Sample Category Title

EUR/JPY - 121.95




EUR/JPY: Wave v as well as larger degree wave (C) ended at 94.11 and first leg of larger degree wave C upmove has possibly ended at 149.79 and wave 2 correction has possibly ended at 109.49.

Although the single currency slipped to 121.13 yesterday, the subsequent rebound has retained out bullishness and as long as this level holds, mild upside bias remains for another rebound to 122.50, however, break of resistance at 122.89 (this week’s high) is needed to confirm the rise from 118.24 has resumed and extend further gain to indicated resistance at 123.31, once this level is penetrated, this would signal the entire correction from 124.10 top (2016 high) has ended, bring subsequent rise to 123.73, then retest of 124.10. Looking ahead, once this level is penetrated, this would confirm medium term erratic upmove from 109.49 (2016 low) has resumed for headway to 124.50-60, then 125.25-30 (50% Fibonacci retracement of 141.06-109.49).

The daily chart is labeled as attached, early selloff from 169.97 (July 2008) to 112.08 is wave (A) of B instead of end of entire wave B and then the rebound from there to 139.26 is wave (B), hence, wave (C) has possibly ended at 94.12 with a diagonal triangle as labeled in the daily chart, hence upside bias is seen for further gain. Recent rally above indicated retracement level at 116.69 (50% Fibonacci retracement of the intermediate fall from 139.26-94.12) adds credence to this view and signal major reversal has commenced but first leg of this wave C has possibly ended at 149.79, hence wave 2 has commenced with wave A ended at 126.09, followed by wave B at 141.06, wave C commenced and could have ended at 109.49, above 125.00 would add credence to this view. 



On the downside, expect pullback to be limited to 121.50-60 and said support at 121.13 should hold, bring another rise later. Below said support at 121.13 would defer and risk weakness to 120.50 but only break of said support at 120.02 would abort and signal the rebound from 118.24 has ended instead, then further fall to 119.60-70 and 119.30-35 would follow but said support at 118.24 should remain intact.



Recommendation: Hold long entered at 121.70 for 123.70 with stop below 121.10.

To re-cap the corrective upmove from the record low of 88.93 (18 Oct 2000), the wave A from there is subdivided as: 1:88.93-113.72, 2:99.88 (1 Jun 2001), 3:140.91 (30 May 2003), 4:124.17 (10 Nov 2003) and 5 ended at record high of 169.97 (21 Jul 2008). The brief but sharp selloff to 112.08 is viewed as a-b-c x a-b-c wave (A) of B. The subsequent rebound to 139.26 is (B) of B and (C) of (B) has possibly ended at 94.12 and in any case price should stay well above previous chart support at 88.93, bring rally in larger degree wave C towards 150.00.

USD/CHF –  1.0125

 
USD/CHF – Wave IV ended at 1.1730 and wave V has possibly ended at 0.7068

 
Despite last week’s rise to 1.0171, lack of follow through buying and the subsequent stronger-than-expected dampened our bullishness and suggests the rebound from 0.9861 has ended there, hence consolidation with mild downside bias is seen for further fall to 0.9900-10 but break of said support at 0.9861 is needed to signal the fall from 1.0344 top has resumed, bring a stronger retracement of early upmove to 0.9850-53 (61.8% Fibonacci retracement of 0.9550-1.0344), then 0.9800, having said that, reckon downside would be limited to 0.9735-40 and 0.9675-80 should hold from here, bring rebound later.

Our preferred count on the daily chart is that early selloff to 0.9630 is an end of the larger degree wave III and major correction is unfolding from there with a leg ended at 1.2298 (Nov 2008 with (a): 1.0625, (b):1.0011 and (c):1.2298), wave b ended at 0.9910 with (a): 1.0370, (b): 1.1967, (c): 0.9910. The rise from there to 1.1730 is the wave c which also marked the end of wave IV and wave V has possibly ended at 0.7068.


On the upside, whilst initial recovery to 1.0000 cannot be ruled out, reckon previous support at 1.0060 would limit upside and bring another decline later. Only a daily close above 1.0060 would suggest low is formed instead, bring a stronger rebound to 1.0105-10 but price should falter below said resistance at 1.0171. In the unlikely event dollar breaks above said resistance at 1.0171, this would revive our bullish view for the erratic rise from 0.9861 to extend further gain to 1.0200 and possibly test of resistance at 1.0248, however, a daily close above there is needed to signal the retreat from 1.0344 has ended at 0.9861, bring eventual retest of 1.0344. Looking ahead, only break of said resistance at 1.0344 would retain bullishness and extend the major rise from 0.7401 (2015 low) to 1.0400 and later towards 1.0470-75 but upside should be limited to 1.0500 and price should falter below 1.0600.

Recommendation: Stand aside for this week.

Dollar's long-term downtrend started from 2.9343 (Feb 1995) and it was unfolding as a (A)-(B)-(C) with (A): 1.1100, (B): 1.8310 (26 Oct 2000), then followed by another impulsive wave (C) with wave III ended at 0.9630 (Mar 2008). Under this count, correction in wave IV has possibly ended at 1.1730 and wave V already broke below support at 0.9630 and met indicated downside target at 0.7500 and 0.7400. The reversal from 0.7068 suggests the wave V has possibly ended and the breach of resistance at 0.9595 add credence to this view and indicated upside target at 1.0000 had been met, however, the sharp retreat from 1.0296 to 0.7401 suggests choppy trading would be seen but price should stay above said record low at 0.7068.

EUR/JPY - 122.00

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

Trend: Near term up

Original strategy:

Bought at 121.30, Target: 123.30, Stop: 120.70

Position: - Long at 121.30
Target: - 123.30
Stop: - 120.70

New strategy :

Hold long entered at 121.30, Target: 123.30, Stop: 120.70

Position: - Long at 121.30
Target:  - 123.30
Stop:- 120.70

As the single currency found good support at 121.13 and staged a rebound from there, suggesting low is possibly formed there and consolidation with upside bias is senior gain to 122.50, however, break of 122.60-65 is needed to signal the retreat from 122.89 has ended, bring retest of this level, above there would retain bullishness and extend recent rise from 118.24 to 123.30-35. Looking ahead, a sustained breach above this level is needed to retain bullishness and signal early erratic fall from 124.10 top has ended at 118.24, bring further rise to 123.85-90 first.

In view of this, we are holding on to our long position entered at 121.30. Below said support at 121.13 would defer and risk correction of recent upmove to 120.45-50 but downside should be limited and price should stay well above support at 120.02 and bring another rise 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).

AUD/USD – 0.7688

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 :

Buy at 0.7640, Target: 0.7775, Stop: 0.7580

Position: -
Target:  -
Stop: -

New strategy :

Buy at 0.7635, Target: 0.7775, Stop: 0.7575

Position: -
Target:  -
Stop:-

As aussie has eased after rising to 0.7719 yesterday, suggesting minor consolidation below this level would be seen and pullback to 0.7650 cannot be ruled out, however, reckon previous resistance at 0.7633 would limit downside and bring another rise later, above said resistance would extend gain to 0.7741 resistance, break there would signal early upmove has resumed for headway towards last year’s high at 0.7778 which is likely to hold on first testing. Looking ahead, a break of this level would retain bullishness and extend medium term upmove to 0.7840-50 but price should falter below 0.7900.

In view of this, we are looking to buy aussie on dips as 0.7633-36 should limit downside and bring another rise later. Only below previous resistance at 0.7592 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 said 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.

'The BoE sounds 'less dovish' rather than the expected 'less hawkish'. Interesting'. - Mike van Dulken, Accendo Markets

The Bank of England left its monetary policy unchanged at its March meeting on Thursday. Eight of nine policymakers voted to keep the key interest rate at the record low level of 0.25%. Kristin Forbes, who is due to leave the BoE in June, cast the sole vote in favour of raising interest rates to 0.50%, adding that she was feeling uncomfortable keeping interest rates on hold. According to her, the post-Brexit economic slowdown has not materialised yet. Analysts suggest that the key policy rate will remain unchanged until the Brexit situation becomes clearer. All of the BoE's officials voted anonymously to maintain the asset-buying plan at 435 billion pounds, as markets expected. At the meeting, policymakers stated that slow wage growth and rising inflation, driven by the sharp fall in the value of the Pound, started to put downward pressure on British consumers. Earlier this week, the ONS reported that wage growth fell to 2.2% during the three-month period to January. This drop called into question the BoE's 2017 wage growth forecast of 3%. The BoE also said that it could tolerate a quicker pace of price rises, following a decade of below-target inflation. After the release, the Pound rose to 1.1518 against the Euro and 1.2363 against the US Dollar.

'2018 seems that it may be the year for the SNB to start normalizing policy'. - Nadia Gharbi, Pictet & Cie

As expected, the Swiss National Bank left its interest rates at historic lows at its monetary policy meeting on Thursday. To avoid further appreciation of the Swiss Franc, policymakers kept the deposit rate at -0.75%, in line with market forecasts. Moreover, the Central bank said it would intervene in the foreign exchange market if necessary, pointing to the 'significantly overvalued' Franc. However, The Swiss Franc traded little changed against the Euro this year but rose around 1.9% against the US Dollar. The Swiss Franc is highly expected to strengthen sharply against most rivals in the near future amid a high-risk aversion environment created by significant uncertainties coming from the upcoming European elections, Donald Trump's trade policies and Britain's exit from the European Union. Earlier this week, The Prime Minister of the Netherlands Mark Rutte lost to its populist rival Geert Wilders during the parliamentary vote. His loss sent shockwaves across Europe, thus adding further uncertainties. In a statement, the SNB also pointed to improving inflation and revised up its 2017 inflation forecast to 0.3%, up from its December estimate of 0.1%. The pace of economic growth in Switzerland is likely to accelerate this year, according to the latest KOF Economic Barometer and PMI.

'Builders are buoyed by President Trump's actions on regulatory reform, particularly his recent executive order to rescind or revise the waters of the U.S. rule that impacts permitting'. - Granger MacDonald, NAHB

The number of Americans who filed for unemployment insurance last week decreased to 241,000, a survey from the Labor Department revealed on Thursday, following the preceding week's 243,000 filings. Meanwhile, market analysts anticipated a slight rise to 245,000 during the reported period. The number of new residential building permits issued in February fell 6.2%, the Census Bureau revealed on Thursday. Nevertheless, housing construction advanced 3% and was mainly driven by one-family house applications, whose growth hit a record since September 2007. The spike in construction was mainly attributable to the robust job market and healthier finances. Yet, high mortgage costs and increasing real estate prices remain an issue for potential home buyers. Overall, the situation in the home-building industry remains positive, as the housing market index reached a 12-year high. The diffusion index fell to 32.8 in March, the Philadelphia Fed reported on Thursday. Nonetheless, it remained positive for eight consecutive months. The difference between firms who reported an increase in activity against decrease was 33%. Similarly, the difference between firms reported a rise in employment against unemployment was 17%. So, in general, regional manufacturers maintained optimism.

'Fundamentally, too, the euro zone isn't as fragile as many English-speaking commentators have suggested. Pro-euro sentiment is stable in the currency area's biggest countries.' – Leonid Bershidsky, Bloomberg View

Pair's Outlook

During the early hours of Friday's trading session the common European currency's surge against the US Dollar was stopped by the resistance put up by the upper Bollinger band, which was located at the 1.0786 level. As a result the rate was in a retreat. However, the retreat is likely going to be short lived. As the upper Bollinger band moves higher, the currency exchange rate will set its course to the weekly R2, which is located at 1.0806. There the pair might stop for a while, as the weekly R2 is strengthened by the 38.20% Fibonacci retracement level at 1.0826.

Traders' Sentiment

SWFX traders are bearish on the pair, as 61% of open positions are short, and 56% of set up orders are to sell.

'The rally could stall here this week but if GBP/USD breaks above 1.2400 on Friday, we could see an extension to 1.25.' – Kathy Lien, BK Asset Management (based on PoundSterlingLive)

Pair's Outlook

The British Pound was able to post more gains against the US Dollar on Thursday, ultimately closing at a fresh two-week high of 1.2363. The Cable's volatility was limited by the resistance around 1.2370, formed by the weekly R2 and the 55-day SMA. This tough area is likely to prevent the Sterling from appreciating again today, being a minor setback on the pair's path towards retesting the down-trend around 1.2450. Nevertheless, a bearish development is anticipated today, but with the exchange rate retaining position above the 1.23 mark. Technical studies are now able to confirm the possibility of the negative for the Pound outcome.

Traders' Sentiment

Market sentiment remains strongly bullish, namely at 68%, but the number of purchase orders declined from 65 to 53% over the day.

Weekly

• Last Candlesticks pattern: Hammer
• Time of formation: 19 Sep 2016
• Trend bias: Down

Daily

• Last Candlesticks pattern: Hammer
• Time of formation: 9 Nov 2016
• Trend bias: Near term up
  


EUR/JPY – 122.09

Although the single currency slipped to 121.13 yesterday, as euro found renewed buying interest there and has rebounded, suggesting the pullback from 122.89 has possibly ended there and consolidation with upside bias is seen for gain towards this level, however, break there is needed to signal the rise from 118.24 low has resumed and extend further gain to resistance at 123.31. Looking ahead, only a daily close above resistance at 123.31 would signal the entire fall from 124.10 top has ended at 118.24 back in Feb and bring further subsequent rise towards this level which is likely to hold on first testing.

On the downside, whilst initial pullback to 121.70 cannot be ruled out, reckon the Tenkan-Sen (now at 121.46) would limit downside and bring another upmove later. A drop below said support at 121.13 would abort and suggest top is possibly formed at 122.89, bring further weakness to 120.65-70, then towards support at 120.02, only a daily close below the latter level would provide confirmation, bring further fall to 119.50-60 and possibly 119.00 but still reckon 118.80 would limit downside and price should stay well above said support at 118.24, bring another rebound later. 

Recommendation: Buy at 121.50 for 123.50 with stop below 120.50.

On the weekly chart, the single currency has maintained a firm undertone after last week’s rise to 122.89, suggesting bullishness remains for the rebound from 118.24 is still in progress and may extend gain to indicated key resistance at 123.31. Looking ahead, only above this level would signal recent rise from 109.49 low has resumed for retracement of early decline to 125.25-30 (50% Fibonacci retracement of 141.06-109.49), having said that, reckon resistance at 126.47 would cap upside and price should falter below resistance at 128.23, bring retreat later.

On the downside, expect pullback to be limited to 121.40-50 and the Tenkan-Sen (now at 120.78) should hold, bring another rise later to aforesaid upside targets. Only below support at 120.02 (last week’s low) would defer and risk weakness to 119.30-35 but a drop below 118.80 is needed to suggest the rebound from 118.24 has ended, bring retest of this level, a break there would signal the retreat from 124.10 top is still in progress and near term downside bias remains for this move to bring retracement of recent upmove, hence weakness towards the Kijun-Sen (now at 118.09), however, a weekly close below there is needed to signal the rise from 109.49 has ended, bring further decline to 117.30-35 but previous resistance at 116.29 should contain downside due to near term oversold condition, bring rebound later.