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'The euro lost a bit of its topside momentum as the French election risk is still a key concern for EUR.' – Stephan Innes, Market Pulse (based on investing.com)

Pair's Outlook

During the early hours of Monday's trading session the common European currency once more attempted to break higher against the Greenback. Previously, during Friday's trading session the currency pair failed to break through the resistance put up by the monthly R1, which is located at the 1.0772 level. It is most likely that the resistance will be broken soon, as the rate has moved and traded above it already more than once. In that case the pair would most likely surge to the next notable resistance level, as the weekly R1 is located at the 1.0814 level.

Traders' Sentiment

SWFX traders remain bearish, as 59% of trader open positions are short, and 59% of trader set up orders are to sell the Euro.

'This [the overnight high] coupled with the strong daily closing suggest further upwards pressure and a daily closing above 1.2370 would indicate that GBP has moved into a bullish phase (with an immediate target of 1.2500).' – UOB Group (based on PoundSterlingLive)

Pair's Outlook

The Cable managed to unexpectedly recover from its intraday low on Friday, ultimately ending trade in the green zone. Moreover, the British Pound was able to breach the immediate resistance, but with gains unable to climb over the 1.24 major level, where psychological resistance was strong. Friday's rally only confirmed the overall outlook, with the GBP/USD pair now being one step closer to reaching its main goal, namely the nine-month down-trend. The final obstacle ahead of this target is the 100-day SMA, which provides resistance circa 1.2415, but technical studies are unable to confirm the possibility of another positive outcome.

Traders' Sentiment

There are still 68% of traders being long the Sterling today, while all pending orders are now equally divided between buy and sell ones.

'There will likely be a two month hiatus before the next overt signalling on a Fed rate hike, enough of a time lag not to immediately undermine the favourable risk and carry environment.' – Alan Ruskin, Deutsche (based on Business Recorder)

Pair's Outlook

The Greenback suffered another loss on Friday, edging 60 pips lower, thus, providing the ascending channel's lower boundary with an additional confirmation. However, the USD/JPY pair remains under pressure and now risks breaking the pattern to the downside. The plunge could be severe, as the nearest significant area to reverse polarity rests only under 112.00. Even though technical indicators are unable to confirm the possibility of the positive outcome, from the technical perspective this outcome is more likely. The monthly PP and the 100-day SMA form immediate resistance around 113.20.

Traders' Sentiment

Bears retreated over the weekend, as now 56% of all open positions are long (previously 60%). At the same time, the number of orders to sell the US Dollar edged up from 55 to 47%.

'Spot gold is expected to test a resistance at $1,237 per ounce, a break above which could lead to a gain to $1,243.' – Wang Tao, Reuters

Pair's Outlook

On Monday morning the yellow metal's price continued its way higher, as the bullion traded above the 1,230 mark. The commodity price is set to face the resistance put up by the monthly PP, which is located at the 1,236.39 level. The pivot point is a lone resistance, and it is highly possible that it will be broken. In that case the metal will be set to face another lone resistance level, as the weekly R1 is located at the 1,242.38 mark. On the other hand the metal might bounce off the monthly level of significance and retreat to the 20-day SMA, which is located at the 1,222.24 level.

Traders' Sentiment

Traders remain neutral bullish, as 51% of open positions are long. Meanwhile, 66% of trader set up orders are to buy the metal.

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 – 1.0765

The single currency found renewed buying interest at 1.0600 last week and has rallied again in line with our bullish expectation, our long position entered at 1.0580 met our upside target at 1.0780 with 200 points profit as price rose to as high as 1.0782, this anticipated rise adds credence to our bullish view that the fall from 1.0829 has ended at 1.0493 earlier and upside bias remains for further gain to 1.0790-00 but break of said resistance at 1.0829 is needed to confirm early erratic rise from 1.0340 low  for further subsequent gain to 1.0890-00 and possibly 1.0930-35 (61.8% Fibonacci retracement of 1.1300-1.0340) which is likely to hold on first testing.

On the downside, whilst initial pullback to 1.0680-90 cannot be ruled out, as long as support at 1.0600 holds, mild upside bias remains for further gain to indicated upside targets. A drop below said support at 1.0600 would abort and signal the rebound from 1.0493 has ended instead, bring further fall to 1.0550 and possibly 1.0525 but said support at 1.0493 should remain intact. Only a drop below support at 1.0493 would signal shift risk back to downside and extend far to 1.0454 support, a sustained breach below there is needed to confirm the rebound from 1.0340 (Jan low) has ended, bring further fall to 1.0400 and later retest of said support which is likely to hold from here.

Recommendation: Long entered at 1.0580 met target at 1.0780 with 200 points profit and would buy again at 1.0690 for 1.0890 with stop below 1.0590.

On the weekly chart, euro found good support at 1.0525 last week and has rebounded again, a white candlestick with a relatively long lower shadow was formed, retaining our bullish view that further consolidation above 1.0493 would be seen and mild upside bias remains for another bounce to 1.0770-80, however, only a break of resistance at 1.0829 would suggest another leg of rise from 1.0340 low is underway, bring retracement of early decline to previous resistance at 1.0873 and later 1.0930-35 (61.8% Fibonacci retracement of 1.1300-1.0340) but reckon 1.1000 would limit upside and price should falter below 1.1050-60.

On the downside, although pullback to 1.0690-00 is likely, reckon 1.0600 would hold and bring another rebound. Below said support at 1.0600 would suggest the rebound from 1.0493 has ended, risk weakness to 1.0525 support but break there is needed to risk retest of said support at 1.0493-96, a drop below 1.0493-96 would extend the retreat from 1.0829 towards key support at 1.0454, however, only a sustained breach below this level would signal the rebound from 1.0340 has ended, then further fall to 1.0390-00 and later retest of this January low would follow.

Cable closed in the daily cloud on Friday, ending strong 1.2100/1.2400 rally last week. The pair was up 1.85% for the week, driven mainly by weaker dollar and broke some important technical barriers that further accelerated the rally.

Fresh upside extension in early Monday trading, took out 100 SMA barrier at 1.2407 and is pressuring daily cloud top at 1.2435, which is the highest traded in the session so far.

Firm break above the cloud is expected to generate strong bullish signal for extension of bull-leg from 1.2107 (14 Mar low) towards targets at 1.2470 zone, with attack at psychological 1.2500 barrier not ruled out.

Daily MA's turned into bullish setup and support scenario, however, corrective dips could be expected meantime on strongly overbought slow stochastic.

Daily cloud base, reinforced by 55SMA offers solid support at 1.2379, with extend downticks required to stay above broken 20 SMA at 1.2316.

Sustained break below the latter would generate reversal signal.

Res: 1.2435, 1.2459, 1.2476, 1.2500
Sup: 1.2409, 1.2379, 1.2337, 1.2316

Weekly

    •    Last Candlesticks pattern: Hanging man
    •    Time of formation: 22 May 2016
    •    Trend bias: Down

Daily

    •    Last Candlesticks pattern: Shooting star
    •    Time of formation: 15 Feb 2017
    •    Trend bias: Down

USD/JPY – 112.77

Last week’s selloff dampened our previous bullishness and suggests the corrective bounce from 111.59 has possibly ended at 115.51 earlier this month, hence consolidation with mild downside bias is seen for further weakness to 112.00-10 would be seen, however, break of indicated support at 111.59-69 is needed to confirm early decline has finally resumed and extend fall to 111.00 but near term oversold condition should limit downside to 110.50 and reckon downside would be limited to 110.00, risk from there is seen for a rebound to take place later.

On the upside, whilst initial recovery to 113.00 cannot be ruled out, reckon upside would be limited to resistance at 113.54, bring another decline later. Only break of previous support at 114.48 would abort and signal low is formed, instead and prolong choppy trading, risk rebound d to 114.90-00 but price should falter well below said resistance at 115.51, bring retreat later. Only a break of said resistance at 115.51 would revive near term bullishness and signal the erratic rise from 111.59 is still in progress for further gain to 116.00, then 116.85-90.

Recommendation : Turn short at 113.50 for 111.50 with stop above 114.50.

On the weekly chart, last week’s retreat formed a black candlestick and suggests the rebound from 111.59 has possibly ended at 115.51, hence consolidation with downside bias is seen for further fall to 112.00, however, break of indicated support at 111.59-69 is needed to signal the fall from 118.66 top is still in progress for retracement of early upmove to support at 111.36, then towards 110.90-95 (50% Fibonacci retracement of 101.19-118.66) but reckon downside would be limited to 110.00 and the Kijun-Sen (now at 109.38) should hold, bring another rebound later.

On the upside, whilst recovery to 113.00 and possibly the Tenkan-Sen (now at 113.55) cannot be ruled out, reckon 114.48 (previous support) would hold and bring another decline later. Above there would bring rebound to 115.20 but only break of 115.51-62 resistance would revive bullishness and extend the rebound from 111.59 to 116.40-50, break there would signal the pullback from 118.66 has ended at 111.59, bring subsequent rise to 116.87.

Despite an early sell-off in Asia trading, crude has rallied to rest almost unchanged on the day.

All said crude has held up reasonably well as the week starts, following Friday's Baker Hughs Rig Count showing shale had added another 14 rigs and U.S. oil production was topping 9.1 million barrels a day (bpd). That is an increase of 600,000 bpd since the mid-year and certainly, puts a hole in OPEC/NOPEC's attempts to chop 1.8 million barrels per day. Interestingly, much of the talk of impending doom on the supply front later in the year seems to have quietened down pretty suddenly as well as the crunch date gets put back by commentators.

If this sort of information had come out at the start of last week, I can only imagine what the reaction would have been. More adrenalin to the panic selling I would imagine. As it is, although Asia had an initial selloff of about 0.5% this morning; we move into European trading almost unchanged. So both Brent and WTI seem to be settling calmly into a new trading range which is a surprise in itself given the histrionics last week. I think a couple of dynamics are at work here.

Firstly we have now passed the predicted FOMC Fed Funds rate hike. That seems to have been so well telegraphed, that the actual event was a bit of a non-event. Will still no concretely policies from the Trump administration's 100 days of inaction, USD bulls have taken some risk of the table with the big dollar soft against most currencies and commodities, and U.S. yields a bit lower. This has also been supportive of oil.

Secondly, the CME Commitment of Traders (COT)report released over the weekend which encompasses positioning in the CME futures up until last Tuesday, showed a massive 23% drop in speculative long positioning in the WTI contracts. Overall, at net long 288,774 contracts, this is also far below the record longs of 413,637 seen earlier year on year. So in a nutshell, a lot of speculative longs have cut their positions.

A couple of caveats here, firstly the COT report does not encompass Wednesday's FOMC meeting or the rest of the week. Secondly, given that WTI (and Brent) rallied before selling off again post FOMC, we don't know just how much the “herd” has been thinned. We will have to wait until next Monday morning for that. Although the report is backward looking, it does provide a fascinating and useful insight into market positioning. My take is that given both Brent and WTI had choppy price action within a largish range, the fact that we have come nowhere near retesting the lows implies that the herd further thinned itself over the course of the week.

Before oil bulls get all excited again, it is important to note that the markets seem to have fallen into a lethargic range pattern. Traders would be far better off concentrating on this in the short term before the API and EIA crude inventory numbers come out later this week. We also have either Fed. Governors are speaking including the Chair, Ms. Yellen this week. So trading becomes a business of watching the short term levels, while keeping an eye on the major levels for an indication of multi-day moves.

Turning to the short term charts.

Spot Brent Crude

The hourly chart support just below current levels at $51.10 and $51.00. Short term resistance lies at $51.90 and then $52.35.

Major support is at the $49.90/$50.00 level, last week's low. Major resistance is at $52.575, last week's high.

The hourly MACD gives no real clues at these levels supporting the near time range trade argument.

Brent Hourly

Spot West Texas Intermediate

Short term support rests again, just below current levels at $48.20 and $48.05 areas.

Short term resistance lies at $49.05 and $49.45 areas.

Major support is at the $47.00 area and the major resistance at the $49.90/$50.00 area. Respectively last weeks low and high.

Summary

Both crude's look set for a period of ranging consolidation in the short term. Traders should play this of the short-term levels. However, this is unlikely to last with speculative long positioning almost certainly whittled down massively. Therefore it is important to keep an eye on the “big picture” levels for clues to the next move.

USD/CHF - 0.9978

Most recent candlesticks pattern : N/A

Trend                                    : Near term down

Tenkan-Sen level                  : 0.9968

Kijun-Sen level                    : 0.9965

Ichimoku cloud top                 : 1.0025

Ichimoku cloud bottom              : 0.9974

Original strategy :

Sell at 1.0020, Target: 0.9920, Stop: 1.0055

Position : -

Target :  -

Stop : -

New strategy  :

Sell at 1.0020, Target: 0.9920, Stop: 1.0055

Position : -

Target :  -

Stop : -

As the greenback has rebounded after finding support at 0.9942 on Friday, suggesting consolidation above this level would be seen and corrective bounce to 1.0005-10 (38.2% Fibonacci retracement of 1.0109-0.9942) cannot be ruled out, however, reckon upside would be limited to 1.0025 (50% Fibonacci retracement) and bring another decline later. Below said support at 0.9942 would extend recent decline from 1.0171 to 0.9920-25 but loss of near term downward momentum should prevent sharp fall below 0.9900 and reckon 0.9870-75 would hold from here.

In view of this, would not chase this fall here and would be prudent to sell dollar on recovery as 1.0025 (current level of the upper Kumo) 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 - 1.2414

Most recent candlesticks pattern   : N/A

Trend                                 : Near term up

Tenkan-Sen level                 : 1.2408

Kijun-Sen level                    : 1.2380

Ichimoku cloud top              : 1.2334

Ichimoku cloud bottom        : 1.2266

Original strategy :

Buy at 1.2290, Target: 1.2400, Stop: 1.2255

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 1.2325, Target: 1.2445, Stop: 1.2290

Position : -

Target :  -

Stop : -

As cable has risen again after finding renewed buying interest at 1.2335, suggesting recent upmove from 1.2109 (this month’s low) is still in progress and may extend further gain to 1.2445-50, however, loss of near term momentum should prevent sharp move beyond previous resistance at 1.2479, 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 said support at 1.2335 should limit downside and bring another rise. Below previous resistance at 1.2310 would defer and suggest top is possibly formed, risk correction to 1.2265-70 but price should stay above indicated support at 1.2241.