Sample Category Title

Weekly

    •    Last Candlesticks pattern: Shooting star
    •    Time of formation: 5 Sep 2016
    •    Trend bias: Down

Daily

    •    Last Candlesticks pattern: Hammer
    •    Time of formation: 14 Mar 2017
    •    Trend bias: Near term up



NZD/USD – 0.7030



Although kiwi fell sharply to as low as 0.6890 earlier this month, as the pair found good support there and has staged a strong rebound since, suggesting low has been formed there and consolidation with mild upside bias is seen for the rebound from 0.6890 to bring at least a retracement of recent decline from 0.7376, hence further gain to the lower Kumo (now at 0.7119) is likely, however, break of previous support at 0.7130 is needed to retain bullishness and encourage for further subsequent rise to 0.7185-90 but resistance at 0.7247 should remain intact.

On the downside, whilst pullback to 0.7030-40 is likely, reckon downside would be limited to the Tenkan-Sen (now at 0.6990) and bring another rise later. Below support at 0.6968 would defer and risk weakness to 0.6920-30 but still reckon said support at 0.6890 would hold from here. Only a break below 0.6890 would revive bearishness and extend the fall from 0.7376 top to 0.6862, then towards 0.6775-80 (50% Fibonacci retracement of 0.6074-0.7486) but price should stay well above previous chart support at 0.6675.



Recommendation: Turn long at 0.6980 for 0.7180 with stop below 0.6880



On the weekly chart, as kiwi found good support at 0.6890 and staged a rebound from there, suggesting the fall from 0.7376 has possibly ended there and consolidation with mild upside bias is seen for test of the Kijun-Sen (now at 0.7133), a weekly close above there would add credence to this view and encourage for further gain towards resistance at 0.7247. Having said that, as broad outlook remains consolidative, reckon upside would be limited to 0.7300-10 and price should falter below said resistance at 0.7376, bring retreat later.

On the downside, expect pullback to be limited to 0.7000-10 and bring another rebound. Only below said support at 0.6890 would abort and bring test of previous support at 0.6862, however, a breach of latter level is needed to retain bearishness and extend the erratic decline from 0.7486 top to 0.6780 (50% Fibonacci retracement of 0.6074-0.7486) and later towards previous chart support at 0.6675 which is likely to hold from here.

Weekly
    •    Last Candlesticks pattern: Morning star
    •    Time of formation: 2 Jan 2017
    •    Trend bias: Sideways

Daily
    •    Last Candlesticks pattern: Long white candlestick
    •    Time of formation: 15 Mar 2017
    •    Trend bias: Up



Last week’s rally has reinforced our bullishness and formed a long white candlestick on the daily chart, our long position entered at 0.7515 reached our indicated upside target at 0.7715 and upside bias remains for further gain to previous chart resistance at 0.7778, however, break there is needed to retain bullishness and confirm early erratic upmove from 0.6827 (2016 low) has resumed for retest of 0.7835 (2016 high) first but near term overbought condition should prevent sharp move beyond 0.7900-10 and price should falter well below psychological resistance at 0.8000. 



On the downside, whilst pullback to 0.7700 cannot be ruled out, reckon downside would be limited to 0.7640-50 and the Kijun-Sen (now at 0.7620) should hold, bring another rise later. A daily close below the Kijun-Sen would defer and suggest top is possibly formed, bring correction towards the upper Kumo (now at 0.7558) and then 0.7540, however, price should stay well above support at 0.7491, bring another upmove later. 



Recommendation: Long entered at 0.7515 met target at 0.7715 with 200 points profit and would buy again at 0.7600 for 0.7800 with stop below 0.7500.



On the weekly chart, aussie did find renewed buying interest at 0.7491 and has rallied in line with our bullish expectations, the breach of indicated resistance at 0.7741 adds credence to our view that the rebound from 0.7158 is still in progress for retest of resistance at 0.7778, however, as broad outlook remains consolidative, reckon upside would be limited and price should falter below 2016 high at 0.7835. Looking ahead, only above this level would suggest an upside break of recent established broad range has occurred, bring further subsequent rise to 0.7900 and later towards psychological level at 0.8000.

On the downside, although pullback to 0.7680-85 cannot be ruled out, reckon downside would bw limited to 0.7640-50 and bring another rise. A weekly close below the Tenkan-Sen (now at 0.7621) would defer and risk correction to 0.7570-75 but support at 0.7491 should remain intact, bring another rise later. Only a drop below 0.7491 would abort and signal the rise from 0.7158 has ended instead, risk further fall to the Kijun-Sen (now at 0.7468) and possibly 0.7400.

The change of the seasons on Tuesday brought a sea change in markets as volatility shot higher and risk aversion ramped up. The pound was the top performer while the New Zealand dollar lagged. Central bank speakers highlight Asia-Pacific trading.

The S&P 500 posted its worst day since Oct 1 on Tuesday in a 29-point fall. In FX, that meant selling on the yen crosses. USD/JPY briefly broke the bottom of the Feb/March range and whether it truly breaks will be the theme of the day ahead.

There wasn't a single catalyst for the change in mood but one worry is the lack of progress on Trump's promises on fiscal stimulus, tax cuts and deregulation. The first test is the repeal and replacement of Obamacare, which is the one thing that virtually every Republican agreed on in theory. Yet the first bill to replace it is facing a close vote in the House this week and will be defeated in the Senate.

That's something the market has known for days but the inability of Republicans to agree and implement what should be an easier part of their agenda is sparking questions about the rest of it.

Another worry is oil. For the past two days OPEC and Russia have floated some oil-positive stories. Both led to short-lived pops in crude that were erased in the following half-hour. Now, crude is re-testing the March low and API inventories showed another big build.

Another technical level to watch is the January high of 1.0829 in the euro. We've emphasized repeatedly how the US dollar struggled with good news like non-farm payrolls and the pricing in (and delivery) of a rate hike. Now the tide has turned and small doses of USD-negative news are having a big effect. That's a signal about an overcrowded trade that's thinning out.

Ultimately, central banks will write the next chapter but it's beginning to look like the good news is priced in for USD and others now have an opportunity. The BOJ's Funo and RBA's Debelle speak at 0130 GMT and 0140 GMT, respectively, and any hints at all about less-dovish policy will be met by JPY and/or AUD buying. Just after Debelle speaks, the Fed's Rosengren is in Bali to deliver remarks. We'll be curious to see if hawkish talk can stem the USD selling.

Key Points:

• Long-term trend line capping upsides.
• Divergence becoming apparent.
• Currently in overbought territory.

Despite a rather spectacular recovery last week, the Aussie Dollar could be on the cusp or resuming its recent downtrend. If such a reversal does occur, losses could be fairly substantial and might extend back to the 0.76 handle and beyond. However, given just how bullish the pair has been over the past few months, we might need to take closer look at just why the technical bias seems to be shifting.

Firstly, even at a glance it seems to be fairly obvious that the AUD is battling against a long-term descending trend line and a historical zone of resistance. Even by itself, this trend line hints that upsides are likely to be severely capped and this could prove to be the end of the post-FOMC rally. Only adding to the resistance is the pair’s overbought status on the stochastic oscillator which, whilst not shown, is still highly influential.

Aside from these more obvious signals, there is another technical argument that is highly suggestive of a decline moving forward. Namely, both the MACD and RSI oscillator are in agreement that a regular divergence is becoming apparent on both the daily, H4, and H1 charts. Typically, such a divergence indicates that underlying bearishness is about to come to a head and the bulls are totally exhausted. When combined with the overbought readings and the trend line, further bullishness now seems like a fairly remote prospect.

As a result of this shift in bias, we now expect to see the pair begin to retrace to around the 0.7609 mark before the return of any bullish sentiment. At this price, both the 50.0% Fibonacci level and the 100 day moving average will be providing some stiff support which could prove difficult to break through. Due to this impasse, we should then see the bulls mount a solid recovery which could inspire another rally in the medium-term, testing the trend line at around the 0.77 handle.

Ultimately, we may have to wait for the fundamentals bias to mirror the technical bias before any serious downsides are realised. Specifically, we might need to rely on either stronger US data or some particularly hawkish remarks from Yellen. However, the predisposition of the pair to take a dive is worth keeping in mind as it could see greater losses occur than would normally be expected. In short, it’s no longer just volatility on the rise but also downside risk for the AUD.

The Trump Trade on the Ropes

The markets were looking rather positive for risk when I clocked out yesterday, as election fears in France subside after a steady performance from Macron. It all went downhill rapidly in the NY session as there are concerns about whether Trump and Ryan have enough votes to pass their new healthcare bill (repealing Obamacare) through Congress on Thursday, which brings into question their ability to pass tax and spending reforms further down the line. Apparently, investors are extrapolating much from this major setback as the market sours on the Trumpflation trade. It appears his lack of skilled political operators will hurt the enactment of his key initiatives. Needless to say, this also brings into question, whether in the Whitehouse, Foggy Bottom or overseas, if Trump’s administration has the politicians at his side to build key political relationships, negotiate huge deals both at home and abroad and more importantly, the backroom movers and shakers, to defuse problems before they become a crisis. But one thing we know for sure now is that there are no rubber stamps for Trump agenda.

The sharp stink of risk off has the S&P500 down 1.2%, US Treasuries rallying, while both crude oil and the US dollar have stumbled. All of which is pointing to a stern near term test for Trumpflation.

Today will be all about healthcare headlines and global equities fallout, which should provide a decent barometer for investor sentiment.

Australian Dollar

After US equities put on their weakest showing of the year, eyes now turn to a likely contagion effect on global equities which could weigh on the AUD/USD today. The markets are very fidgety about this political setback for the Trump administration, which will be the primary driver in today’s session and possibly beyond. No asset class was spared investors wrath with WTI -1.3% and Industrial Metals lower, led by Copper. The Aussie dollar’s resilience will certainly be tested as the Trump re-inflationary narrative comes under scrutiny.

Overnight GBP, EUR and JPY were the best performers, and while the Trump Dump played a part in each, all had a uniquely local story.

British Pound

UK consumer price inflation hurdled the Bank of England’s target of 2% for the first time since 2013, and the pound exploded higher. The rise to 2.3% YY in the CPI was well above expectations, which will undoubtedly pressure the MPC into considering a rate hike. However, the dust is far from settled on the Brexit campaign, and the BOE will likely opt for a uniform policy, as fear of the unknown may be a stronger motivator than the fear of the known (read inflation).

Euro

The EUR and Cross EUR has turned bid in the aftermath to the French elections debate, as the markets jump to conclusion and prices in a Le Pen defeat. But the significance of this shift is that it now provides the market with a singularity of focus on a possible ECB policy pivot. I suspect the EUR momentum was only capped by skittishness over potential global equity market fall about the implementation of Trump’s agenda as part of the bullish Euro storyline, which includes surging demand for EU assets as political risk abates. But clearing the political airwaves has indeed put the euro pointing higher, as dealers are now setting their sights on the lofty 1.1000 target. Keep an eye on the yearly high of 1.0829 as this could be a near-term tipping point for anyone holding short EUR positions. While we should expect heavy selling ahead, the momentum is clearly higher for the EUR.

Japanese Yen

USDJPY is more or less a tale of two sessions. After moving to 112.75 on post-French debate risk euphoria, the USDJPY fell prey to slumping US equity prices and risk aversion on the back of the Trump Obamacare debacle. With little top tier news on the agenda, traders worked themselves into a froth as the US political developments devolve.

Keep in mind that during this recent wave of risk aversion, the Moritomo scandal is simmering on the back burner and that with repatriation flows from Japanese corporations expected at fiscal year-end, we could see and acceleration on USDJPY, selling on a break of the 111 level. It’s going to be a nervy day on the dollar-yen desk as we open up just on top of significant support at 111.50-30. Let’s see who is first to blink.

BOJ released the January meeting minutes and stated the economy continued moderate recovery trend is encouraging but contained little forward guidance

Predictably Nikkei 225 has opened -1.6 % after the shoddy performance in US markets

GBP/USD has posted considerable gains on Tuesday, as the pair trades slightly below the 1.25 line in North American trade. On the release front, British CPI jumped to 2.3%, above the estimate of 2.1%. British Public Sector Net Borrowing posted a deficit of GBP 1.1 billion, much lower than the forecast of GBP 2.9 billion. In the US, Current Account posted a deficit of $112 billion, well below the estimate of $129 billion. FOMC member William Dudley spoke at an event in New York City, but did not discuss monetary policy.

Inflation in the UK continues to climb, led by CPI. The key consumer indicator rose 2.3% in February, beating the forecast of 2.1%. This is a significant reading, as it surpassed the BoE's inflation target of 2.0% for the first time in three years. Just one year ago, British CPI was sputtering at 0.3%. The British pound has plummeted 17% since the Brexit vote in June, and a weak pound has led to higher inflation levels.

British Prime Minister Theresa May has been saying for months that she wanted to trigger Article 50, the mechanism for triggering Brexit, at the end of March. May has stuck to her deadline, as the government announced on Monday that it would formally launch Brexit talks on March 29. The announcement comes after the government passed its Brexit bill last week. Relations between the EU and Britain have soured since the Brexit vote in June, and negotiations promise to be arduous and possibly acrimonious between the parties. The pound has dipped lower on the Brexit announcement.

With the Fed's quarter-rate point behind us, what's next for Janet Yellen & Co.? The CME Group has priced a rate hike in May at just 6%, while a June move is priced at 54%. With a dearth of key fundamentals in the US this week, the markets are left to monitoring comments from FOMC members who will be speaking this week, including Fed Chair Janet Yellen on Thursday. On Monday, Chicago Fed President Charles Evans said he expects the Fed to raise rates two more times this year. This echoes the Fed's projection in its rate statement. Although three rate hikes in 2017 would be no small feat, market players want four hikes, and have reacted with disappointment to the Fed's more cautious approach. This has sent the US dollar lower, and the pound is up 2.4% since the Fed announcement last week.

USD/CHF - 0.9940

Most recent candlesticks pattern : N/A

Trend                                    : Near term down

Tenkan-Sen level                  : 0.9952

Kijun-Sen level                    : 0.9965

Ichimoku cloud top                 : 0.9971

Ichimoku cloud bottom              : 0.9965

Original strategy :

Sell at 1.0000, Target: 0.9900, Stop: 1.0035

Position : -

Target :  -

Stop : -

New strategy  :

Sell at 1.0000, Target: 0.9900, Stop: 1.0035

Position : -

Target :  -

Stop : -

As the greenback has remained under pressure, suggesting recent decline from 1.0171 is still in progress and may extend weakness to 0.9915-20 (50% projection of 1.0109-0.9942 measuring from 1.0003), however, loss of downward momentum should prevent sharp fall below 0.9900 (61.% projection) and reckon 0.9870-75 would hold from here, risk from there has increased for a rebound later.

In view of this, would not chase this fall here and would be prudent to sell dollar on recovery as 1.0000-05 should limit upside and bring another decline. Only above previous support at 1.0060 (now resistance) would abort and signal low is formed instead, risk rebound to 1.0090-95 first.

GBP/USD - 1.2465

Most recent candlesticks pattern   : N/A

Trend                                 : Near term up

Tenkan-Sen level                 : 1.2419

Kijun-Sen level                    : 1.2407

Ichimoku cloud top              : 1.2397

Ichimoku cloud bottom        : 1.2342

Original strategy :

Buy at 1.2400, Target: 1.2500, Stop: 1.2365

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 1.2400, Target: 1.2500, Stop: 1.2365

Position : -

Target :  -

Stop : -

As cable has surged again in London morning and broke above previous resistance at 1.2436, confirming the rise from 1.2109 has resumed and bullishness remains for further gain to previous resistance at 1.2479, then 1.2500, however, near term overbought condition should prevent sharp move beyond 1.2540-50 and price should falter below previous chart resistance at 1.2570, risk from there has increased for a retreat to take place later.

In view of this, would not chase this move from here and we are looking to buy cable on pullback as 1.2400-10 should limit downside. Below 1.2380-85 would defer and risk correction to 1.2350 but support at 1.2335 should remain intact. 

EUR/USD - 1.0797

Most recent candlesticks pattern   : N/A

Trend                      : Near term up

Tenkan-Sen level              : 1.0794

Kijun-Sen level                  : 1.0769

Ichimoku cloud top             : 1.0756

Ichimoku cloud bottom      : 1.0745

Original strategy  :

Buy at 1.0740, Target: 1.0840, Stop: 1.0705

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 1.0725, Target: 1.0840, Stop: 1.0690

Position : -

Target :  -

Stop : -

As the single currency has continued trading with a firm undertone after last week’s rally, suggesting recent erratic upmove from 1.0493 low is still in progress and may extend further gain towards previous chart resistance at 1.0829, however, loss of near term upward momentum should prevent sharp move beyond 1.0850-60 and price should falter well below 1.0890-00, risk from there has increased for a retreat to take place later.

In view of this, would not chase this rise here and we are looking to buy euro on subsequent pullback as 1.0706 support should limit downside and bring another rise later. Below 1.0675-80 would defer and suggest top is possibly formed, risk weakness to 1.0640 (previous resistance now support) but still reckon indicated support at 1.0600 would remain intact.

USD/JPY - 112.00

Most recent candlesticks pattern   : N/A

Trend                      : Near term down

Tenkan-Sen level              : 112.37

Kijun-Sen level                  : 112.37

Ichimoku cloud top             : 113.00

Ichimoku cloud bottom      : 112.75

Original strategy  :

Bought at 112.55, stopped at 112.20

Position :  - Long at 112.55

Target :  -

Stop : - 112.20

New strategy  :

Stand aside

Position :  -

Target :  -

Stop : -

The greenback met renewed selling interest at 112.87 and has fallen again, dampening our near term bullishness for a much-needed correction and signaling recent decline is still in progress, hence downside risk remains for further weakness towards previous support at 111.69, however, loss of near term downward momentum should prevent sharp fall below 111.40 (50% projection of 115.20-112.26 measuring from 112.87) and reckon 111.00-10 would hold, bring rebound later.

In view of this, would not chase this fall here and would be prudent to stand aside in the meantime. Above the Kijun-Sen (now at 112.37) would bring recovery to 112.65-70 but only break of said resistance at 112.87-90 would signal low is formed, bring retracement of recent decline to 113.20-30 later.