Cable broke below thin daily cloud and met next target at 1.2345 (daily Kijun-sen) on today’s strong acceleration lower.

Rising bearish pressure sees risk of further downside action towards 1.2260 (Fibo 61.8% of 1.1986/1.2704 rally).

Meantime, the fall may pause at Kijun-sen support, as slow stochastic is breaking into oversold territory.

Corrective upticks are expected to precede of fresh weakness, as sentiment is negative.

Broken daily cloud (spanned between 1.2388 and 1.2426) marks good resistance, with extended correction to be capped by broken falling 100SMA (currently at 1.2457).

Res: 1.2388, 1.2426, 1.2457, 1.2485
Sup: 1.2345, 1.2300, 1.2260, 1.2200

The Euro broke below daily Tenkan-sen (1.0723) and 20SMA (1.0691) supports and extended losses on today's fresh acceleration lower.

With 1.0700 support zone that held during past two days being taken out, the pair heads towards next pivot at 1.0641 (Fibo 38.2% of 1.0318/1.0827 ascend).

Break here is needed to confirm reversal and open way for extension towards daily Kijun-sen at 1.0583, possibly to daily cloud base at 1.0550.

Broken Tenkan-sen now acts as resistance (1.0723) which should limit corrective attempts and keep fresh near-term bears in play.

Res: 1.0692, 1.0723, 1.0754, 1.0789
Sup: 1.0641, 1.0600, 1.0583, 1.0550

EUR/USD

Current level - 10685

The intraday bias remains bearish, as the pair is currently testing the dynamic support around current levels. Crucial on the upside is 1.0750 and only a break through the latter will reinstate the positive outlook for 1.0870.

Profit-taking affects gold curbing silver and platinum

USD/JPY

Current level - 111.98

The bias remains negative, for a break through 111.40 major support, towards 109.80 area. Crucial on the upside is 113.00 zone.

GBP/USD

Current level - 1.2435

There is no sign of a reversal here and and eventual break through 1.2415 support could challenge 1.2240 area. Crucial on the upside is 1.2535 high.

Sunrise Market Commentary

• Rates: Eyes on EMU bond markets; technical picture Bund improves
  The short term technical picture of the Bund improved as yesterday's safe haven bid pushed the contract above resistance, suggesting further gains towards 164.90. Worries about Italy/France/Greece caused spread widening on EMU bond markets and generated the risk aversion. Today's eco calendar is empty, suggesting eyes will remain on EMU bond markets..
• Currencies: Euro weakness to prevail?
  Yesterday, European political uncertainty weighed on the euro and this process continues this morning. The dollar shows a mixed picture. USD/JPY dropped below a first line of defensive. A break below 111.16 support would be USD negative. Sterling is trading soft as the Brexit debate in the UK parliament continues.

The Sunrise Headlines

• US equities ended flat to marginally lower (S&P), withstanding European risk aversion. Overnight, most Asian stock markets marginally lose ground.
• German industrial production unexpectedly fell in December, signalling that Europe's largest economy isn't immune to heightened global uncertainty. Production declined 3% M/M, while consensus expected a 0.3% M/M increase.
• Australia's central bank held rates steady at its first policy meeting of the year, playing down a recent soft patch in economic growth as a temporary hiccup that would not prevent a pick up to a healthy 3-percent pace over time.
• A stand-off with European authorities over the terms and future of Greece's bailout has led to a rare public split on the International Monetary Fund's board, amid growing questions over the fund's participation.
• French conservative presidential candidate Fillon, moved to stabilize his faltering campaign by apologizing to the country for having employed his wife and children as parliamentary aides rejecting accusations the jobs were phony.
• Philly Fed president Harker, who votes on policy this year, said he could support raising short-term interest rates at the central bank's next meeting in March. He also reiterated that he supports around three rate hikes this year.
• British lawmakers rejected the first set of proposed amendments to legislation that would give Prime Minister Theresa May the right to notify the European Union of Britain's intention to leave the bloc.
• Japan will stick to a G7/G20 agreement against competitive currency devaluation and continue to use monetary policy to achieve its inflation goal, without targeting currencies, Finance Minister Taro Aso said.
• Today's eco calendar only contains US trade balance. Supply is heavy with Austria, the Netherlands, Germany (inflation), the US and Belgium (probably syndication 7-yr & 40-yr OLO) tapping the market. ECB Weidmann speaks

Currencies: Euro Weakness To Prevail?

Euro weakness prevails

On Monday, sentiment turned risk-off as markets focused on political uncertainty in Europe, in particular in France. Intra-EMU spreads widened and EUR/USD declined to finish the day at 1.0750 (from 1.0783). At the same time, risk-off sentiment and declining core yields support the yen. USD/JPY tested again the 112 area and finally dropped below this area to close the session at 111.74 (from 112.61). EUR/JPY also dropped below the mid-January correction low/support at 120.55.

Overnight, Asian equity markets trade in line with US yesterday evening (minor losses). The dollar is in the defensive against the yen. USD/JPY touched an intraday low in the 111.60 area and trades currently in the 111.80 area. At the same time, the dollar is rebounding against most regional currency (KRW, TWD, CNY …). EUR/USD is trading in the 1.0710 area, within reach of the post-payrolls low. The Reserve bank of Australia left its policy rate unchanged at 1.5%. The Bank remains positive on growth, but the return of inflation north of 2% will continue at a gradual pace. The rise in commodity prices is a positive, but a rise in the Aussie dollar could complicate the transition process in the economy. The Aussie dollar jumped from the 0.7640 area to the 0.7680 area.

Today, the German industrial production is the only important event during the European session. It was weak, but after strong orders yesterday, it had FX impact. In the US, the trade balance is expected to show a deficit of $ 45 bln in December. A bigger than expected deficit might get some more attention as president Trump tries to bring back production to the US and attacks countries with currencies he considers too weak. A negative surprise might be slightly USD negative. Yesterday, euro weakness and a global risk-off sentiment dominated currency trading. Markets keep an eye on the French political scene. Will presidential candidate Fillon be able to change fortunes after yesterday's speech? Euro uncertainty might persist even as the pace of the euro decline may slow. The price action in USD/JPY is also interesting. The pair dropped below the 112 support. Risk sentiment and interest rate differentials are an important driver, but yen traders also look forward to the meeting between PM Abe and President Trump later this week. The weak yen might be a point of debate at this meeting.

Global context. The dollar is in a (presumed) corrective downtrend against most majors since the start of January. The USD rally due to the Trump reflation trade petered out. Interest rate differentials in favour of the dollar narrowed. Trump politics/communication has become a sources of global uncertainty for the dollar. EUR/USD broke a minor resistance at 1.0775. Next resistance is at 1.0874. A return above EUR/USD 1.0874 would question the short-term USD positive outlook. At some point, the absolute interest rate support should provide a USD floor, especially as the Fed is still expected to continue its monetary policy normalisation. Yesterday's price action illustrated that euro weakness might still be a factor too. The 1.0874 resistance looks solid. A cautious sell EUR/USD on upticks can be considered. USD/JPY is trading well off the post-Trump highs (118.60/66) and dropped below the112 support. USD/JPY 111.16 (38% retracement of the 99.02/118.66 rally) is the next key support. A break below this area is clearly USD negative.

EUR/USD: Topside test rejected. Euro weakness dominates

EUR/GBP

Sterling caution as Brexit debate continues

On Monday, sterling trading was driven by global sentiment on risk and by the Brexit debate in the Lower House. Cable extended the decline that started after the BoE policy assessment last week. The pair finished the session at 1.2439. The euro was in the defensive across the board due to political uncertainty in continental Europa. This euro weakness was also a bit visible in EUR/GBP. The pair closed the session at 0.8622. However, the decline of EUR/GBP remains modest given the losses in other euro cross rate. This suggests some Brexit driven caution, too.

This morning, UK BRC like for like sales disappointed at (-0.6% Y/Y). Is this another signal that the positive domestic momentum is waning? Later today on the Halifax house prices will be published. The focus will remain on the Brexit debate in Parliament. Until now a series of amendments were rejected, but the process might go a bit less smooth today. The debate in Parliament might be neutral to slightly negative for sterling in a day-to-day perspective. Last week's balanced approach of the BoE capped the topside of sterling and helped to start a cautious bottoming out process for EUR/GBP. EUR/GBP 0.8450 support looks again a bit better protected. The sterling momentum is waning, but euro weakness is becoming on issue, too. Even so, yesterday's loss of EUR/GBP remained modest. A cautious buy-on-dips approach is preferred. The price action in cable also suggests that further sterling gains against the dollar won't be easy.

EUR/GBP: 0.8450 support better protected after soft BoE policy assessment

Download entire Sunrise Market Commentary

Optimism amongst investors following the U.S. election on November 8 is being questioned as recent developments show the U.S. President is more focused on protectionist measures than policies to boost economic growth. This also applies to Europe after France's Marine Le Pen launched her presidential campaign, promising to dump the Euro, fight globalisation and close the borders on immigrants.

What's more interesting, Francois Fillon who just few weeks ago, seemed to be winning the Presidential race is falling well behind in most recent polls after being accused ofpaying his wife and children hundreds of thousands of euros for jobs they did not do.

Investors who failed to predict the outcome of the biggest two political events, the U.S. elections and Brexit vote, started considering the high likelihood of Le Pen winning the French elections. This is reflecting in fixed income markets, as French bond yield rose to itshighest levels since July 2015, and the spread between the French 10-year bonds and the German Bunds widened to 0.78% which waslast seen in November 2012.

These developments are dragging EUR/USD lower for a second consecutive day, and Mr. Draghi who defended on Monday the ECB's QE program and fired back on the accusations by Peter Navarro that Germany is using a "grossly undervalued" euro, didn't help the single currency either.

Political risks in the euro area will likely continue to overshadow economic data in the weeks ahead. The French elections is not the only risk factor. Dutch, German, and possibly Italian elections will continue to weigh on the Euro.

The Yen is becoming the major beneficiary of the most recent developments. USD/JPY has declined by more than 5.7% from January highs and since BoJ will not likely take any new actions after the central bank extended buying 10-year bonds we may see further appreciation in the Yen, possibly hitting 110 if equity markets continued to decline.

Investors fell in love with gold again for same reasons after being dumped in November through mid-December last year. Rising political risks on both sides of the Atlantic will continue to support the yellow metal, but how further it may shine depends on real interest rates and the USD direction.

A widely ignored economic figure during Obama's era will be one of the most interesting releases going forward. The U.S. trade balance which is due to release later today will attract lot of attention, and I don't rule out a tweet from Trump after the U.S. shows a deficit close to $45 billion. Whether he's going to attack China, Germany, Japan or Mexico for being the winners in this trade relation will remain to be seen.

Key Points:

• Bearish channel remains intact at present.
• EMA crossover could herald further losses.
• Market fears continue to drag the pair lower.

The Swiss Franc has been taking back some ground from the Greenback over the past number of weeks and it shows little sign of slowing as we move forward. Specifically, the rather protracted downtrend could extend all the way back to the 0.97 handle if the current technical bias holds firm. However, on the fundamental front, there is also some evidence to suggest further downside potential for the only recently resurgent pair.

First and foremost, even at a glance, a relatively tight bearish channel has been in play since late-December and this structure looks set to remain in place moving ahead. This is largely a result of the EMA bias which has finally moved into its most bullish daily configuration. Specifically, the 100 day measure has now crossed both the 12 and 20 day averages whilst it is itself tracking lower.

Aside from the damning EMA readings, the presence of a strong and historical zone of resistance around the 50.0% Fibonacci level will be limiting chances of a near-term reversal for the Swissy. Indeed, the pair has largely been resisting the uptick in USD sentiment that characterised the prior sessions, resulting in some long wicks on the daily chart's candles.

One factor that could militate somewhat against further slides is the Parabolic SAR reading. Currently signalling a bullish bias, the indicator could be interpreted as a bellwether for the embattled USDCHF. Fortunately, in this context, it may not be indicative of an end to the recent slew of losses. Rather, it is suggestive of a near-term moderation that will likely come to an end as the pair approaches the intersection of the 50.0% Fibonacci level and the upside constraint of the channel.

After this moderation, losses should, at worst, extend to around the 0.97 handle which approximately coincides with the 78.6% Fibonacci retracement. The journey to this point will be assisted by the general malaise surrounding the market, currently strengthening haven investments such as gold, the JPY, and the CHF. What's more, this general uncertainty is unlikely to evaporate anytime soon given the rather torrid start to Trump's presidency.

Ultimately, keep an eye on the Swissy as it could provide some rather large swings even as it continues its long-term downtrend. Specifically, look to developments from the Trump administration which is likely to inspire some day to day peaks and troughs within the confines of the channel structure. However, to avoid being caught out by any breakouts, also stay abridged of any economic data pertinent to the pair, especially as it nears the upper and lower constraints.

Market movers today

Today, German industrial production for December is set to be released. Industrial production was solid throughout October and November, with 0.5% and 0.4% monthly increases, respectively. However, factory orders saw a monthly decline in November, following October's strong increase, which indicates declining industrial production in December. Thus, we estimate the December figure will show a monthly decline of 0.4%.

Chinese FX reserve data due to be released this morning is likely to attract some attention, as we saw significant movements in the Chinese currency in January.

The ECB's Jens Weidmann speaks in Mainz.

Selected market news.

Risk-off sentiment hit the European fixed income market yesterday and particularly France and Italy came under strong pressure. The 10-year yield-spread against Germany surged to the widest level since 2012 for France and 2014 for Italy, respectively.

The reason is the rising political risks in Europe, where focus is on France and the growing concerns that Marine Le pen could win the French Presidential election after the Francois Fillon ‘fake job' scandal. The ‘excuse' or explanation from Fillon yesterday afternoon did little to calm the markets.

The sour sentiment in the European government Bond might continue today after the IMF overnight said that Greece is falling short of budget-surplus targets set out under the bail-out agreement. The IMF also said that Greece's debt is unsustainable. However, the ESM/EFSF recently agreed a new debt package with Greece that should ease the debt burden.

Holland is another political hotspot this year. Yesterday, we published a piece on the election in the Netherlands, which is scheduled to be held on 15 March. Here, we argue that although the probability of a PVV government is low, in our view, investor sentiment is unlikely to remain complacent and some risk premium should be included when the election date draws nearer.

Daily Pivots: (S1) 1.0707; (P) 1.0747 (R1) 1.0790; More.....

EUR/USD's decline from 1.0828 extends today but stays above 1.0619 minor support. Intraday bias remains neutral for the moment. As noted before, choppy rise from 1.0339 is seen as a correction. Hence, in case of another rise, upside should be limited by 1.0872 resistance and bring fall resumption eventually. Break of 1.0619 will turn bias to the downside for retesting 1.0339 low.

In the bigger picture, whole down trend from 1.6039 (2008 high) is in progress. Such down trend is expected to extend to 61.8% projection of 1.3993 to 1.0461 from 1.1298 at 0.9115. On the upside, break of 1.1298 resistance is needed to confirm medium term bottoming. Otherwise, outlook will stay bearish in case of rebound.

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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 sellers managed to find their feet early on in the day yesterday, consequently surrendering all of Friday's gains. It was only once price struck the top edge of a H4 demand base coming in at 1.0684-1.0709 (houses the 1.07 handle) going into the US segment did we see the tables begin to turn. It may be worth noting here that this H4 demand area is reinforced by a daily support level drawn from 1.0710 that stretches as far back as March 2015.

While the buyers may be growing confidence, one thing to keep in mind here is that weekly action recently shook hands with a weekly resistance level seen at 1.0819. With that being the case, here is our two cents' worth on the direction this market may head today/tomorrow:

Ideally, what we'd like to see happen is the bulls continue bidding prices higher, and form a H4 AB=CD approach in the direction of 1.08. 1.08, coupled with February's opening level at 1.0801, a H4 Quasimodo resistance at 1.0812, a H4 trendline resistance extended from the high 1.0873 and also the weekly resistance mentioned above at 1.0819 is a stable enough zone to consider shorts from (yellow area). Still, there is a possibility that price may possibly fake through this H4 sell area to tap the daily resistance at 1.0850 and maybe even the 2016 yearly opening level at 1.0873 (sits above the current weekly resistance). To that end, opting to wait for a reasonably sized H4 bearish candle to take shape here before placing an order is, in our view, the better/safer route to take.

A second scenario, given the position of price on the weekly timeframe, is a breakdown through the current H4 demand zone. This would likely open up the trail south to a H4 trendline support taken from the low 1.0589, which is planted within daily demand seen at 1.0589-1.0662.
Our suggestions: Unless price comes into contact with the 1.08 band today, or breaks below the current H4 demand and retests the area as a resistance, we'll likely remain flat during today's sessions.

Data points to consider: There are no scheduled high-impacting news events on the docket today relating to these two markets.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: 1.0819/1.08 ([wait for a reasonably sized H4 bear candle to form before looking to execute a trade] stop loss: ideally beyond the trigger candle). Watch for H4 price to engulf the H4 demand at 1.0684-1.0709 and retest the area as resistance.

GBP/USD

For those who read Monday's report you may recall that our desk highlighted the possibility of a bullish reaction being seen from the 1.2390/1.2427 H4 zone marked in yellow. Comprised of a H4 support at 1.2427, a psychological level at 1.24 and a H4 trendline support drawn from the high 1.2432, the pair, as demonstrated on the H4 chart, did manage to catch a bid from the top edge of this barrier as the US opened their doors for business. While the bounce has rallied around 50 pips already, there's a chance that price will likely tap the 1.25 number today, followed closely by December's opening level at 1.2514. Our reasoning behind this simply comes down to the fact that although the GBP has declined for three consecutive days now, it is situated within the walls of a daily support area chalked in at 1.2510-1.2415. On the other side of the coin though, let's also take into consideration that weekly price is selling off from a weekly Quasimodo resistance level at 1.2673, which happens to show room for further selling to the 2017 yearly opening level at 1.2329.

Our suggestions: As of current prices, neither a long nor short seems attractive at this time. A short from the 1.25 region, while it would place you in-line with weekly flow, it simultaneously positions you against potential daily buyers! The same goes for a buy from the above noted H4 yellow buy zone. Buying from here places you alongside daily buying, but at the same time against weekly selling. What makes this area slightly more risky, in our opinion, is also the fact that it has already been tested once, thus it could potentially be much weaker now.

Data points to consider: There are no scheduled high-impacting news events on the docket today relating to these two markets.

Levels to watch/live orders:

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

AUD/USD 

Weighed on heavily by disappointing Australian retail sales data yesterday, the commodity-driven currency tapered off from the H4 channel resistance band drawn from the high 0.7569. Evident from the H4 chart, Monday's downside move erased all of Friday's gains, and currently looks to be on course to attack the other side of the H4 channel taken from the low 0.7449.

Building a case for a potential buy trade here we have the following converging structures forming a buy zone (marked in yellow) around 0.7557/0.76: a round number at 0.76, a H4 61.8% Fib at 0.7582 and February's opening level at 0.7577. On top of this, we also have the top edge of a daily support area at 0.7581 bolstering the above noted H4 buy zone. This area will remain valid as long as price does NOT connect with the 0.77/0.7720 (daily resistance) beforehand.

Our suggestions: Dependent on how the Reserve Bank of Australia conducts itself today, although there is no change expected at this meeting, our desk favors the 0.7557/0.76 region for buys today. Given the confluence surrounding this H4 area, one may consider entering here without waiting for additional confirmation. To give the trade room to breathe, however, we'd look to place stops around the 0.7570 mark. As for take-profit targets, we typically look to take some off the table at the closest H4 supply (in this case) formed on approach.

Data points to consider: The RBA will announce its benchmark interest rate today at 3.30am.

Levels to watch/live orders:

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

AUD/USD

Weighed on heavily by disappointing Australian retail sales data yesterday, the commodity-driven currency tapered off from the H4 channel resistance band drawn from the high 0.7569. Evident from the H4 chart, Monday's downside move erased all of Friday's gains, and currently looks to be on course to attack the other side of the H4 channel taken from the low 0.7449.

Building a case for a potential buy trade here we have the following converging structures forming a buy zone (marked in yellow) around 0.7557/0.76: a round number at 0.76, a H4 61.8% Fib at 0.7582 and February's opening level at 0.7577. On top of this, we also have the top edge of a daily support area at 0.7581 bolstering the above noted H4 buy zone. This area will remain valid as long as price does NOT connect with the 0.77/0.7720 (daily resistance) beforehand.

Our suggestions: Dependent on how the Reserve Bank of Australia conducts itself today, although there is no change expected at this meeting, our desk favors the 0.7557/0.76 region for buys today. Given the confluence surrounding this H4 area, one may consider entering here without waiting for additional confirmation. To give the trade room to breathe, however, we'd look to place stops around the 0.7570 mark. As for take-profit targets, we typically look to take some off the table at the closest H4 supply (in this case) formed on approach.

Data points to consider: The RBA will announce its benchmark interest rate today at 3.30am.

Levels to watch/live orders:

• Buys: 111.36 ([pending order] stop loss: 110.83).
• Sells: Flat (stop loss: N/A).

USD/CAD:  

Bolstered by an overall stronger dollar, the USD/CAD exploded to the upside during the course of yesterday's London morning segment. As you can see from the H4 chart, the pair ended the day aggressively whipsawing through a H4 supply area at 1.3123-1.3093 and closed out just below the 1.31 boundary. What this recent up move also accomplished was bringing the daily supply zone at 1.3169-1.3116 into the picture, which happens to support the above noted H4 supply zone.

Ultimately, for our team to become buyers in this market, the H4 mid-way resistance level at 1.3150 will need to be consumed. This would not only likely confirm bullish strength from the current weekly demand area at 1.3006-1.3115, but also open the doors up to 1.32 and possibly beyond. In regards to selling this pair today, there's room seen on the H4 chart for the candles to stretch down to the H4 mid-way support at 1.3050, followed closely by February's opening base at 1.3039.

Our suggestions: To our way of seeing things, an intraday short could be possible today from the 1.31 region. However, we would advise waiting for a lower-timeframe sell signal to form before pulling the trigger, as selling against potential weekly buyers (see above) can be a very risky play indeed! Apart from this, as mentioned above, a H4 close above 1.3150 would need to take shape before we look to buy into this market.

Data points to consider: Canadian trade balance report scheduled for release at 1.30pm.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: 1.31 region ([waiting for a lower-timeframe signal to form is advised prior to pulling the trigger] stop loss: dependent on where one confirms this area).

USD/CHF

Beginning with the weekly timeframe this morning, the Swissy probed the underside of a weekly resistance yesterday at 0.9943, following last week's correction off the weekly trendline support etched from the low 0.9443. Turning our attention to the daily timeframe, we now have two back-to-back daily selling wicks printed at the underside of the aforementioned weekly resistance. This, alongside room seen for the pair to drop down as far as daily support at 0.9841 could very well spark further selling in the days ahead.

While selling the daily bearish candles is tempting, the H4 timeframe seems to be throwing up a red flag! By selling this market, the H4 bears would have to contend with the possibility that the 0.99 handle along with February's opening level at 0.9899 could put the brakes on any downside moves today! Additionally, even with a break below these H4 barriers, H4 demand at 0.9832-0.9865 is seen just below, which happens to merge with the daily support level discussed above at 0.9841.

Our suggestions: In the absence of clear price action, the desk has come to a consensus that remaining flat could very well be the safer route to take.

Data points to consider: There are no scheduled high-impacting news events on the docket today relating to these two markets.

Levels to watch/live orders:

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

DOW 30

US equities fell sharply going into yesterday's London lunchtime, but, as you can see, managed to recover relatively quickly after bottoming just ahead of the 20000 mark amid the US open. Despite this, we can see that equity prices are little changed this morning. On the H4 chart, the next upside target, apart from Monday's high point at 20091, is a H4 Quasimodo resistance level fixed at 20125. To the downside, we not only have the 20000 neighborhood representing potential support, there's also a nearby H4 support at 19989, followed closely by daily support penciled in at 19964.

The other key thing to note in this market is that although the DOW closed marginally in the red last week, the unit chalked in a nice-looking weekly bullish tail that missed clipping the 2017 yearly opening level at 19769 by only a few points. In view of this, there are absolutely no weekly resistance levels in this market right now. Therefore, the best we can do for the time being is continue looking to ‘buy the dips'.

Our suggestions: Regardless of the weekly chart (see above), however, the buyers will need to overcome daily supply at 20138-20075 before buying this market medium term is made possible. With this in mind, we unfortunately do not see anything with ‘trade me' written on it at the moment. Therefore, we'll remain on the sidelines and wait for further developments.

Data points to consider: There are no scheduled high-impacting news events on the docket today that will likely affect the US equity market.

Levels to watch/live orders:

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

GOLD

As you can see from the charts this morning, the gold market continued to accelerate to the upside yesterday. This was likely helped by the US dollar index topping out just ahead of a H4 resistance at 100.26.

At the time of writing, we believe the yellow metal to be currently underlining overbought conditions. To put it differently, the H4 candles are presently trading within a H4 AB=CD (see black arrows) sell zone comprised of both the 127.2%/161.8% Fib extensions (yellow area – 1232.9/1241.7). Supporting a downside move from this area is also the fact that the top edge is strengthened by a weekly resistance level pegged at 1241.2. With that being the case, there may be trouble ahead for traders who bought into the breakout above daily supply at 1232.9-1224.5!

Our suggestions: For us personally, we have chosen to wait and see if bullion can stretch a little higher into the above noted H4 sell zone, before looking to short. Ideally, the closer the better to the weekly resistance at 1241.2! In addition to this, our trigger to sell will be on the basis that a reasonably sized H4 bear candle forms. Granted, this will by no means guarantee a winning trade, but what it will do is show seller intent within a high-probability reversal zone.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: 1241.7/1232.9 ([wait for a H4 bear candle to form within the upper limit of this zone before looking to execute a trade] stop loss: ideally beyond the trigger candle).

Currency pair EUR/USD

The EUR/USD completed a bearish turn at the 88.6% Fibonacci resistance and broke below a support trend line (dotted blue), which could be part of a bearish wave 3 (purple). The most momentum should be expected if price manages to break below the next support trend line (blue).

The EUR/USD completed a wave 2 pullback (purple).Price could be in a wave 3 (blue) if it manages to break below the support trend line (green). A break above the 100% level of wave 2 vs 1 invalidates the wave count.

Currency pair GBP/USD

The GBP/USD is building a correction between support (green) and resistance) which is most likely a wave 4 (purple). At the moment a larger ABC (blue) correction seems likely within wave 4 (purple).

The GBP/USD price action seems to be in a wave A (purple) and a break below support (blue) could indicate a continuation towards the Fibonacci levels of wave 5 vs 1+3. A break above resistance (orange) could start wave B (purple). The Fibonacci levels of wave B (purple) should become resistance but the structure is invalidated if price breaks above the 100% Fibonacci level.

Currency pair USD/JPY

The USD/JPY is building a retracement back to the Fibonacci levels of wave 4 (purple). The 38.2% and 50% are likely support levels to complete a wave 4 (purple).

The USD/JPY broke below the support trend line (dotted blue) and has completed the bullish ABC (orange) zigzag within wave X (brown). Price could now be building a bearish ABC zigzag (orange).