Sample Category Title

Key Points:

• Reversal likely as the 100 day EMA is applying downward pressure.
• Stochastics trending towards overbought.
• Consolidation phase could end shortly.

The EUR looks poised to have another near-term slip in the wings as its latest attempt at pushing through the 100 day EMA seems to have been met with failure. However, there could be a silver lining for the bulls out there as the medium-term consolidation phase could be only a week or so away from ending, the result of which will likely be a rally to the long-term trend line.

First and foremost, we need to confirm just how likely a reversal and subsequent downtrend is for the EUR. From a technical perspective, such an outcome looks all but assured given a number of factors. For one, the 100 day EMA is once again making its presence felt and is supplying some notable dynamic resistance. Moreover, stochastics are trending towards overbought which will only add to resistance moving forward.

Aside from the EMA and stochastic biases, evidence for a reversal comes from the chart pattern that has developed over the past few months. Specifically, a fairly robust pennant seems to be forming up which should help to encourage the pair to drift lower in the coming sessions. This decline should come to an end around the 1.0550 handle before the downside constraint of the pennant kicks in and lends support to the Euro.

However, all is not lost for the bulls out there who may have been disheartened by the pair’s inability to move above that 100 day EMA. More precisely, at its current trajectory, the EUR’s consolidation phase is fast running out of wiggle room which should mean a breakout is on the horizon. As a result, there is likely only going to be one or maybe two reversals before the pair moves into a rather strong uptrend.

Ultimately, this uptrend will most probably be constrained by the long-term trend line which should limit gains to around the 1.0750 handle. However, by this point, we will have price action above the 100 day moving average which could help to see a long-term uptrend begin. If this occurs, the Euro will be well positioned to return to the price ranges seen early last year, much to the delight of the EUR bulls.

Daily Pivots: (S1) 1.0631; (P) 1.0672 (R1) 1.0694; More.....

A temporary top is formed at 1.0713 in EUR/USD with 4 hour MACD crossed below signal line. Intraday bias is turned neutral first. At this point, we're still favoring the bullish case. That is, whole rise from 1.0339 low is in progress and resuming. Above 1.0713 will target 1.0828 and above. However, since it's seen as a corrective move, we'd expect upside to be limited by 100% projection of 1.0339 to 1.0828 from 1.0494 at 1.0983. The larger down trend is expected to resume later. On the downside, break of prior resistance at 1.0630 will turn bias back to the downside for retesting 1.0494 low.

In the bigger picture, as long as 1.1298 key resistance holds, whole down trend from 1.6039 (2008 high) is still expected to continue. Break of 1.0339 low will send EUR/USD through parity to 61.8% projection of 1.3993 to 1.0461 from 1.1298 at 0.9115.

FOMC is highly likely to raise its policy rate, by +25 bps, to a range to 0.75-1% in March. With a March rate hike a done-deal, the market focus turns to the future monetary policy stance. We expect two more hikes, one in June and one in September, this year. Given the recent improvements in employment and inflation, the market has begun talking about four rate hikes in 2018. For now, we stick to three, as suggested in December's dot plot. The market is currently pricing in three 25-bps hikes this year and two for 2018. The Fed's updated Summary of Economic Projections (SEP) would be released with fan charts added for the first time.

Fed's monetary policy decision is data-dependent. Recent economic developments have indicated that the Fed is on right path to achieve its dual mandate. US non-farm payrolls came in stronger than expected, adding +235K in February, compared with consensus of +193K and the upwardly revised +238K in January. The average monthly gain over the past 6 months stands at +194K and the average over the past year is +197K. The unemployment rate slipped -0.1 percentage point to 4.7% as the participation rate added+0.1 percentage point to 63%. Average earnings rose +0.2%, compared with forecast of +0.3%. January's inflation surprised to the upside. Headline CPI accelerated to +0.6% m/m from +0.3% in December. This also marked that largest monthly gain since 2013. Undoubtedly, the +4% jump in energy CPI (+1.2% in December) was the key drive. Yet, the core CPI also strengthened, rising an above-trend 0.3% m/m. On a year-ago basis, headline CPI accelerated to 2.5% from +2.1% in December, while the core reading improved to +2.3% from +2.1% previously.

There have been rising hopes of four rate hikes in 2018, compared with three suggested in the December dot plot. Recall that in December 2016, FOMC's median estimate in dot plot showed a Fed funds rate of 1.375% in 2017, 2.125% in 2018 and 2.875% in 2019. Indeed, it is not impossible for the median dot plot to signal four hikes next year. Only two participants, who were at the median last time, are needed to raise their forecasts by +25 bps to lift the median to 2.375%. For 2019, only one participant is needed to lift the median to 3%. Note, however, that the market is currently pricing in only two rate hikes for 2018.

We believe policymakers would have more discussions on balance sheet adjustment over the course of this year, culminating to announcement of plans to reduce the balance sheet in 4Q17. Yet, the policy statement in March would likely maintain the reference that 'the Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction, and it anticipates doing so until normalization of the level of the federal funds rate is well under way. This policy, by keeping the Committee's holdings of longer-term securities at sizable levels, should help maintain accommodative financial conditions'.

FOMC would add new fan charts to the SEP. While these are intended to display uncertainty around economic projections, we doubt they would provide more new information about the economic and monetary policy outlooks

Daily Pivots: (S1) 1.0049; (P) 1.0083; (R1) 1.0105; More.....

Intraday bias in USD/CHF remains neutral as the retreat from 1.0169 continues. Deeper decline cannot be ruled out. But another rise is mildly in favor. Above 1.0169 will turn bias to the upside and target a test on 1.0342 resistance. Based on neutral medium term outlook, we'd be cautious on topping below 1.0342. On the downside, break of 1.0008, however, will indicate completion of the rebound from 0.9860. And intraday bias will be turned back to the downside for 0.9860.

In the bigger picture, prior rejection from 1.0327 resistance argues that USD/CHF is staying in a medium term sideway pattern. In any case, decisive break of 1.0342 resistance is needed to confirm underlying strength. Otherwise, we'll stay neutral in the pair first. In case of another fall, we'd expect strong support from 0.9443/9548 support zone.

A note on lower timeframe confirming price action...

Waiting for lower timeframe confirmation is our main tool to confirm strength within higher timeframe zones, and has really been the key to our trading success. It takes a little time to understand the subtle nuances, however, as each trade is never the same, but once you master the rhythm so to speak, you will be saved from countless unnecessary losing trades. The following is a list of what we look for:

• A break/retest of supply or demand dependent on which way you're trading.
• A trendline break/retest.
• Buying/selling tails ... essentially we look for a cluster of very obvious spikes off of lower timeframe support and resistance levels within the higher timeframe zone.
• Candlestick patterns. We tend to only stick with pin bars and engulfing bars as these have proven to be the most effective.

EUR/USD

The single currency, as you can see, closed marginally lower on Monday after piercing through the nearby psychological level at 1.07/ H4 61.8% Fib retracement taken from the high 1.0828. Seeing as how the daily candles are responding reasonably well from daily supply at 1.0714-1.0640, and weekly action shows price to be meandering mid-range between weekly resistance at 1.0819 and the weekly support area at 1.0333-1.0502/ 2017 yearly opening level at 1.0515, further selling could be on the cards. With that being the case, the next downside target on the H4 scale can be seen around the H4 trendline support etched from the high 1.0679, followed closely by a 50.0% retracement level at 1.0603 and psychological level 1.06.

Our suggestions: The pair is likely to find some support around 1.06/1.0620 region with it having been a strong barrier of resistance on a number of occasions over the past few weeks (see green circle). Despite this, let’s be mindful to the fact that we have little higher-timeframe structure supporting this zone. The closest area of interest is seen on the daily chart at 1.0525-1.0576: a daily demand base. As a result of this, we would strongly recommend waiting for at least a reasonably strong bullish candle to form before considering a position from the above noted H4 support area.

Data points to consider: German ZEW economic sentiment at 10am. US PPI at 12.30pm GMT.

Levels to watch/live orders:

• Buys: 1.06/1.0620 neighborhood ([waiting for a reasonably sized H4 bull candle to form is advised] stop loss: ideally beyond the trigger candle).
• Sells: Flat (stop loss: N/A).

GBP/USD

Looking at this market from the top this morning, weekly price is currently seen testing the underside of the recently broken weekly Quasimodo line coming in at 1.22. On the condition that the pair remains bearish beyond this hurdle, then the next port of call on this scale can be seen around weekly support coming in at 1.1904. Down on the daily timeframe, we can see that the bulls went on the offensive yesterday and pulled the unit up to within an inch of the daily resistance area drawn from 1.2252-1.2342, before printing a mild end-of-day correction. The next area of interest seen below here is a daily support drawn from 1.2135, followed closely by the daily 161.8% Fib ext. at 1.2119 taken from the high 1.2706.

Swinging across to the H4 candles, price clipped the H4 mid-way resistance at 1.2250 going into the early hours of yesterday’s US segment and closed the day just ahead of the 1.22 psychological support. As we are already aware, 1.22 also denotes the weekly broken Quasimodo level mentioned above. So, with that in mind, a H4 close beyond 1.22 today could spark a selloff back down to the H4 mid-way support at 1.2150/daily support at 1.2135. The question is how can we take advantage of this?

Our suggestions: Other than selling on the break of 1.22, the only other alternative we see here is to wait for H4 price to retest the underside of 1.22 as resistance (following the close lower) and a lower-timeframe sell signal (see the top of this report). The latter, in our opinion, is the safer route to take.

Data points to consider: US PPI at 12.30pm GMT.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: Watch for price to engulf 1.22 and then look to trade any retest seen thereafter ([wait for a lower-timeframe signal to form following the retest before looking to pull the trigger] stop loss: dependent on where one confirms this barrier).

AUD/USD

Having seen weekly price recently shake hands with the weekly support area at 0.7524-0.7446, as well as a daily action also touch base with a daily support area drawn from 0.7449-0.7506, there was no surprise to see the Aussie push higher on Monday. Still, the rally could very well be a short-lived one! While daily action did indeed extend Friday’s bounce from the aforementioned daily support base yesterday, we also saw a daily supply zone at 0.7632-0.7584 brought into play. Couple this with the H4 candles also recently topping out around the completion point of a minor H4 AB=CD pattern (see black arrows) at 0.7589/February’s opening level at 0.7577, the unit may look to erase some/all of yesterday’s gains.

Our suggestions: Despite the weekly chart suggesting further buying could be on the horizon, both the H4 and daily charts disagree (see above). Even so, shorting this market is proving to be difficult owing to the nearby H4 mid-way support at 0.7550! Unfortunately, we see little else to hang our hat on this morning, so we will be placing this market on the back burner for the time being and will look to reassess following today’s Chinese industrial production figures.

Data points to consider: Chinese industrial production at 2am. US PPI at 12.30pm GMT.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: Flat (stop loss: N/A).

USD/JPY

In recent sessions, the USD/JPY succeeded in netting a batch of fresh bids off the H4 mid-way support hurdle at 114.50 which led to price tapping a high of 114.91 into the close. In consequence to yesterday’s rather lackluster performance, there was little change seen to the higher-timeframe structure. Weekly price remains on course to cross swords with a weekly resistance level seen at 116.08, and daily price is seen trading within the walls of a daily resistance area coming in at 115.62-114.60.

With the above in mind, a break through the 115 handle, although this would be considered a bullish signal according to the weekly timeframe, shows little wiggle room for price to move since H4 supply at 115.37-115.18 sits directly above. On the other hand, a break below 114.50 would be considered a bearish signal since daily flow remains within a daily resistance area. Nevertheless, let’s take into account that not only is there a nearby H4 trendline support (extended from the high 115.62) seen just below 114.50, but there’s also the fact that you’d be selling against potential weekly momentum!

Our suggestions: Based on the above notes, our team has come to a general consensus that a trade in this market is just too risky on the timeframes we follow.

Data points to consider: US PPI at 12.30pm GMT.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: Flat (stop loss: N/A).

USD/CAD

For the most part, it was a relatively quiet session in the USD/CAD market yesterday. There were no high-impacting events affecting either the US dollar or Canadian dollar, which saw the pair drift lower to retest the 1.3419/1.3434 region (November/December/January's opening levels). This area, as you can see, is holding ground for now and this could very well be because of the daily demand base currently seen in play at 1.3371-1.3437. Looking up to the weekly candles, the unit managed to marginally close beyond the 2017 yearly opening level at 1.3434. Since the close above this line was relatively minor, and taking into account that there is a nearby weekly double-top formation seen around the 1.3588 region (green circle), we do not consider 1.3434 to be out of the picture as a weekly resistance just yet!

Our suggestions: In a nutshell, the structure of this pair can be boiled down to the following:

Weekly action suggests that the bears could come into play.

Daily price is trading from demand so this evidently favors the bulls.

And H4 flow is currently seen bouncing off 1.3419/1.3434, which also favors the bulls.

Ultimately, we will not be happy selling this market until the current daily demand is out of the picture. Despite this, a break below 1.3419/1.3434 may entice sellers down to the H4 broken Quasimodo support at 1.3353 since, other than the 1.34 barrier, we see very little active H4 demand to the left of price. In regards to buying this unit, we still feel it would just be too much of a risk considering the weekly structure noted above. However, In the event that you believe the 1.3419/1.3434 will hold today despite our notes, we would advise waiting for a solid (preferably full-bodied) bull candle to form before pulling the trigger. This will, of course, by no means guarantee a winning trade, but what it will do is show buyer intent!

Data points to consider: US PPI at 12.30pm GMT.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: Flat (stop loss: N/A).

USD/CHF

As anticipated, the H4 candles eventually engulfed the 1.01 handle during the course of yesterday’s sessions and tested March’s opening level at 1.0066. As highlighted in yesterday’s report, this level is also bolstered by a H4 trendline support taken from the low 0.9929 and a H4 127.2% Fib ext. at 1.0071. While this confluence is attractive and may continue to hold this unit higher today, we remain wary of buying from here due to the following:

On the H4 chart, there is little room for price to rally from here given the nearby 1.01 handle.

Over on the daily chart, the pair recently clipped the underside of a daily supply coming in at 1.0248-1.0168. In addition to this, we do not see much active demand to the left of current price until the pair reaches the daily demand pegged at 0.9929-0.9975, which happens to intersect with a daily support level seen at 0.9950.

Weekly price also recently came within striking distance of the 2017 yearly opening level at 1.0175, which looks to be enough to force weekly action lower this week.

Our suggestions: As things stand, our desk believes that 1.0066 will ultimately give way and price will look to test the H4 Quasimodo support at 1.0024, followed closely by parity (1.0000). To that end, we will be looking to short price beyond 1.0066 today if we happen to see a retest of this number as resistance that’s bolstered by a lower-timeframe sell signal (see the top of this report).

Data points to consider: US PPI at 12.30pm GMT.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: Watch for price to engulf 1.0066 and then look to trade any retest seen thereafter (waiting for a lower-timeframe confirming signal to form [see the top of this report] following the retest is advised] stop loss: dependent on where one confirms the level).

DOW 30

It was a quiet session for the US equity market yesterday, with price ranging a mere 74 points on the day. Looking at the H4 timeframe, it’s quite clear that price is somewhat restricted at the moment between a H4 supply at 20951-20911 and March’s opening level at 20824.

Turning our attention to the weekly timeframe, the index printed its first losing week since early Feb last week. The bearish close is not something we would label significant, however, seeing as how price remained within the prior week’s range and sported a minor end-of-week bullish correction. With equities still seen trading nearby record highs, where do we go from here? Well, given that there is absolutely no weekly resistance levels in sight, the best we can do for the time being is continue looking to ‘buy the dips’. The closest higher-timeframe area can be seen at 20714-20821: a daily demand zone, which is currently in play as we write.

Our suggestions: In essence, our team is still in favor of a rally higher. Be that as it may, the H4 supply at 20951-20911 and nearby 21000 line would need to be taken out beforehand. Therefore, until we see a H4 close print above these areas, we will not be considering positions in this market.

Data points to consider: US PPI at 12.30pm GMT.

Levels to watch/live orders:

• Buys: Watch for price to engulf 21000 and then look to trade any retest seen thereafter (waiting for a lower-timeframe confirming signal to form [see the top of this report] following the retest is advised] stop loss: dependent on where one confirms the level).
• Sells: Flat (stop loss: N/A).

GOLD

Following the open, we saw the yellow metal start the week out on a reasonably strong footing which saw the unit touch a high of 1211.0, just missing February’s opening base by a few pips at 1211.5. It was here (the London open), however, that things begun to turn sour. H4 price ended the day engulfing the weekly opening level, clocking a low of 1201.4 going into the closing bell. This, as you’ll see over on the daily chart, formed a nice-looking daily bearish selling wick.

As far as higher-timeframe structure goes, the weekly timeframe indicates that price could potentially continue driving lower until we reach the weekly support level drawn from 1180.1. Despite this, the weekly sellers will need to run through the daily support area drawn in at 1197.4-1187.7 before we see 1180.1.

Our suggestions: Given the conflicting signals seen from the weekly and daily timeframes, this remains a difficult market to read. For all intents and purposes, neither a long nor short seems attractive at this time.

The daily demand seen below the current daily support area at 1170.8-1182.8, nonetheless, has caught our eye. Encased within is the above noted weekly support level and a H4 Quasimodo support hurdle seen below the current H4 demand at 1184.3. This daily area, given its surrounding confluence, has a high probability of bouncing price higher. Unfortunately, there is a fair amount of ground to cover before this base comes into view, so place this beauty on the back burner for a later date!

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: Flat (stop loss: N/A).

Daily Pivots: (S1) 114.59; (P) 114.75; (R1) 115.04; More...

Intraday bias in USD/JPY remains neutral as consolidation from 115.49 temporary low continues. Deeper retreat could be seen to 4 hour 55 EMA (now at 114.30). Downside is expected to be contained above 113.60 support and bring another rally. As noted before, corrective decline from 118.65 should have completed with a a double bottom pattern (111.58, 111.68). Above 115.49 should turn bias to the upside and pave the way for a test on 118.65. Decisive break there will extend whole rise from 98.97 and target 125.85 high next. On the downside, however, break of 113.60 will invalidate our view and turn bias back to the downside for 111.58/68 support zone instead.

In the bigger picture, price actions from 125.85 high are seen as a corrective pattern. The impulsive structure of the rise from 98.97 suggests that the correction is completed and larger up trend is resuming. Decisive break of 125.85 will confirm and target 61.8% projection of 75.56 to 125.85 from 98.97 at 130.04 and then 135.20 long term resistance. Rejection from 125.85 and below will extend the consolidation with another falling leg before up trend resumption.

The financial markets are generally staying in tight range in Asian session today as traders await the heavy-weight events later in the week. US equities ended mixed overnight with DJIA closed down -22.5 pts, or -0.1% at 20881.48. S&P 500, on the other hand, gained 0.87 pts, or 0.04%, to close at 2373.47. Treasury yields also rose with 30 year yield gained 0.023 to close at 3.192. Meanwhile, 10 year yield gained 0.026 to close at 2.608. But both are limited below recent resistance at 3.197 and 2.621 respectively. Gold is trying to regain 1200 handle for the moment. WTI crude oil turned sideway after breaching 48 handle briefly. Dollar index is trying to draw support from 55 day EMA and is trading at 101.40 at the time of writing. Forex pairs are all trading inside Monday's range.

House of Commons Passed Brexit Bill

In UK, Sterling trades lower as this week's recovery lost steam. The Parliament passed the bill allowing Prime Minister Theresa May to trigger Article 50 for Brexit negotiation. The House of Commons overturned the amendments of the House of Lords, including the guaranteed rights for EU citizens staying in UK, and a vote by the Parliament on the final Brexit agreement. Brexit Secretary David Davis said that "Parliament has today backed the Government in its determination to get on with the job of leaving the EU and negotiating a positive new partnership with its remaining member states." May will address the House of Commons today. Some expect May to wait until the end of the month to trigger Brexit. But there are speculations that May could announce it this week.

Staying in UK, Scottish First Minister Nicola Sturgeon confirmed that she would ask for permission to hold a second independence referendum. PM May warned that the move would set Scotland on a course for "more uncertainly and division" as the majority of Scottish people do not want a second vote. As May noted, "the tunnel vision that SNP has shown today is deeply regrettable... Instead of playing politics with the future of our country, the Scottish government should focus on delivering good government and public services for the people of Scotland. Politics is not a game".

Dutch to Vote on March 15

Elsewhere in Europe, the Netherlands' general election would be held on March 15. With fractured political environment, no party is expected to gain a majority. And it's expected that as many as five parties could be needed to form the coalition even though the Liberals are tipped to secure a majority of votes. Nonetheless, firstly, with rising popularity of the far-right candidate Geert Wilders, leader of the Party of Freedom, the market is concerned his victory would intensify anti-EU/euro debates. Secondly, the result of the Dutch election is another indicator of populism in Europe and is seen as a precursor to French elections in April and May.

Fed to revise median "dot plot"

On the other side of the Atlantic, markets are awaiting the FOMC rate decision on Wednesday. The Fed is 99.99% certain to increase the policy rate by 25 bps. The is seen as driven by improvement in the economic outlook with the employment and inflation data showing that the Fed is on the way to achieve its dual mandate. We expect the policy statement to sound more upbeat and point to faster rate hike this year. Fed fund futures are pricing in 64% chance of another hike by June. The point of interests will be on economic projections and in particular the median "dot plot" rate path. Back in December, Fed projected interest rate to hit 1.4% by the end of 2017 and 2.1% by end of 2018. Upward revision in these two figures would fuel rally in Dollar.

On the data front...

China has released just now that industrial production expanded 6.3% yoy in the first two months of the year, up from consensus of 6.1% and December's 6%. Urban fixed asset investment (FAI) grew 8.9% yoy during the period, beating consensus of 8.3% and 8.1% previously. However, the growth of retail sales moderated to 9.5% yoy, from 10.4% in December. The market had anticipated stronger growth of 10.6%. For the day ahead, US PPI probably eased to 0.1% mom in February, from 0.6% a month ago, while the core reading slowed to 0.2%, from 0.4% previously. In the Eurozone, industrial production probably expanded 1.2% mom in January, after a -1.6% contraction in the prior month. On the sentiment data, the ZEW economic sentiment index for Germany probably added 1.6 points to 12 in March, while the current situation index added 2.2 points to 78 this month.

GBP/USD Daily Outlook

Daily Pivots: (S1) 1.2159; (P) 1.2205; (R1) 1.2263; More...

GBP/USD's recovery from 1.2133 was limited by 4 hour 55 EMA and weakens mildly today. Intraday bias stays neutral first as the consolidation could extend. Another recovery cannot be ruled out but upside should be limited by 1.2346 support turned resistance and bring fall resumption. As noted before, consolidation pattern from 1.1946 is completed at 1.2705 is resuming larger down trend. On the downside, below 1.2133 will turn bias to the downside for retesting 1.1946/86 support zone. Break of 1.1946 will confirm our bearish view. However, sustained break of 1.2346 will dampen out view and turn focus back to 1.2569 resistance first.

In the bigger picture, fall from 1.7190 is seen as part of the down trend from 2.1161. There is no sign of medium term bottoming yet. Sustained trading below 61.8% projection of 2.1161 to 1.3503 from 1.7190 at 1.2457 will target 100% projection at 0.9532. Overall, break of 1.3444 resistance is needed to confirm medium term bottoming. Otherwise, outlook will remain bearish.

Economic Indicators Update

Daily Pivots: (S1) 1.2159; (P) 1.2205; (R1) 1.2263; More...

GBP/USD's recovery from 1.2133 was limited by 4 hour 55 EMA and weakens mildly today. Intraday bias stays neutral first as the consolidation could extend. Another recovery cannot be ruled out but upside should be limited by 1.2346 support turned resistance and bring fall resumption. As noted before, consolidation pattern from 1.1946 is completed at 1.2705 is resuming larger down trend. On the downside, below 1.2133 will turn bias to the downside for retesting 1.1946/86 support zone. Break of 1.1946 will confirm our bearish view. However, sustained break of 1.2346 will dampen out view and turn focus back to 1.2569 resistance first.

In the bigger picture, fall from 1.7190 is seen as part of the down trend from 2.1161. There is no sign of medium term bottoming yet. Sustained trading below 61.8% projection of 2.1161 to 1.3503 from 1.7190 at 1.2457 will target 100% projection at 0.9532. Overall, break of 1.3444 resistance is needed to confirm medium term bottoming. Otherwise, outlook will remain bearish.

STOCKS

The sweeping victory of BJP in the state election results on Saturday would be taken positively in the Indian Markets today. Nifty (8934.55, +0.08%) could open with a gap up today and could well break beyond the 9000 level on the upside. Initial target of 9280 opens up on the upside.

Dow (20881.48,-0.10%) is almost stable near current levels. Immediate support near 20750, if holds could take it back towards 21200; else some consolidation could be expected in the near term. A break below 20750 could turn bearish for the coming sessions.

Dax (11990.03, +0.22%) could move higher from current levels towards 12200. In case a break below 11990 is seen, we could possibly expect the fall to extend towards 11800 or lower before bouncing back from there.

Nikkei (19614.24, -0.10%) could come off from immediate resistance near 19620. Note that the US-Japan yield spread is testing crucial medium term resistance and if that holds could push off Nikkei in the coming sessions.

Shanghai (3244.64, +0.24%) looks bearish in the near term while resistance near 3250 holds. A break above 3250 is necessary to confirm any upside reversal.

COMMODITIES

Gold(1204) is trading slightly higher levels from pervious week’s low low of 1193. We continue to look for a bounce from 1200 levels in the near term. It may spend a few sessions within the 1190-1220 region before the FOMC funds rate announcement on 15th March. We will remain bearish until it is trading below 1240.

Silver (16.96) has tested immediate support near 16.65-72 before closing slightly higher. A break below 16.65 could take it down to 15.60. The bias will remain weak until it is trading below 17.45.

Copper (2.63) has also bounced back from 2.55 and may ranged bound between 2.58-65. A close above 2.72 could open up 2.83 as well.

Taking a look at the energy section, a bounce back could be expected for both Brent (51.35) and WTI (48.38). Brent could be headed towards 52-52.50 and WTI towards 49.60-50 in near term. We have US crude inventory data, tomorrow at 8.00 pm and a further increase in weekly stocks is more likely to be already discounted in the price, thus we should be cautious about any further depreciation for both Brent and crude in near term. Immediate supports are poised at 50.50 for Brent and 46.50 for WTI respectively. Only a close below these levels could open up further downside.

FOREX

The BJP sweeping win in UP has unleashed a huge bullish sentiment in the market which has strengthened the Rupee considerably. The global markets wait for the FOMC meet to conclude by tomorrow where a rate hike is fully expected.

Dollar Index (101.39) has tested the major support near 101.00 and bounced back strongly which may push it towards 102.00-30 once again in the rest of the week.

Euro (1.0653) has revisited higher levels of 1.07 contrary to expectations but the jitteriness over the Dutch elections with the rising odds of a populist victory have pushed it down once again and the rest of the week may see it gradually declining towards 1.0550-00 levels.

The immediate resistance of 123.00 may hold for EURJPY (122.33) with the long term resistance looming around 124.00. It may keep Euro below 1.07 this week.

Dollar-Yen (114.85) is held below 115.00-50 as the US-Japan 10Yr struggles around the major resistance at the current levels (See Interest rates section) as discussed last week. The near term bias remains bullish but a firm break of the yield differentials may help it to rise to the higher resistance levels of 116.00 and 117.50.

Pound (1.2199) is shrugging off the Brexit impact as it remains steady even as the UK PM looks set to trigger Article 50 this week. The upside looks capped to 1.23 for the next few days with the downside possibility to 1.20 levels still open. As discussed previously, it remains to be seen if any bottoming price action may take place around the current levels or not.

Aussie (0.7558) has held above the immediate support of 0.75 and bounce back to 0.76 levels just as expected. Now the bias in the range of 0.75-0.76 remains neutral. Only a firm break from this range can give directional clue in the near term.

Dollar-Rupee (66.60) is trading near 66.15 levels in the NDF market today, an 11-month low after the overwhelming win of BJP in UP. Below the long term support of 66.50-35 comes 66.00-65.90 and 65.50. It remains to be seen where Dollar Rupee makes the low for the day.

INTEREST RATES

The US 10-5Yr (0.48%) has moved up from channel support and could be headed towards 0.50% and higher in the near term.

The US yields are headed higher and could move up further in the near term. The 5Yr (2.14%), 10Yr (2.62%) and the 30YR (3.20%) are trading higher than previous levels of 2.08%, 2.56% and 3.15% respectively.

The German 10-2YR (1.2820%) has come off slightly from immediate resistance levels and could test 1.20-1.98% in the near term. The German yields by themselves have paused after a sharp rise in the past few sessions. A short corrective dip could be seen now.

The US-Japan 10YR (2.53%) is testing medium term resistance near current levels. While that holds, a corrective dip towards 2.40% may be expected in the near term. This could possibly limit the upside for Dollar-Yen and Nikkei in the coming sessions.

EUR/USD

The EUR/USD pair closed the day in the green at 1.0665 after peaking at 1.0713, its highest since February 7th. Dollar's broad weakness seen late Friday extended in a quiet macroeconomic journey, as there were no major releases in Europe or the US. The common currency continued to find demand on Friday's headlines about ECB considering tapering ahead of the end of their QE program by the end of this year, maintaining a positive tone near term, although the absence of news, alongside with the upcoming Fed meeting next Wednesday, kept volumes at lows. Things will become more interesting on Tuesday, as Germany will release February inflation figures, and the March ZEW survey, the EU will unveil January Industrial Production, while in the US, February PPI will take center stage.

From a technical point of view, and despite the mentioned high, the pair has made little progress, given that no critical level has been broken. Around 1.0710, the pair has the 38.2% retracement of the post-US election slide, and investors have been unwilling to push the price beyond it ever since early February, amid political uncertainty at both shores of the Atlantic. Intraday and for the upcoming sessions, the 4 hours chart shows that technical indicators are easing from extreme overbought readings achieved at the beginning of the day, but also that the 20 SMA maintains a strong bullish slope after breaking above the 100 SMA, this last indicating a limited downward scope. A downward corrective movement towards the 1.0630 region seems likely, while a break below this last should favor a deeper downward corrective move.

Support levels: 1.0635 1.0600 1.0565

Resistance levels: 1.0710 1.0755 1.0790

USD/JPY

The USD/JPY pair ended the day flat around 114.70, confined to a tight 50 pips range ever since the day started, but with the scale leaned towards the downside. The Japanese yen saw some early demand, but mixed data coming from Japan kept the pair on check. The Producer Price Index came in at 1.0% YoY in February, matching expectations, but above previous 0.5%, while machinery orders plunged at the beginning of the year, down by 3.2% in January from a 6.7% advance in December, and falling 8.2% yearly basis. There was mounting speculation about the BOJ reducing their facilities, after headlines suggesting that, given the decline in yields, the Central Bank would need to buy less than the 80 trillion yen per year. Further keeping the pair limited were US Treasury yields that consolidated near their recent highs. The pair bounced modestly from a major Fibonacci support, the 23.6% retracement of the November/December rally around 114.50, but technical readings in the 4 hours chart fail to provide a clear sign on what's next, as technical indicators hover around their mid-lines, whilst the large moving averages remain pretty much flat and converging within a tight range well below the current level.

Support levels: 114.50 114.15 113.70

Resistance levels: 115.10 115.50 115.85

GBP/USD

The Pound benefited from dollar's weakness, with the GBP/USD pair regaining the 1.2200 level, and holding above it during the last two sessions. The pair traded as high as 1.2250, getting some help from Brexit´s Minister David Davis who asked the Parliament to clear the path for PM May to begin negotiations with the EU to begin the exit process. The Brexit bill returned to the House of Commons this Monday. Also, Scottish PM Nicola Sturgeon announced a plan to stage a second independence referendum within the next two years, claiming that UK PM May has ignored Scotland´s desires of maintaining full access to the EU single market after the Brexit. The news should have been Pound negative, but attention is now centered in the US and what the Federal Reserve will say this week. As it was the case for the EUR/USD pair, Pound's recovery against the greenback stalled near a major Fibonacci resistance, the 61.8% retracement of the January rally around 1.2260. Technical readings in the 4 hours chart maintain the risk towards the upside, as the price settled well above a now bullish 20 SMA, whilst technical indicators have moderated their advances, but remain far above their mid-lines. A break above the mentioned resistance should open doors for an extension up to 1.2345, the 50% retracement of the same rally and February low.

Support levels: 1.2190 1.2150 1.2110

Resistance levels: 1.2260 1.2300 1.2345

GOLD

Spot gold closed the day marginally lower at $1,204.10 a troy ounce this Monday, failing to sustain early gains, as the commodity traded as high as 1,211.13 due to broad dollar weakness. Different risk events, including Dutch elections, the US Federal Reserve meeting, and the possibility of UK's May triggering the Art. 50 of the Lisbon Treaty, were not enough to fuel demand for the safe-haven asset, as bulls are side-lined on a possible rate hike in the US this Wednesday. From a technical point of view, the daily chart shows that the price retreated from around the 38.2% retracement of the December/February rally, whilst technical indicators keep heading south near oversold readings, maintaining the risk towards the downside. In the 4 hours chart, the price settled around its 20 SMA, whilst technical indicators remain horizontal, the Momentum around its 100 level and the RSI indicator around 40. The 50% retracement of the mentioned rally stands at 1,193.00, still the main support and the level to break to confirm additional slides during the upcoming sessions.

Support levels: 1,197.10 1,188.20 1,180.50

Resistance levels: 1,210.00 1,218.50 1,226.70

WTI CRUDE

Crude oil prices extended their declines at the beginning of the week, with WTI futures trading as low as $47.90 a barrel before settling at 48.40, unchanged from Friday's close. There were no major news coming from the sector, with the market now eyeing EIA's weekly storage report to decide whether to extend the sell-off or re-buy the commodity. The technical outlook is still bearish, given that in the daily chart, the price has remained well below all of its moving averages, whilst technical indicators pulled modestly higher within oversold territory, rather reflecting the latest bounce than confirming downward exhaustion. In the shorter term, and according to the 4 hours chart, the technical picture is quite alike, with the RSI recovering modestly, but standing now at 26, the Momentum indicator heading higher below the 100 level, and the 20 SMA maintaining a sharp bearish slope, now around 49.10, and providing a dynamic resistance in the case of an upward move.

Support levels: 48.00 47.30 46.65

Resistance levels: 49.10 49.75 50.40

DJIA

US stocks saw little action this Monday, with the three major indexes closing mixed, but not far from their opening levels. The Dow Jones Industrial Average closed in the red, down 21 points or 0.10%, to 20,881.48. The Nasdaq Composite added 14 points, to 5,875.78, while the S&P closed 0.04% higher at 2,373.47. Cautious prevailed ahead of the Federal Reserve meeting this Wednesday, exacerbated by the absence of macroeconomic headlines to drive the mood. Within the Dow, Walt Disney topped winners' list, adding 0.52%, whilst El du Pont added the same percentage. Intel was the worst performer, down 2.23%, followed by General Electric that lost 1.39%. From a technical point of view, the DJIA held a few points above its 20 DMA, currently at 20,852, whilst technical indicators have lost directional strength, but hold within positive territory, with the RSI indicator holding around 64, all of which limits the possibility of a steeper decline. In the 4 hours chart, the index remains stuck around a modestly bearish 20 SMA, and above a still bullish 20 SMA, although the fact that both moving averages are so close, with the shortest easing, is a first sign of bearish pressure. In this last chart, however, the Momentum indicator bounced modestly from the 100 level, whilst the RSI indicator remains flat in neutral territory, failing to provide clear directional signs for the upcoming sessions.

Support levels: 20,852 20,817 20,777

Resistance levels: 20,922 20,978 21,045

FTSE 100

The FTSE 100 managed to advance for a second consecutive day, adding 24 points to close at 7,367.08, underpinned by a recovery in the mining-related sector. Equities traders shrugged off Brexit concerns and a stronger Pound, focusing on the advance in base metals. Fresnillo led advancers, adding 5.59%, followed by Antofagasta which added 4.88%. Anglo American gained 4.03%, while Rio Tinto advanced 3.96%. Financials underperformed all across the region, and within the Footsie, Standard Life shed 2.24%, Royal Bank of Scotland lost 151%, while Barclays closed 0.71% lower. Technically, the daily chart shows that the London benchmark retains a modestly positive tone, holding above its 20 DMA and with technical indicators bouncing from their mid-lines, although with limited upward momentum. In the shorter term, and according to the 4 hours chart, the upward potential is a bit more constructive, as the index extended its advance above a now flat 20 SMA, whilst technical indicators maintain their bullish slopes within positive territory and at fresh 2-week highs.

Support levels: 7,332 7,306 7,262

Resistance levels: 7,397 7,420 7,450

DAX

European equities closed little changed this Monday, with the German DAX up 26 points or 0.22%, to close at 11,990.03, with automakers leading the way higher. There were no major news coming from Germany, but the country will release the final revisions for February inflation, expected to remain unchanged, and the ZEW confidence survey for March, expected to improve from February's setback. ThyssenKrupp was the best performer, advancing 2.30%, followed by Volkswagen that gained 1.53% and Daimler which added 1.50%. The worst performer was Deutsche Boerse that shed 0.63%, while Commerzbank closed 0.05% lower and Deutsche Bank also posted a modest lost. The index flirts with 12,000 ahead of the Asian opening, still holding above a bullish 20 SMA, today at 11,920, while the RSI indicator heads north around 60, whilst the Momentum indicator holds around its 100 level. In the 4 hours chart, the index maintains a neutral stance, as the index is a few pips above a flat 20 SMA whilst technical indicators head nowhere around their mid-lines.

Support levels: 11,909 11,857 11,819

Resistance levels: 12,018 12,067 12,100