and price should falter well below resistance at 87.50, bring another decline later.



Recommendation: Sell at 85.70 for 83.70 with stop above 86.70.

On the weekly chart, last week’s selloff together with the breach of previous support at 85.85 suggest top has been formed at 88.15 earlier and consolidation with downside bias is seen for retracement of recent upmove, hence weakness to 83.75 and possibly 83.00-10 is likely, however, reckon the Kijun-Sen (now at 82.49) would limit downside and the upper Kumo (now at 81.61) should remain intact, bring rebound later due to near term oversold condition.

On the upside, expect recovery to be limited to 85.50-55 and the Tenkan-Sen (now at 86.00) should hold, bring another decline later. A weekly close above 86.00 would risk rebound to 86.50-60 but reckon upside would be limited to 87.00 and resistance at 87.50 should hold, bring another retreat. Only a break above 87.50 would revive bullishness and signal the pullback from 88.15 top has ended, bring retest of 88.15. Looking ahead, a break of 88.15 resistance would confirm the rise from 72.50 low has resumed for retracement of early downtrend to 88.50 and then 89.00-10 but reckon upside would be limited to psychological resistance at 90.00 and previous resistance at 90.70 should remain intact.