Sample Category Title
Gold – Extended Bears Took Out Strong Support at $1212
Spot Gold remains under strong pressure on increased expectations of Fed rate hike next week.
Today's extension of past two-days strong fall took out important support at $1212 (Fibo 61.8% of $1180/$1263 upleg, reinforced by 100SMA).
Daily close below here is needed to confirm bearish continuation that eyes immediate support at $1204 (55SMA) and psychological $1200 level (also Fibo 76.4% retracement).
Further downside would look for $1191 (top of daily Ichimoku cloud that twisted on 02 Mar) that may attract extended weakness on break.
Strongly oversold slow stochastic suggests that bears may run out of stem on approach to $1200 support, however, strong bearish sentiment is expected to limit upside action, with $1212 marking immediate barrier and former strong support at $1222, now reverted to resistance, seen ideally capping.
Res: 1228; 1238; 1243; 1250
Sup: 1222; 1216; 1212; 1203
USDJPY – Has it Got a New Lease of Life?
Just as it looked as though USDJPY was sleepwalking into bearish territory, it would appear the pair has found a new lease of life just in the nick of time.
Following in the footsteps of EURJPY and GBPJPY, it looked as though USDJPY was about to break below the Ichimoku cloud, taking it into bearish territory for the first time since the start of October (barring a brief dip below on 9 November).
Instead the pair could be heading higher once again having rallied off the bottom of the cloud to trade around 0.5% higher on the day and 100 pips up off the lows.
Whatever the trigger for the move - weaker GDP data from Japan overnight, weaker economic sentiment figures, stronger global risk appetite on the day - the only question that matters is whether it's sustainable or a short term shot in the arm that precedes a break below the cloud?
The first sign that the rally may have found new life again is the break of a short term trend line - 19 January highs - although this in itself is far from a clear signal. A much stronger sign would come from a break above 115 which would see the pair move back above the cloud and take out the 15 February and 3 March peaks and end the series of lower highs in the process.
More broadly speaking, the pair has been roughly range-bound since near the start of the year, with the upper end around 115.50 and lower around 115.50. A break out of this would be a clear sign that the pair has broken out of the consolidation period.
Should this be a break higher then we could be headed back towards 118.50 - which given the fundamental backdrop may make sense - while a break below the cloud would suggest further consolidation at best or a much broader sell-off at worst. The latter still seems quite unlikely at the moment.
Trade Idea Wrap-up: USD/CHF – Buy at 1.0080
USD/CHF - 1.0143
Most recent candlesticks pattern : N/A
Trend : Near term up
Tenkan-Sen level : 1.0139
Kijun-Sen level : 1.0132
Ichimoku cloud top : 1.0147
Ichimoku cloud bottom : 1.0120
Original strategy :
Buy at 1.0080, Target: 1.0200, Stop: 1.0045
Position : -
Target : -
Stop : -
New strategy :
Buy at 1.0080, Target: 1.0200, Stop: 1.0045
Position : -
Target : -
Stop : -
Dollar’s retreat after yesterday’s rise to 1.0171 suggests top has been formed and consolidation below this level would be seen and pullback to 1.0105-10 cannot be ruled out, however, reckon downside would be limited to support at 1.0073 and bring another rise later, above said resistance at 1.0171 would confirm recent erratic upmove from 0.9861 has resumed for further gain towards 1.0200-10 but overbought condition should prevent sharp move beyond previous chart resistance at 1.0248, risk from there is seen for a retreat later.
In view of this, would not chase this rise here and would be prudent to buy dollar on pullback as support at 1.0073 should limit downside. A drop below 1.0065 support would abort and signal top is formed instead, risk weakness to 1.0040-45 but reckon support at 1.0009 would remain intact.
Trade Idea Wrap-up: GBP/USD – Stand aside
GBP/USD - 1.2157
Most recent candlesticks pattern : N/A
Trend : Near term down
Tenkan-Sen level : 1.2174
Kijun-Sen level : 1.2177
Ichimoku cloud top : 1.2242
Ichimoku cloud bottom : 1.2222
New strategy :
Stand aside
Position : -
Target : -
Stop : -
Although cable has fallen again after brief recovery and near term downside risk remains for recent decline to extend further weakness to 1.2120-25 (50% projection of 1.2479-1.2214 measuring from 1.2301), loss of near term downward momentum should prevent sharp fall below 1.2100 and reckon 1.2070-75 would hold from here, risk from there has increased for a rebound to take place later.
In view of this, would not chase this fall here and would be prudent to stand aside in the meantime. Above 1.2180-85 would bring test of 1.2210-15, however, break there is needed to signal an intra-day low is formed, bring correction to 1.2245-55 but price should falter well below resistance at 1.2301 and bring another selloff.
Trade Idea Wrap-up: EUR/USD – Buy at 1.0525
EUR/USD - 1.0557
Most recent candlesticks pattern : N/A
Trend : Sideways
Tenkan-Sen level : 1.0554
Kijun-Sen level : 1.0562
Ichimoku cloud top : 1.0587
Ichimoku cloud bottom : 1.0582
Original strategy :
Buy at 1.0525, Target: 1.0625, Stop: 1.0490
Position : -
Target : -
Stop : -
New strategy :
Buy at 1.0525, Target: 1.0625, Stop: 1.0490
Position : -
Target : -
Stop : -
Although the single currency has remained under pressure after retreating from 1.0640 and near term downside risk remains for weakness, reckon downside would be limited to 1.0525-30 and bring another rebound later, above 1.0600-05 would bring test of said resistance at 1.0640 but break there is needed to extend the erratic rise from 1.0493 low for retracement of early decline to 1.0660-65 (50% Fibonacci retracement of 1.0829-1.0493) and possibly towards resistance at 1.0680, however, price should falter well below 1.0700-05 (61.8% Fibonacci retracement).
In view of this, we are looking to buy euro on dips. Below 1.0510 would abort and risk retest of 1.0493 but only break there would shift risk back to the downside and signal recent decline from 1.0829 has resumed for further selloff to 1.0470 and then towards previous support at 1.0454.
Trade Idea Wrap-up: USD/JPY – Buy at 114.20
USD/JPY - 114.51
Most recent candlesticks pattern : N/A
Trend : Near term up
Tenkan-Sen level : 114.20
Kijun-Sen level : 114.19
Ichimoku cloud top : 114.16
Ichimoku cloud bottom : 113.92
New strategy :
Buy at 114.20, Target: 115.20, Stop: 113.85
Position : -
Target : -
Stop : -
As the greenback found renewed buying interest at 113.61 and has staged a strong rebound, suggesting the rise from 111.69 is still in progress and may extend further gain towards previous chart resistance at 114.96, however, break there is needed to signal early erratic rise from 111.59 low has resumed and extend gain towards another previous resistance at 115.38 but price should falter below previous resistance at 115.62, bring retreat later.
In view of this, we are looking to buy dollar on pullback as the Kijun-Sen (now at 114.19) should limit downside and bring another rise later. Below 113.95 support would signal an intra-day top is formed instead, risk weakness towards said strong support at 113.56-61 which is likely to hold from here.
Crude Oil (CL_F) Short-term Elliott Wave View
Short term Elliottwave view in Crude Oil (CL_F) suggests that the instrument is currently correcting cycle from 11/14/2016 low (42.21) in 3, 7, or 11 swing before the next leg higher. The decline starting from 2/23 high (54.94) is unfolding as a double three Elliottwave structure where wave ((w)) ended at 52.54 and wave ((x)) ended at 53.80. Near term focus is on 52.47 – 52.64 area to complete wave (w) of ((y)), then Crude Oil should bounce in wave (x) of ((y)) before turning lower again towards as low as 49.34 – 50.41 area, provided that pivot at 53.8 high remains intact. We don't like selling the proposed pullback and expect the next buying area of 49.34 – 50.41 to find dip buyers for the next leg higher or at least a 3 waves bounce.
CL_F 1 Hour Chart
New Home Construction Starts 2017 on a High Note
Canadian housing starts remained relatively stable at a strong 210K annualized units in February, with the 6-month moving average now standing at 205K, which is the fastest trend pace of new home construction since November 2015.
On a regional basis, strong m/m gains in both the Prairies (led by a doubling in housing starts in Edmonton) and Quebec, were offset by a 14K drop in Ontario, while starts were relatively stable everywhere else. Ontario starts eased off of a record pace of 98K units in January, and were still strong at 83K in February. Most of Ontario's strength in recent months has been in the single-detached home market, which climbed to a decade high in February and accounted for 43% of new housing starts.
Housing starts in Vancouver were down 45% year-over-year in February, but have now settled at a more normal pace of housing construction, following last year's unsustainable, record pace.
Key Implications
Housing starts have gained considerable momentum over the first two months of 2017, but this may in part be due to an unusually warm winter allowing projects to start earlier than usual. As winters have been getting more mild, starts have been showing more strength in winter months than has historically been the case.
Still, the strength in Ontario is less surprising, with builders responding to tight market conditions and the resulting 27% year-over-year appreciation in the average home price over the last year. A hot pace of construction is expected to continue throughout most of the year. The number of units under construction in Ontario (both in level and per 1,000 of persons) is near a record high. The eventual completion of these units will help take some steam out of Ontario home price growth, but this may be a story for 2018 and beyond.
The gains in the Prairie regions in recent years has been more of a surprise given the rising inventory of newly completed and unabsorbed units. As such, even as housing demand appears to be turning a corner in some of the oil-plagued regions, home price growth is likely to remain more modest along with rising inventories of new homes available for sale.
While new home construction in Ontario is expected to remain hot this year, the combination of changes to seasonal patterns, rising mortgage rates and high inventory levels in the Prairie Regions and a moderation in housing demand in Vancouver will likely bring housing starts back to a pace of close to 190K to 195K for the remainder of the year.
Canadian Housing Starts Strong again in February
- Housing starts inched up to 210.2k in February from an already-elevated 208.9k units in January.
The monthly increase was led by a 21.5% jump in Quebec urban starts (in large part reflecting a 21.7% jump in the multiple-unit component as a number of large condo buildings in Montreal reportedly began construction). Starts declined 14.9% in Ontario but that only retraced a portion of the outsized 74% surge over the prior two months. Starts inched higher in all other regions, including a 23.3% gain in the prairies, 14.6% increase in Atlantic Canada and a 6.8% gain in B.C. On a year-over-year basis, starts are still down sharply in B.C. but up in all other regions of the country.
Our Take:
Homebuilding has been strong to start 2017 with the third consecutive 200k+ reading in February marking the first such streak since October 2012. Although strength has been weighted to areas where housing markets have been tighter (ie. Ontario) with offset coming from areas where markets have cooled (B.C.), the aggregate level of starts nationally is nonetheless well-above most (including our own) estimates of the underlying pace of household formation. Unseasonably warm winter temperatures in much of the country probably played some role in boosting building activity over January and February and we expect recent moderation in resale activity, driven by a combination of new macro-prudential regulations and stretched affordability conditions, and a modest up-drift in lending rates will ultimately be reflected in slower homebuilding ; however, recent permit issuance (230k residential building permits were issued in January, released separately this morning, and the average over the last four months has been a whopping 238k per month) suggests that the strong pace of starts could also persist over the next couple of months.
Trade Idea: EUR/GBP – Buy at 0.8600
EUR/GBP - 0.8672
Recent wave: Major double three (A)-(B)-(C)-(X)-(A)-(B)-(C) is unfolding and 2nd (A) has possibly ended at 0.6936.
Trend: Near term down
Original strategy :
Buy at 0.8600, Target: 0.8700, Stop: 0.8560
Position : -
Target : -
Stop : -
New strategy :
Buy at 0.8600, Target: 0.8700, Stop: 0.8560
Position : -
Target : -
Stop : -
As the single currency has continued trading with a firm undertone after breaking resistance at 0.8646, adding credence to our view that the fall from 0.8857 is still in progress and upside bias remains for the rally from 0.8403 low to extend gain to 0.8740-50, however, loss of near term upward momentum should prevent sharp move beyond there and price should falter well below 0.8780, risk from there is seen for a retreat to take place later.
In view of this, would not chase this rise here and we are looking to buy euro on pullback as 0.8600 should limit downside. Below support at 0.8547 would suggest first leg of rebound from 0.8403 has ended, bring weakness to 0.8520-25 but support at 0.8509 should contain downside and bring another rise later.
Our preferred count is that, after forming a major top at 0.9805 (wave V), (A)-(B)-(C) correction is unfolding with (A) leg ended at 0.8400 (A: 0.8637, B: 0.9491 and 5-waver C ended at 0.8400. Wave (B) has ended at 0.9413 and impulsive wave (C) has either ended at 0.8067 or may extend one more fall to 0.8000 before prospect of another rally. Current breach of indicated resistance at 0.9043 confirms our view that the (C) leg has ended and bring stronger rebound towards 0.9150/54, then towards 0.9240/50.
