Sample Category Title

AUD/USD – 0.7687

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

New strategy :

Buy at 0.7640, Target: 0.7775, Stop: 0.7580

Position: -
Target:  -
Stop:-

As aussie has surged after brief pullback, adding credence to our view that low has been formed at 0.7491 and mild upside bias remains for the rise from 0.7491 low to extend further 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 0.7640-50 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 Fed's outlook hasn't changed much from where they were in December, but the markets had gone overboard with rate hike expectations.' – Norihiro Fujito, Mitsubishi UFJ Morgan Stanley Securities Co. (based on Bloomberg)

Pair's Outlook

During the early hours of Thursday's trading session the common European currency was consolidating against the US Dollar, as the rate moved slightly lower. First of all it has to be noted that the pair jumped on the Federal Reserve rate announcement, breaking a strong resistance cluster, which kept the pair lower previously. Moreover, the currency exchange rate broke the resistance of a long term descending channel. The jump stopped at the weekly R1, which is located at the 1.0740 level. In face of this resistance the pair bounced off and began to consolidation. It is most likely that the rate will fall throughout the day before setting a new course in the near future.

Traders' Sentiment

SWFX traders are bearish on the pair, as 56% of open positions are short. Meanwhile, 64% of trader set up orders are to sell the Euro.

'Data, politics and widening yield spreads should override rising short positioning as GBP/USD slides towards 1.20, if not 1.1850, even though broader range trading is likely to remain.' – Westpac (based on FXStreet)

Pair's Outlook

The psychological 1.2150 mark once again successfully provided strong support, causing the Cable to rebound and put the 1.23 major level to the test yesterday. However, the pair was reluctant to maintain trade above 1.23, suggesting that a bearish correction could occur today. The BoE's meeting results could be negative for the Pound today, in which case most of yesterdays gains risk getting erased. Technical indicators are also in favour of the bearish scenario; on the other hand, the Sterling is seen taking another step towards the down-trend at 1.2450 if the BoE is hawkish today. We maintain a relatively positive outlook, with the trend-line expected to be reconfirmed in the near future.

Traders' Sentiment

There are 70% of traders holding long positions today (previously 68%), while the share of purchase orders inched up 56 to 65%.

'After a massive buildup in long positions earlier this week, currencies are in full reversal mode, with the dollar falling aggressively.' – Cambridge Global Payments (based on Reuters)

Pair's Outlook

Even though the Fed raised rates on Wednesday, both inflation and labour market showed improvements, the US Dollar still plummeted on a cautious Fed stance. Against the Yen a nearly 140-pip loss was registered, but from the technical perspective this was anticipated. The decline only confirmed the ascending channel pattern's resistance line, allowing the pair to cover most of the distance towards retesting the lower boundary. The monthly PP and the 100-day SMA is now the only obstacle on the Buck's path, which is expected to be crossed today. However, a drop under 113.00 is doubtful just yet, but is required for the up-trend to be reconfirmed this week.

Traders' Sentiment

Now 58% of traders are long the US Dollar (previously 53%), but 55% of all pending orders are to sell it, compared to 48% on Wednesday.

'Yellen reiterated that future rate increases would be 'gradual', with this key word bestowing a dovish tone to the outlook.' – Edward Meri, INTL FCStone (based on Reuters)

Pair's Outlook

On Thursday morning the yellow metal's price continued to score gains in the aftermath of the jump, which occurred on the Federal Funds rate increase on Wednesday. Although, the commodity price has run into the resistance of the weekly R1, which is located at the 1,228.89 level. It is highly possible that a consolidation of positions will occur, as traders take profits. However, the decline of the price is unlikely to fall lower than the 1,220 mark, near which the 20-day SMA and the 38.20% Fibonacci retracement level are located at. Due to that reason it can be assumed that the pair will rebound against the mentioned support levels.

Traders' Sentiment

Traders are bullish on the metal, as 53% of open positions are long on Thursday. In addition, 68% of trader set up orders are to buy.

EUR/USD

Current level - 10721

Yesterday's impulsive rise broke through 1.0660 resistance and 1.0712 peak and the today's bias is positive above 1.0710 area. My outlook is counter-trend, for a break through 1.0712, towards 1.0650 and 1.0600 low later on.

Profit-taking affects gold curbing silver and platinum

USD/JPY

Current level - 113.15

The recent break through 114.50 led to a fast sell-off all the way down to 112.90 support area. I favor a reversal and a break through 113.50 will signal a rebound towards 114.50.

GBP/USD

Current level - 1.2270

The pair has reached the resistance area at 1.2300 and my outlook is already bearish, for a break through 1.2250, towards 1.2175.

Weekly

• Last Candlesticks pattern: N/A
• Time of formation: N/A
• Trend bias: Near term up

Daily

• Last Candlesticks pattern: Hammer
• Time of formation: 3 Feb 2016
• Trend bias: Sideways

EURGBP – 0.8708

As the single currency has eased after meeting resistance at 0.8788 twice, suggesting minor consolidation below this level would be seen, however, reckon downside would be limited to 0.8650-60 and reckon the Kijun-Sen (now at 0.8596) would hold, bring another rise later, above said resistance at 0.8788 would extend rise from 0.8403 to 0.8810-15 but as broad outlook remains consolidative, reckon upside would be limited to previous resistance at 0.8857, risk from there is seen for a retreat to take place later. Looking ahead, only break of said resistance at 0.8857 would signal the rise from 0.8304 low is underway for headway to 0.8900, then towards 0.8940 (50% Fibonacci retracement of 0.9576-0.8304) which is likely to hold from here.

On the downside, whilst pullback to 0.8650-60 cannot be ruled out, reckon the Kijun-Sen (now at 0.8596) would contain downside and bring another rise later. A daily close below the Kijun-Sen would signal top is formed and bring weakness to 0.8550-55 and then test of 0.8505-10 but break of latter level is needed to signal the rebound from 0.8403 has ended, bring subsequent fall to 0.8460-65, however, price should stay well above said support at 0.8403 and bring another rebound later. 

Recommendation: Buy at 0.8605 for 0.8785 with stop below 0.8505.

On the weekly chart, although the single currency staged another rebound last week, as euro has eased after meeting resistance at 0.8788, suggesting initial consolidation below this level would be seen and pullback to the Tenkan-Sen (now at 0.8630) cannot be ruled out, however, reckon downside would be limited to 0.8580 and bring another rise later. Above said resistance at 0.8788 would extend the rebound from 0.8403 towards said resistance at 0.8857. Looking ahead, only a break of this level would revive bullishness and extend the rise from 0.8304 to 0.8940 (50% Fibonacci retracement of 0.9576-0.8304 and current level of the Kijun-Sen) but price should falter below resistance at 0.9026.

On the downside, expect pullback to be limited to 0.8630 and 0.8595-00 should hold, bring another rebound. Below 0.8550 would defer and risk weakness to 0.8520 but reckon 0.8495-00 would contain downside. Below 0.8460-65 would bring retest of 0.8403 but break there is needed to revive bearishness and extend the fall from 0.8857 to 0.8350-55. Looking ahead, below there would signal decline from 0.9576 top has resumed for retest of 0.8304 but only break there would extend the fall from 0.9576 top for retracement of medium term upmove to previous support at 0.8251, then 0.8200.

The Swiss National Bank (SNB) is maintaining its expansionary monetary policy. Interest on sight deposits at the SNB is to remain at -0.75% and the target range for the three-month Libor is unchanged at between -1.25% and -0.25%. The SNB will remain active in the foreign exchange market as necessary, while taking the overall currency situation into consideration. The SNB's expansionary monetary policy is aimed at stabilising price developments and supporting economic activity. The Swiss franc is still significantly overvalued. The negative interest rate and the SNB's willingness to intervene in the foreign exchange market are intended to make Swiss franc investments less attractive, thereby easing pressure on the currency.

Compared to December, the new conditional inflation forecast is slightly higher for the next few quarters. Increased oil prices in particular contribute to the rise in inflation in the short term. Over the longer term, however, the conditional inflation forecast is marginally lower. The inflation forecast for 2017 has risen to 0.3%, compared to 0.1% in the previous quarter. For 2018, the SNB anticipates inflation of 0.4%, compared to 0.5% in the previous quarter. The forecast for 2019 is 1.1%. The conditional inflation forecast is based on the assumption that the three-month Libor remains at -0.75% over the entire forecast horizon.

The global economy expanded in line with expectations in the fourth quarter. GDP growth was once again robust in the US, where the labour market has returned to full employment and inflation is approaching the Federal Reserve's target. Against this backdrop, the Federal Reserve decided on 15 March to raise its key interest rate by a further 25 basis points. The other major economic areas likewise developed favourably in the fourth quarter. The euro area, Japan and China all reported encouraging growth rates, and economic growth in the UK was once again surprisingly strong.

Indicators available at the beginning of the year suggest the outlook for the global economy will continue to improve. Industrial activity and international trade especially have picked up. While the SNB expects international economic developments to remain positive in 2017, its baseline scenario for the global economy is still subject to considerable risks. Chief among these are political uncertainty with respect to the future course of economic policy in the US, upcoming elections in Europe, and the complex exit negotiations between the UK and the EU.

In Switzerland, fourth-quarter GDP growth was lower than expected. According to an initial quarterly estimate, GDP grew - as in the third quarter - at an annualised rate of just 0.3%. However, a more extensive analysis of the available economic indicators points to an ongoing moderate recovery in the final months of the year; developments on the labour market support this view. Although the seasonally adjusted unemployment rate remained stable, the number of people out of work declined slightly from August onwards. Discussions with company representatives conducted by the SNB's delegates for regional economic relations also suggest a moderate improvement of the economic situation.

Given favourable economic developments internationally, the outlook for Switzerland's economy is cautiously optimistic. Overall, the SNB continues to expect GDP growth of roughly 1.5% for 2017. Nonetheless, the forecast for Switzerland, too, is marked by considerable uncertainty emanating from international risks.

Growth on the mortgage and real estate markets remained fairly constant at a relatively low level in the fourth quarter of 2016. At the same time, the slowdown in price momentum in the residential property market continued. Imbalances on the mortgage and real estate markets nevertheless persist. The SNB will continue to monitor developments on these markets closely, and will regularly reassess the need for an adjustment of the countercyclical capital buffer.

Weekly

• Last Candlesticks pattern: Shooting star
• Time of formation: 1 Feb 2016
• Trend bias: Up

Daily

• Last Candlesticks pattern: Doji
• Time of formation: 1 Sep 2016
• Trend bias: Near term down

EUR/CHF – 1.0711

Although the single currency staged a strong rebound to 1.0825 earlier this week, lack of follow through buying and the subsequent retreat suggest further consolidation would take place and weakness to 1.0670 cannot be ruled out, however, reckon downside would be limited and last month’s low at 1.0631 should remain intact, bring another rebound later. Above 1.0770 would bring test of said resistance at 1.0825 but break there is needed to signal low has been formed, bring further subsequent gain to 1.0850 but price should falter below key resistance at 1.0899 (Dec high), risk from there is seen for a retreat later.

On the downside, whilst pullback to 1.0660-70 cannot be ruled out, reckon downside would be limited and said strong support at 1.0631 should remain intact, bring another rebound later. Only a break below support at 1.0622-31 would confirm the erratic decline from 1.1201 (2016 high) has resumed for further fall to 1.0590-00, then towards 1.0530-35 but loss of downward momentum should prevent sharp fall below 1.0500, price should stay well above 1.0400-10, risk from there has increased for a strong rebound to take place later.

Recommendation: Stand aside for this week.

 
On the weekly chart, despite this week’s initial rise to 1.0825, lack of follow through buying and the subsequent retreat look set to form a black candlestick this week and consolidation with initial downside bias is seen for weakness to 1.0660-70, however, break of support at 1.0622-31 is needed to signal recent decline from 1.1201 top is still in progress and may extend further fall to 1.0550-55, then 1.0500-10, however, oversold condition should prevent sharp fall below 1.0400-10 (100% projection of 1.1201-1.0622 measuring from 1.1001) and price should stay well above previous support at 1.0314, risk from there is seen for a rebound to take place later.

On the upside, above said resistance at 1.0825 would signal low has been formed at 1.0631, bring retracement of recent decline to 1.0850 but a break above indicated resistance at 1.0899 is needed to add credence to this view and bring a stronger rebound to 1.0970-75, then test of 1.1001. Looking ahead, only a sustained breach above 1.1001 would signal the fall from 1.1201 has ended, bring further gain to 1.1100 but reckon resistance at 1.1129 would hold on first testing.

USD/CHF - 1.0002

Most recent candlesticks pattern : N/A

Trend                                    : Near term down

Tenkan-Sen level                  : 0.9993

Kijun-Sen level                    : 1.0039

Ichimoku cloud top                 : 1.0090

Ichimoku cloud bottom              : 1.0089

New strategy  :

Sell at 1.0050, Target: 0.9950, Stop: 1.0085

Position : -

Target :  -

Stop : -

Although the greenback dropped sharply overnight and fell to as ow as 0.9978, current recovery suggests consolidation above this level would be seen and rebound to 1.0020 is likely, however, reckon upside would be limited and price should falter below previous support at 1.0060 (now resistance) and bring another decline later. A break of said support at 0.9978 would extend recent decline from 1.0171 top towards key support at 0.9967 but break there is needed to retain bearishness and extend fall to 0.9930-40.

In view of this, would not chase this fall here and would be prudent to sell dollar on recovery as 1.0040-50 should limit upside. Above said previous support at 1.0060 would defer and suggest low is formed instead, risk rebound to 1.0090 and then test of resistance at 1.0109.