Articles

EUR/USD:

Outlook unchanged.

Monday observed minimal price change, with the EUR/USD ranging no more than 25 points amid a light economic calendar and likely a cautious tone ahead of this week’s ECB minutes and speakers.

On account of yesterday’s lacklustre activity, the area where channel resistance (taken from the high 1.1263) and the local trend line support-turned resistance (1.1166) on the H4 timeframe merges remains of interest today for potential selling opportunities (green). The next downside target from this point, aside from yesterday’s low 1.1150, can be found at a Quasimodo support drawn from 1.1130.

On a wider perspective, however, buyers and sellers remain trading within the parapets of a long-standing demand zone at 1.1119-1.1295 on the weekly timeframe by way of a bearish engulfing formation. In the event a break of the aforesaid demand is observed, traders’ crosshairs will likely be fixed on the 2016 yearly opening level at 1.0873. This, according to our technical studies, is a strong possibility, given the long-term trend facing a southerly bearing since topping in early 2018.

The central focus on the daily timeframe is demand parked at 1.1075-1.1171, thanks to a rejection off long-term channel resistance taken from the high 1.1569. Although the demand is glued to the underside of the current weekly demand area, traders are encouraged to pencil in the next downside target on the daily scale in the event we push lower: a particularly interesting area of demand coming in at 1.0860-1.0954 (not visible on the screen), which happens to envelope the 2016 yearly opening level mentioned above on the weekly timeframe at 1.0873.

Areas of consideration:

Longer term, although the overall trend is facing south, this market offers a difficult short owing to demand seen on the weekly and daily timeframes.

Short-term trading, though, is likely to pop lower, at least until shaking hands with H4 Quasimodo support mentioned above at 1.1130, hence the interest in 1.1184ish: the H4 area where channel resistance (taken from the high 1.1263) and the local trend line support-turned resistance (1.1166) merges. A test of this area in the form of a H4 bearish candlestick signal, therefore, is certainly something to keep an eye on today (entry and risk can be structured according to the candlestick’s rules of engagement).

Today’s data points: FOMC Members Evans and Rosengren Speak.

GBP/USD:

Outlook unchanged.

In similar fashion to the EUR/USD, cable also emphasised a dreary tone Monday, sporting a range of no more than 45 points as the market likely awaits its next round of developments on the Brexit front.

Last week’s action on the weekly timeframe witnessed the GBP/USD extend losses and finish down more than 250 points by the close. Moulded by way of a near-full-bodied weekly bearish candle, the unit marginally engulfed its 2019 yearly opening level at 1.2739 and now faces a possible test of demand plotted close by at 1.2365-1.2615.

Assessing the daily timeframe’s structure, five consecutive bearish daily candles pencilled their way on to the page in recent trading, each closing near its respective low. As you can see, the market ended the week closing within touching distance of a support level drawn from 1.2697, after engulfing support at 1.2839 (now acting resistance) in strong fashion. It might also be of interest to some traders to note recent movement overthrew the 200-day SMA, indicating sentiment faces a downside trajectory at present.

Price action on the H4 timeframe wrapped up Monday’s session within striking distance of a mid-way Quasimodo support level at 1.2708, closely shadowed by the 1.27 handle. Another key thing to note here is the daily support level circulates just south of 1.27 at 1.2697. Therefore, between 1.2697/1.2708, we have a potential base of support to work with (green). In the event further selling is seen, however, we could head for H4 demand pencilled in at 1.2606-1.2646 (not visible on the screen), which captures the top edge of weekly demand mentioned above at 1.2365-1.2615.

Areas of consideration:

Although the market has been incredibly bearish of late, a bounce from the green H4 support zone at 1.2697/1.2708 may still come to fruition early week. As round numbers tend to entice fakeouts, though, waiting for additional confirmation to form might be an idea. A H4 bullish candlestick signal, for example, is likely enough to attract buyers into the market. Not only does a candlestick pattern help identify buyer intent, it also provides traders entry and risk levels to work with. 

Today’s data points: UK Inflation Report Hearings; FOMC Members Evans and Rosengren Speak.

AUD/USD:

The Australian dollar found broad support vs. the majority of its major rivals at the beginning of the week, a reaction to local elections: a surprise win for the Liberal-National coalition.

Price action, however, swiftly attempted to fill the weekend gap, though encountered support off the 0.69 handle in the shape of a strong buying tail. In spite of the positive start to the week, the H4 candles are struggling to overthrow nearby resistance: a channel support-turned resistance line extended from the low 0.6988. A violation of this barrier would, according to our technical reading, likely witness an approach towards resistance pencilled in at 0.6964.

In terms of higher-timeframe structure, weekly flow remains within last week’s range. Areas to have on the watchlist on this scale are support drawn from 0.6828 and the 2019 yearly opening level at 0.7042 as resistance. Daily flow, on the other hand, shows resistance at 0.6907 (now acting support) was engulfed in recent trade, potentially setting the stage for a run towards resistance at 0.7003.

Areas of consideration:

On account of the overall technical picture, traders are somewhat cornered at present. H4 price is sandwiched between 0.69 as support and the aforementioned channel support-turned resistance. However, as daily price appears to be establishing ground above 0.6907, this could be an indication we’re likely to break above the noted H4 channel line and head for at least H4 resistance mentioned above at 0.6964.

In the event our analysis is accurate, a possible (as per the black arrows) retest of either the H4 channel line or the 0.69 level may come to fruition. For additional confirmation, traders could  opt to wait and see if the H4 candles chalk up a bullish candlestick signal before pulling the trigger – think hammer or bullish engulfing pattern (entry/risk can be defined according to this structure).

Today’s data points: AUD Monetary Policy Meeting Minutes; FOMC Members Evans and Rosengren Speak.

USD/JPY:

Since Wednesday last week, the USD/JPY’s H4 candles have been compressing within an ascending channel formation (109.15/109.96). Of late, price action also conquered the 110 handle to the upside and looks poised to continue exploring higher ground, targeting April’s opening level at 110.94, followed closely by 111.

The story on the weekly timeframe has price action rebounding off its 2019 yearly opening level at 109.68 in the mould of a reasonably attractive hammer pattern. Continued bidding could ultimately witness the pair knock on the door of its 2018 yearly opening level at 112.65, whereas a move to the downside has support on the radar at 108.13.

Leaving daily demand at 107.98-108.59 unchallenged, price action on the daily timeframe appears poised to approach a 61.8% Fibonacci resistance at 111.10. What gives this Fib level extra credibility is a merging trend line support-turned resistance etched from the low 107.77 and the 200-day SMA (yellow). Therefore, for traders looking to buy the recently formed hammer pattern on the weekly timeframe, it might be worth noting possible resistance could form from the 111.10ish region.

Areas of consideration:

In order to become buyers above 110 on the H4 timeframe, one option is to wait and see if the H4 candles retest the number, preferably at the point it merges with H4 channel support highlighted above (green).

Traders might also want to consider waiting and seeing if the H4 candles formulate a bullish candlestick signal off the psychological boundary. This helps confirm buyer intent and also gives credence to higher-timeframe direction. Upon a successful rejection off 110, a long on the close of the selected candle is an idea, with a protective stop-loss order plotted beneath its lower shadow.

Today’s data points: FOMC Members Evans and Rosengren Speak.

USD/CAD:

Outlook unchanged.

The US dollar kicked off the week on negative footing, opening 20 points lower vs. its Canadian counterpart. Despite somewhat of a lively start, the pair had a difficult time setting its next short-term direction amid a lifeless economic calendar and Canadian banks closing in observance of Victoria Day.

Since the latter part of April, the H4 candles have been busy carving out a 100-point+ range between May’s opening level at 1.3393 and the round number 1.35. However, within the confines of this zone, it may interest some traders to note price action is currently rebounding from a trend line support extended from the low 1.3274.

On a wider context, longer-term flows broke out above the 2017 yearly opening level at 1.3434 on the weekly timeframe, though has so far failed to breed much follow-through momentum. Areas outside of this level to be aware of fall in around the 2018 yearly high of 1.3664, and a trend line support etched from the low 1.2247.

A closer reading of price action shows the daily candles continue to feed off support drawn from the top edge of a pennant pattern (1.3467). Although the traditional price target (calculated by taking the distance from the beginning of the preceding move and adding it to the breakout price) remains on the chart at 1.3768 (black arrows), the next upside target from a structural standpoint falls in around resistance at 1.3645.

Areas of consideration:

In light of yesterday’s lacklustre performance, the research team’s outlook echoes thoughts put forward in Monday’s briefing.

1.34/May’s opening level at 1.3393 is an area of interest on the H4 timeframe for possible longs. Not only does the base represent the lower edge of the current H4 range, it is also further reinforced by the top edge of the daily pennant formation highlighted above. For conservative traders, waiting for a H4 bullish candlestick to print from this region will help identify buyer intent and also serve as a structure to base entry and risk levels from.

In the event we fail to reach 1.34 and turn higher, nonetheless, the market may eventually observe a H4 close form above 1.35. Should this occur, traders have the choice of either buying the breakout candle and placing stop-loss orders beneath its tail, or waiting and seeing if a retest scenario takes shape and entering on the back of the rejection candle’s structure (the more conservative approach). The next upside target on the H4 scale can be seen around 1.3570 (not seen on the screen), though according to the higher timeframes we could be heading much higher.

Today’s data points: FOMC Members Evans and Rosengren Speak.

USD/CHF:

The Swiss franc was among the top performers Monday.

The USD/CHF, despite rising for four consecutive sessions, closed lower in recent trade, down 0.25%. Seeing the H4 candles reclaim 1.01 should not come as a surprise, considering buyers failed to prove themselves above this figure, along with a robust daily resistance zone between 1.0102/1.0140 visible overhead.

Further selling from current price has H4 support at 1.0053 in sight, eventually followed by 1.0000 (parity). Further rejection off the said daily resistance zone, nonetheless, has last Tuesday’s low at 1.0050 in sight, followed then by a possible run towards support fashioned at 0.9986.

It might also be worth sharing a note on the weekly timeframe. The buck’s retreat from the 2019 high 1.0236 set towards the end of May continued last week, though downside momentum decreased considerably and formed a nice-looking hammer formation off support at 1.0110. For that reason, there are likely some buyers entering this market, though likely hampered by the collection of daily resistance highlighted above. A failure of the aforementioned weekly support positions trend line support (etched from the low 0.9187) in the firing range.

Areas of consideration:

As we’ve formulated a H4 close beneath 1.01, a retest to the underside of this number is likely of interest to some traders, targeting H4 support at 1.0053 as the initial port of call. Ultimately, it is down to the individual trader to decide whether a short here is worthy of the risk. Conservative traders may opt for additional confirmation to take shape, be it a candlestick signal, an MA crossover or even lower-timeframe confirming structure: support-turned resistance retest. This not only helps identify seller intent, it’ll also help provide traders with entry and risk levels to work with.

Today’s data points: FOMC Members Evans and Rosengren Speak.

Dow Jones Industrial Average:

Outlook unchanged.

US equities turned south Monday amid on-going conflict between the Chinese media giant Huawei and the US government. The Dow Jones Industrial Average ended lower by 0.33%; the S&P 500 concluded the session down by 0.67 and the tech-heavy Nasdaq settled at -1.69%.

Despite the negative start to the week, the overall technical structure of the DJIA remains unchanged.

Weekly flow shows demand marked in yellow at 25217-25927, although unlikely to be considered a strong area on this timeframe owing to limited momentum produced from the base, remains in the fold. However, traders may also want to acknowledge weekly price finished the week in the form of a hammer candlestick pattern. In the event this entices buyers into the market, we could be looking at a run towards the 26668 April 22 high, while a move to the downside has the 2018 yearly opening level to target at 24660.

Last week observed the index shake hands with notable support at 25385 on the daily timeframe, which happened to intersect with the 200-day SMA. Technically, this provided a platform for buyers to enter the market, with the next upside point of interest falling in at resistance fixed from 26139.

H4 flow has the candles rebounding from demand at 25540-25645, poised to possibly run towards a Quasimodo resistance at 25957, trailed closely by April’s opening level at 26026. Beyond the current demand, the research team also has daily support mentioned above at 25385 sited on the chart.

Areas of consideration:

While there is scope for a push higher on the weekly timeframe, daily price has resistance plotted within touching distance at 26139. On top of this, we also have short-term resistance on the H4 timeframe between 26026 and 25957. This resistance makes the current weekly hammer formation a problematic long, according to our technical studies.

On account of the above, the green area plotted on the H4 timeframe between 26139 (the daily resistance level) and 25957 (the collection of H4 resistances) is a zone worthy of attention this week for shorts. An ideal scenario would be for the H4 candles to chalk up a notable bearish candlestick configuration. Entry can be applied according to the candlestick’s rules, though stop-loss placement may be either above the daily resistance at 26139 (conservative) or above the upper shadow of the candlestick signal (aggressive).

Today’s data points: FOMC Members Evans and Rosengren Speak.

XAU/USD (GOLD):

Outlook unchanged.

Up until now, the price of gold, in $ terms, offered little in terms of market movement, ranging no more than $5. For that reason, technically anyway, Monday’s outlook remains in focus.

Kicking things off from the weekly timeframe, the 2018 yearly opening level at 1302.5 was aggressively challenged last week and held almost to the point. Selling from this angle brought price action back beneath its 2019 yearly opening level at 1282.2 and produced a bearish shooting star pattern. This, by and of itself, has likely garnered the attention of candlestick traders and could play a part in weighing on the market this week towards support coming in at 1260.8.

Sited just north of the weekly support level mentioned above at 1260.8 is a daily support area seen at 1272.5-1261.5. The zone boasts a reasonably solid history and merges with a trend line support taken from the low 1160.3. What’s also notable from a technical perspective is the 200-day SMA appears poised to converge with the said support zone in the near future.

Closer analysis on the H4 timeframe exhibits limited support until reaching demand (green arrow) at 1268.1-1272.3, followed closely by support at 1266.1. Note the current H4 demand area also resides around the top edge of the daily support area at 1272.5-1261.5. Should price turn higher before probing lower, resistance surfaces at May’s opening level drawn from 1282.6 (merges closely with the 2019 yearly opening level mentioned above on the weekly timeframe at 1282.2).

Areas of consideration:

The H4 supply at 1288.9-1284.8, positioned directly above May’s opening level at 1282.6 (and the 2019 yearly opening level on the weekly timeframe at 1282.2) is an area sellers potentially have interest in this week. This is due to the stop-loss orders likely accumulating above May’s opening level, thus providing strong liquidity to sell into.

The H4 demand marked with a green arrow at 1268.1-1272.3 is also a point of interest for longs this week, owing to its connection to the top base of the daily support area at 1272.5-1261.5.

Both areas, according to our technical reading, house considerable strength and are likely to hold should a test (under normal market conditions) be observed. However, for the more conservative traders, they may wish to wait and see how H4 action behaves before pulling the trigger. While this may sacrifice the ‘better’ entry, it’s offset by having additional confluence backing the trade, and therefore a higher probability of moving in favour.

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Global Markets:

• Asian Stock Markets : Nikkei down 0.20%, Shanghai Composite up 1.46%, Hang Seng up 0.08%, ASX up 0.17%
• Commodities : Gold at $1275.05 (-0.18%), Silver at $14.41 (-0.26%), Brent Oil at $72.20 (+0.32%), WTI Oil at $63.48 (+0.43%)
• Rates : US 10-year yield at 2.419, UK 10-year yield at 1.064, Germany 10-year yield at -0.081

News & Data:

• (NZD) Credit Card Spending y/y 4.50% vs 4.50% previous
• (GBP) CB Leading Index m/m -0.50% vs -0.40% previous
• (EUR) Current Account 24.7B vs 24.2B expected
• (EUR) German PPI m/m 0.50% vs 0.40% expected
• (JPY) Revised Industrial Production m/m -0.60% vs -0.90% expected
• (JPY) Prelim GDP q/q 0.50% vs -0.10% expected
• (JPY) Prelim GDP Price Index y/y 0.20% vs 0.20% expected
• (GBP) Rightmove HPI m/m 0.90% vs 1.10% previous

Markets Update:

Asian markets were mixed in morning trade on Tuesday. Chinese stocks rebounded as the U.S. government’s decision to temporarily ease some trade restrictions imposed on Huawei eased trade tension between the U.S. and China.

The Australian market gave up early gains amid fears of an intensifying U.S-China trade war after the U.S. crackdown on Chinese telecom giant Huawei. Tech stocks are among the leading decliners. Investors are also cautious as they look ahead to the release of minutes from the Reserve Bank of Australia’s May 7 monetary policy meeting later in the day.

The Nikkei 225 in Japan were marginally lower by 0.2% in afternoon trade following an earlier slip, as shares of index heavyweight and robot maker Fanuc recovered to see gains. Mainland Chinese shares rose by the afternoon, with the Shanghai composite gaining 1.5% and the Shenzhen component adding 2.1%. The Hang Seng index in Hong Kong rose 0.1%.

In the foreign exchange market, major currencies were on the sidelines for now. The euro was under pressure ahead of the European election this weekend but was little moved at $1.1165, off Monday’s low of $1.1150, its lowest level since May 3. The dollar was little changed at 110.21 yen Monday’s near two-week high of 110.32 yen. The British pound was listless near four-month lows, trading at $1.2730,

Oil prices held near multi-week highs as OPEC indicated it was likely to maintain production cuts while escalating Middle East tensions provided further support.

Upcoming Events:

• 09:30 AM GMT – (GBP) Inflation Report Hearings
• 03:45 PM GMT – (USD) FOMC Member Evans Speaks
• 05:00 PM GMT – (USD) FOMC Member Rosengren Speaks
• 11:45 PM GMT – (NZD) Retail Sales q/q
• 11:45 PM GMT – (NZD) Core Retail Sales q/q
• &more…

EUR/USD:

Weekly gain/loss: -0.67%

Weekly close: 1.1156

Weekly perspective:

Despite trading within the parapets of a long-standing demand zone at 1.1119-1.1295, last week’s flow witnessed strong selling in the shape of a bearish engulfing formation.

In the event a break of the aforesaid demand is observed, traders’ crosshairs will likely be fixed on the 2016 yearly opening level at 1.0873. This, according to our technical studies, is a strong possibility, given the long-term trend facing a southerly bearing since topping in early 2018.

Daily perspective:

The central focus on the daily timeframe is demand parked at 1.1075-1.1171, thanks to a rejection off long-term channel resistance taken from the high 1.1569. While the demand is glued to the underside of the current weekly demand area, traders are encouraged to pencil in the next downside target on the daily scale: a particularly interesting area of demand coming in at 1.0860-1.0954 (not visible on the screen), which happens to envelope the 2016 yearly opening level mentioned above on the weekly timeframe at 1.0873.

H4 perspective:

A quick recap of Friday’s action shows the single currency entered European hours by way of a retest to the underside of a recently broken trend line support extended from the low 1.1109. Interestingly, this trend line was also bolstered by another trend line support-turned resistance (1.1166).

As the US dollar index picked up steam, this sent the EUR/USD to a session low of 1.1155 into the week’s close. With limited support/demand visible to the left of current price until reaching Quasimodo support at 1.1130, further selling on this timeframe could be in store today/early week. Note also we have another layer of Quasimodo support nearby at 1.1118, followed closely by the 1.11 handle.

Areas of consideration:

Longer term, although the overall trend is facing south, this market is a difficult short owing to demand seen on the weekly and daily timeframes.

Short-term trading, however, is likely to pop lower, at least until shaking hands with H4 Quasimodo support mentioned above at 1.1130. A point of interest (green) on the H4 timeframe for potential selling this week comes in at around 1.1184: the area where channel resistance (taken from the high 1.1263) and the local trend line support-turned resistance highlighted above (1.1166) merges. A retest of this area in the form of a H4 bearish candlestick signal is certainly something to keep an eye on (entry and risk can be structured according to the candlestick’s rules of engagement).

Today’s data points: FOMC Member Clarida Speaks.

GBP/USD:

Weekly gain/loss: -2.20%

Weekly close: 1.2714

Weekly perspective:

A clear G10 laggard last week, sterling extended losses and finished down more than 250 points by the close. Moulded by way of a near-full-bodied bearish candle, the unit marginally engulfed its 2019 yearly opening level at 1.2739 and now faces a possible test of demand plotted close by at 1.2365-1.2615.

Daily perspective:

Assessing the daily timeframe’s structure, five consecutive bearish daily candles pencilled their way on to the page in recent trading, each closing near its respective low. As you can see, the market ended the week closing within touching distance of a support level drawn from 1.2697, after engulfing support at 1.2839 (now acting resistance) in strong fashion.

It might also be of interest to some traders to note recent movement overthrew the 200-day SMA, indicating sentiment faces a downside trajectory at present.

H4 perspective:

Friday witnessed the British pound come under substantial selling pressure amid a broad downturn in sentiment, with Tory and Labour Parties conceding that efforts to cross red lines and compromise on key issues have been exhausted.

Price action on the H4 timeframe wrapped up the week within striking distance of a mid-way Quasimodo support level at 1.2708, closely shadowed by the 1.27 handle. Another key thing to note here is the daily support level circulates just south of 1.27 at 1.2697. Therefore, between 1.2697/1.2708, we have a potential base of support to work with (green). In the event further selling is seen, however, we could head for H4 demand pencilled in at 1.2606-1.2646 (not visible on the screen), which captures the top edge of weekly demand mentioned above at 1.2365-1.2615.

Areas of consideration:

Although the market has been incredibly bearish as of late, a bounce from the green H4 support zone at 1.2697/1.2708 could come to fruition early week. As round numbers tend to entice fakeouts, though, waiting for additional confirmation to form might be an idea. A H4 bullish candlestick signal, for example, might be enough to attract buyers into the market. Not only does a candlestick pattern help identify buyer intent, it also provides traders entry and risk levels to work with.

Today’s data points: MPC Member Broadbent Speaks; FOMC Member Clarida Speaks.

AUD/USD:

Weekly gain/loss: -1.89%

Weekly close: 0.6866

Weekly perspective:

Suffering hefty losses vs. its US counterpart, the Australian dollar, organised as a full-bodied bearish candle, ended the week down more than 130 points. According to the market’s technical position, the next downside target enters the fold at support drawn from 0.6828.

Daily perspective:

Resistance coming in at 0.7003 remained in focus in early trading last week, drawing sellers into the market and eventually dethroning nearby support at 0.6907 (now acting resistance). In similar fashion to the weekly timeframe’s projection, the daily timeframe has its centre line fixed on support at 0.6780 (50 points beneath the weekly timeframe’s next downside barrier).

H4 perspective:

Following four days in negative waters, Friday’s session extended its slide into the fifth day and tested levels not seen since early January. With the 0.69 handle now a distant memory, on-going US/China trade issues continues to weigh on the commodity-linked currency.

In terms of surrounding technical structure, options are limited to the 0.69 resistance, a narrow descending channel pattern (0.7009/0.6942) and the 0.68 handle (not seen on the screen). Support could also form off the 0.6850 point as well.

Areas of consideration:

On account of the technical picture, all three timeframes demonstrate desire to explore lower ground this week, at least until connecting with weekly support highlighted above at 0.6828.

With this being the case, traders may find use in the current H4 channel: selling the upper limit and attempting to ride the trend towards 0.6828 as an initial take-profit zone. Conservative traders might opt to observe price action before pressing the sell button as a breakout of the channel back up to 0.69 is always a possibility. Price action confirmation can take many forms, with the simplest being a bearish candlestick formation, be it on the H4 or lower timeframes. Another idea is waiting for an MA crossover to take shape.

Entry and risk can be plotted according to the selected confirmation technique.

Today’s data points: FOMC Member Clarida Speaks.

USD/JPY:

Weekly gain/loss: +0.11%

Weekly close: 110.05

Weekly perspective:

USD/JPY action managed to eke out marginal gains over the course of last week, consequently breaking a three-week bearish phase. The recovery formed by way of a reasonably attractive hammer pattern off its 2019 yearly opening level at 109.68. Continued bidding could ultimately witness the pair knock on the door of its 2018 yearly opening level at 112.65, whereas a move to the downside has support on the radar at 108.13.

Daily perspective:

Leaving demand at 107.98-108.59 unchallenged, price action on the daily timeframe appears poised to approach a 61.8% Fibonacci resistance at 111.10. What gives this Fib level extra credibility is a merging trend line support-turned resistance etched from the low 107.77 and the 200-day SMA (yellow).

Therefore, for traders looking to buy the recently formed hammer pattern on the weekly timeframe, it might be worth noting possible resistance could form from the 111.10ish region.

H4 perspective:

After failing to sustain gains beyond 110 in early hours Friday, the pair encountered a fresh floor of buying off channel support extended from the low 109.15. Technical support, coupled with the US index trading above weekly resistance at 97.72 and US equities climbing higher, saw the day conclude reclaiming 110+ status.

Although the pair is technically above 110, as well as the higher-timeframe picture exhibiting scope to press north, there are still two cautionary H4 points to consider:

• H4 supply marked in green at 110.26-109.90.
• H4 channel resistance stretched from the high 109.96.

Areas of consideration:

In order to become buyers above 110 early week, traders might want to consider waiting and seeing if the H4 candles formulate a retest off the psychological boundary. This helps confirm buyer intent and also gives credence to higher-timeframe direction. Upon a successful rejection off 110, a long on the close of the candle is an option with a protective stop-loss order plotted beneath its lower shadow.

Today’s data points: FOMC Member Clarida Speaks.

USD/CAD:

Weekly gain/loss: +0.36%

Weekly close: 1.3461

Weekly perspective:

Although longer-term flows broke out above the 2017 yearly opening level at 1.3434, so far price action has failed to generate much follow-through momentum. Areas outside of this level to be aware of fall in around the 2018 yearly high of 1.3664, and a trend line support etched from the low 1.2247.

Daily perspective:

A closer reading of price action shows the daily candles continue to feed off support drawn from the top edge of a pennant pattern (1.3467). Although the traditional price target (calculated by taking the distance from the beginning of the preceding move and adding it to the breakout price) remains on the chart at 1.3768 (black arrows), the next upside target from a structural standpoint falls in around resistance at 1.3645.

H4 perspective:

Technically speaking, the H4 candles remain within a 100-point+ range between May’s opening level at 1.3393 and the round number 1.35.

Price action, however, advanced to a fresh high of 1.3513 in early US hours Friday, its highest level since April 25. Despite this, buyers failed to hold upside momentum and turned lower into the close amid headlines surrounding US/Canada trade negotiations.

Areas of consideration:

1.34/May’s opening level at 1.3393 is an area of interest this week for possible longs. Not only does the base represent the lower edge of the current H4 range, it is also further reinforced by the top edge of the daily pennant formation highlighted above. For conservative traders, waiting for a H4 bullish candlestick to print from this region will help identify buyer intent and also serve as a structure to base entry and risk levels from.

In the event we fail to reach 1.34 and turn higher, nonetheless, the market may observe a H4 close form above 1.35. Should this occur, traders have the choice of either buying the breakout candle and placing stop-loss orders beneath its tail, or waiting and seeing if a retest scenario takes shape and entering on the back of the rejection candle’s structure. The next upside target on the H4 scale can be seen around 1.3570 (not seen on the screen), though according to the higher timeframes we could be heading much higher.

Today’s data points: FOMC Member Clarida Speaks; Canadian banks are closed in observance of Victoria Day.

USD/CHF:

Weekly gain/loss: -0.07%

Weekly close: 1.0108

Weekly perspective:

The buck’s retreat from the 2019 high 1.0236 set towards the end of May continued last week, though downside momentum decreased considerably and formed a nice-looking hammer formation off support at 1.0110. For that reason, the order of the week may be to the upside, targeting resistance plotted at 1.0240. A failure of the aforementioned support, nonetheless, positions trend line support (etched from the low 0.9187) in the firing range.

Daily perspective:

Contrary to weekly price, a resistance zone between 1.0102/1.0140 is in motion on the daily timeframe (yellow). A rejection from this barrier this week has last Tuesday’s low at 1.0050 in sight, followed then by a possible run towards support fashioned at 0.9986.

H4 perspective:

The US dollar gained modestly versus the Swiss franc Friday amid a broad-based USD advance (US dollar index). Registering its fourth consecutive daily gain, the H4 candles wrapped up the week brushing aside 1.01. While the push above 1.01 is considered a bullish indicator, traders should remain cognizant of where we’re trading on the higher timeframes. Granted, weekly buying may emerge on the back of weekly price finding support off 1.0110, though pressing through the collection of resistances on the daily timeframe between 1.0040/1.0102 is likely to be a challenge.

Areas of consideration:

With the H4 candles yet to produce much in the way of bullish intent above 1.01 (check out the real bodies of the candles) and daily price testing an area of resistance, traders considering a long position above 1.01 are encouraged to exercise caution.

The research team believes the buyers have yet to prove themselves on the H4 timeframe. A retest of 1.01 in the form of a strong bullish rotation candle (a full or near-full-bodied candle), however, would certainly place buying above 1.01 in a more favourable light. But until that time, patience is key.

Should we push beneath 1.01 this week, shorts on the retest of the figure are also of interest, targeting H4 support at 1.0053 as the initial port of call.

Irrespective of what direction one selects around 1.01, waiting for additional H4 candlestick confirmation to develop is encouraged. Entry and risk levels can then be defined according to the selected candlestick formation.

Today’s data points: FOMC Member Clarida Speaks.

Dow Jones Industrial Average:

Weekly gain/loss: -0.72%

Weekly close: 25756

Weekly perspective:

Demand marked in yellow at 25217-25927, although unlikely to be considered a strong area on this timeframe owing to limited momentum produced from the base, remains in the fold. However, traders may also want to acknowledge weekly price finished the week in the form of a hammer candlestick pattern. In the event this entices buyers into the market, we could be looking at a run towards the 26668 April 22 high, while a move to the downside has the 2018 yearly opening level to target at 24660.

Daily perspective:

Early week observed the index shake hands with notable support at 25385 on the daily timeframe, which happened to intersect with the 200-day SMA. Technically, this provided a platform for buyers to enter the market, with the next upside point of interest falling in at resistance fixed from 26139.

H4 perspective:

The Dow Jones Industrial Average fell for the first time in three days Friday, amid a market rattled by a barrage of trade-related headlines.

H4 flow has the candles positioned a few points south of a Quasimodo resistance at 25957, trailed closely by April’s opening level at 26026. To the downside, nonetheless, price finds nearby support from demand at 25540-25645. Beyond here, the research team also has daily support mentioned above at 25385 sited on the chart.

Areas of consideration:

While there is scope for a push higher on the weekly timeframe, daily price has resistance plotted within touching distance at 26139. On top of this, we also have short-term resistance on the H4 timeframe between 26026 and 25957. This resistance makes the current weekly hammer formation a problematic long, according to our technical studies.

On account of the above, the green area plotted on the H4 timeframe between 26139 (the daily resistance level) and 25957 (the collection of H4 resistances) is a zone worthy of attention this week for shorts. An ideal scenario would be for the H4 candles to chalk up a notable bearish candlestick configuration. Entry can be applied according to the candlestick’s rules, though stop-loss placement may be either above the daily resistance at 26139 (conservative) or above the upper shadow of the candlestick signal (aggressive).

Today’s data points: FOMC Member Clarida Speaks.

XAU/USD (GOLD):

Weekly gain/loss: -0.66%

Weekly close: 1277.1

Weekly perspective:

The 2018 yearly opening level at 1302.5, as you can see, was aggressively challenged last week and held almost to the point. Selling from this angle brought price action back beneath its 2019 yearly opening level at 1282.2 and produced a bearish shooting star pattern. This, by and of itself, has likely garnered the attention of candlestick enthusiasts and could weigh on the market this week towards support coming in at 1260.8.

Daily perspective:

Sited just north of the weekly support level mentioned above at 1260.8 is a daily support area seen at 1272.5-1261.5. The zone boasts a reasonably solid history and merges with a trend line support taken from the low 1160.3. What’s also notable from a technical perspective is the 200-day SMA appears poised to converge with the said support zone in the near future.

H4 perspective:

A quick recap of Friday’s movement on the H4 timeframe reveals bullion extended losses, as the prevailing risk-on atmosphere limited demand for safe-haven assets. Also weighing on losses was a dominant greenback and some upbeat earnings figures from large US corporations.

Technically, the research notes limited support until reaching demand (green arrow) at 1268.1-1272.3, followed closely by support at 1266.1. Note the current H4 demand area also resides around the top edge of the daily support area at 1272.5-1261.5. Should price turn higher before probing lower, resistance surfaces at May’s opening level drawn from 1282.6 (merges closely with the 2019 yearly opening level mentioned above on the weekly timeframe at 1282.2).

Areas of consideration:

The H4 supply at 1288.9-1284.8, positioned directly above May’s opening level at 1282.6 (and the 2019 yearly opening level on the weekly timeframe at 1282.2) is an area sellers potentially have interest in this week. This is due to the stop-loss orders likely accumulating above May’s opening level, thus providing strong liquidity to sell into.

The H4 demand marked with a green arrow at 1268.1-1272.3 is also a point of interest for longs this week, owing to its connection to the top base of a daily support area at 1272.5-1261.5.

Both areas, according to our technical reading, house considerable strength and are likely to hold should a test (under normal market conditions) be observed. However, for the more conservative traders, they may wish to wait and see how H4 action behaves before pulling the trigger. While this may sacrifice the ‘better’ entry, it’s offset by having additional confluence backing the trade, and therefore a higher probability of moving in favour.

The accuracy, completeness and timeliness of the information contained on this site cannot be guaranteed. IC Markets does not warranty, guarantee or make any representations, or assume any liability with regard to financial results based on the use of the information in the site.

News, views, opinions, recommendations and other information obtained from sources outside of www.icmarkets.com.au, used in this site are believed to be reliable, but we cannot guarantee their accuracy or completeness. All such information is subject to change at any time without notice. IC Markets assumes no responsibility for the content of any linked site. The fact that such links may exist does not indicate approval or endorsement of any material contained on any linked site.

IC Markets is not liable for any harm caused by the transmission, through accessing the services or information on this site, of a computer virus, or other computer code or programming device that might be used to access, delete, damage, disable, disrupt or otherwise impede in any manner, the operation of the site or of any user’s software, hardware, data or property.

Global Markets:

• Asian Stock Markets : Nikkei up 0.89%, Shanghai Composite down 2.48%, Hang Seng down 1.22%, ASX up 0.59%
• Commodities : Gold at $1287.75 (+0.12%), Silver at $14.53 (-0.08%), Brent Oil at $72.70 (+0.11%), WTI Oil at $63.05 (+0.29%)
• Rates : US 10-year yield at 2.391, UK 10-year yield at 1.065, Germany 10-year yield at -0.099

News & Data:

• (USD) Philly Fed Manufacturing Index 16.6 vs 10 expected
• (USD) Building Permits 1.30M vs 1.29M expected
• (CAD) Manufacturing Sales m/m 2.10% vs 1.50% expected

Markets Update:

Asia ex China gained, while China dropped, with investor sentiment bolstered by the positive cues overnight from Wall Street for a third straight session as upbeat corporate earnings results and U.S. economic data helped offset worries about U.S.-China trade tensions.

The Australian market is advancing after briefly surpassing an eleven-year high in morning trade following the gains on Wall Street as well as higher iron ore and crude oil prices. The major miners, oil and tech stocks are among the leading gainers. The Nikkei 225 in Japan added 0.9% in afternoon trade, while the Topix index rose 1.1% as most sectors gained. Shares of Sony surged more than 10% after the company announced a $1.83 billion share buyback and a new partnership with competitor Microsoft.

Chinese markets were hit by Beijing’s hard talk. The Shanghai composite slipped 2.5% by the morning session’s end and the Shenzhen component was 3.2% lower. Hong Kong’s Hang Seng index also slipped 1.2%.

The chillier tone in Asia helped Treasuries recoup early losses as the session wore on, with the 10-year futures contract firming 7 ticks. The U.S. dollar lost a little of its shine on the safe haven yen to stand at 109.64 from a top of 110.03. Against a basket of currencies, it was a shade softer at 96.824. Yet the euro could make no ground and held at $1.1173, down 0.5% for the week so far.

Sterling was one of the worst performers as Britain’s Prime Minister Theresa May battled to keep her Brexit deal, and her premiership, intact amid growing fears of a disorderly departure from the European Union.

Upcoming Events:

• 03:00 PM GMT – (USD) Prelim UoM Consumer Sentiment
• 06:40 PM GMT – (USD) FOMC Member Clarida Speaks
• &more…

Global Markets:

• Asian Stock Markets : Nikkei down 0.79%, Shanghai Composite up 0.40%, Hang Seng down 0.05%, ASX up 0.47%
• Commodities : Gold at $1297.45 (-0.03%), Silver at $14.79 (-0.15%), Brent Oil at $72.08 (+0.43%), WTI Oil at $62.34 (+0.52%)
• Rates : US 10-year yield at 2.366, UK 10-year yield at 1.060, Germany 10-year yield at -0.110

News & Data:

• (AUD) Unemployment Rate 5.20% vs 5.00% expected
• (AUD) Employment Change 28.4K vs 15.2K expected
• (USD) Retail Sales m/m -0.20% vs 0.20% expected
• (USD) Core Retail Sales m/m 0.10% vs 0.70% expected
• (CAD) Trimmed CPI y/y 2.00% vs 2.10% expected
• (CAD) Median CPI y/y 1.90% vs 2.00% expected
• (CAD) Common CPI y/y 1.80% vs 1.80% expected
• (CAD) CPI m/m 0.40% vs 0.40% expected
• (EUR) Flash GDP q/q 0.40% vs 0.40% expected
• (EUR) German Prelim GDP q/q 0.40% vs 0.40% expected
• Currency Fears Drive Chinese Into Bitcoin
• CME Group Hits New Open Interest Record of 138.2 Million Contracts

Markets Update:

Asian stock markets are mixed on Thursday despite the positive cues overnight from Wall Street after media reports indicated U.S. President Donald Trump plans to delay imposing the auto tariffs by up to six months.

Worries about U.S.-China trade tensions continued to weigh on investor sentiment on news that Trump has signed an executive order declaring a national emergency and prohibiting U.S. companies from using foreign information or communications technology and services deemed a national security risk. The move is seen as appearing to target Chinese tech giant Huawei.

Mainland Chinese shares recovered from their earlier slip to rise by the afternoon, with the Shanghai composite adding around 0.4% and the Shenzhen composite gaining 0.5%. In Hong Kong, the Hang Seng index also turned around from earlier declines to trade flat. The Nikkei 225 in Japan slipped 0.8% in afternoon trade, while the Topix declined 0.7%. Over in South Korea, the Kospi fell 1.4%. Australia’s ASX 200 rose 0.22% as most sectors advanced.

Weak data underpinned U.S. bond prices, pushing down yields further. The 10-year U.S. Treasuries yield eased to 2.371%, near its 15-month low of 2.340% touched on March 28. Fed funds rate futures are fully pricing in a rate cut by the end of this year and more than a 50 percent chance of a move by September.

In the foreign exchange market, the Australian dollar brushed its lowest since early January after a drop in the country’s full-time jobs supported views the central bank may be forced to lower rates soon to stimulate the economy. Oil prices gained on the prospect of mounting tensions in the Middle East hitting global supplies despite an unexpected build in U.S. crude inventories.

Upcoming Events:

• 09:15 AM GMT – (EUR) German Buba President Weidmann Speaks
• 01:30 PM GMT – (CAD) Manufacturing Sales m/m
• 01:30 PM GMT – (USD) Building Permits
• 01:30 PM GMT – (USD) Philly Fed Manufacturing Index
• 04:15 PM GMT – (CAD) BOC Gov Poloz Speaks
• 05:15 PM GMT – (USD) FOMC Member Brainard Speaks
• 06:30 PM GMT – (GBP) MPC Member Haskel Speaks
• Tentative – (USD) Treasury Currency Report
• &more…

EUR/USD:

The US dollar, according to the US dollar index, largely disregarded the weaker-than-expected April retail sales report Wednesday, though eventually yielded to selling pressure on news US President Trump would delay tariffs on EU automobiles. This delivered the euro fresh impetus against its dollar counterpart, lifting the unit beyond 1.12 to a high of 1.1224, before rotating lower and retesting 1.12 as support. April and May’s opening levels at 1.1221 and 1.1211 are key resistances in play right now on the H4 timeframe. Beneath 1.12, the next port of call can be seen at a trend line support etched from the low 1.1110.

Focus on the weekly timeframe remains within the walls of a long-standing demand zone at 1.1119-1.1295, perhaps absorbing sellers from the daily channel resistance stretched from the high 1.1569. Interestingly, the next downside target on the daily timeframe falls in at demand drawn from 1.1075-1.1171, glued to the underside of the current weekly demand base.

Areas of consideration:

A point of interest on the H4 timeframe resides between resistance at 1.1262 and a Quasimodo resistance at 1.1254 (green). The combination of these two levels, the overall trend pointing in a southerly bearing and the nearby daily channel resistance highlighted above, is likely sufficient confluence to entice seller interest. To avoid falling victim to a fakeout, as 1.1262/1.1254 offers a narrow range, traders may opt to wait for additional confirmation to form prior to pulling the trigger. Entry and risk parameters can then be determined according to the selected confirmation technique.

Technically, the research team is not as enthusiastic about the current H4 trend line support. This is due to the fact price failed to produce a higher high (peak) following its previous bounce.

Today’s data points: German Buba President Weidmann Speaks; US Building Permits; Philly Fed Manufacturing Index; FOMC Member Brainard Speaks.

GBP/USD:

A clear G10 laggard, the pound was undermined by a broad downturn in sentiment and the on-going Brexit impasse between the Tory and Labour Parties Wednesday. Losing grip of the 1.29 handle on the H4 timeframe, the technical picture has the GBP/USD nursing losses off a Quasimodo support drawn from February 12 at 1.2833.

Although a H4 pivot resistance at 1.2865 is capping upside right now, traders are urged to pencil in the additional confluence bolstering the current Quasimodo support. Daily movement, thanks to yesterday’s slide, is also shaking hands with support coming in at 1.2839 and a merging trend line resistance-turned support extended from the high 1.3380. This – coupled with the H4 RSI indicator testing oversold terrain – may be enough to offer sterling some much-needed respite today.

The only caveat to entering long from 1.2833 can be found on the weekly timeframe. Price action, as you can see, exhibits scope to explore lower ground, with a possible downside target residing around the 2019 yearly opening level at 1.2739.

Areas of consideration:

Although weekly flow suggests further losses may be upon us, a reasonably sizeable bounce from the H4 Quasimodo support at 1.2833 could still be in store. Aggressive traders may look at the lower head of the Quasimodo formation seen at 1.2772 (quite a stop distance), whereas conservative traders might feel waiting for a H4 bullish candlestick signal to form (entry and risk parameters can be defined according to this structure) may be the better path to take.

Irrespective of which entry technique is employed, a H4 close above 1.2865 would be an ideal trigger to reduce risk to breakeven, with the expectation then of a follow-through move to at least 1.29.

Today’s data points: MPC Member Haskel Speaks; US Building Permits; Philly Fed Manufacturing Index; FOMC Member Brainard Speaks.

AUD/USD:

Early hours Wednesday witnessed the Australian dollar sink lower vs. the US dollar, weighed on by weaker-than-forecast data out of Australia and China. Technically speaking this threw the H4 candles beneath its channel support extended from the low 0.6988.

USD selling pressure on news US President Trump would delay tariffs on EU automobiles, provided fresh juice to the AUD/USD market going into US hours, consequently forcing a revisit to the underside of the recently broken channel support level, which, as evident from the chart, held firm as resistance and could potentially set the stage for a run towards 0.69.

As highlighted in Wednesday’s outlook, the research team notes additional moves to the downside are likely upon us, according to the higher-timeframe charts. Distancing itself further from the underside of its 2019 yearly opening level at 0.7042 on the weekly timeframe, the pair is seen starved of support until shaking hands with 0.6828. While daily price also shows scope to press lower, neighbouring support falls in at 0.6907, situated a few points above the round number 0.69 on the H4 timeframe.

Areas of consideration:

On account of the technical picture, a short term selling opportunity from the underside of the H4 channel support-turned resistance is certainly a consideration today. However, before pressing the sell button, traders are encouraged to weigh up risk/reward. Ideally you want more than a 1:1 ratio to daily support at 0.6907. Do recall, though, we could eventually push as far south as weekly support priced in at 0.6828.

Today’s data points: Australian Employment Change; Australian Unemployment Rate; RBA Assist Gov. Bullock Speaks; US Building Permits; Philly Fed Manufacturing Index; FOMC Member Brainard Speaks.

USD/JPY:

Several news outlets reported US President Trump is planning to delay tariffs on EU automobiles Wednesday, which was welcomed across equity markets. Investors dumped the safe-haven Japanese yen, reinforcing a reasonably strong bid tone in USD/JPY.

Heading into Asia Pac trading, the technical landscape on the H4 timeframe is clear in terms of resistance. The 110 handle, a resistance by and of itself, is sandwiched closely together with a 38.2% Fibonacci retracement at 110.04, a 50.0% retracement at 109.99 and a Fibonacci extension point also at 109.99. Note the 127.2% Fibonacci line brings with it a potential ABCD (black arrows) bearish formation at 109.93. Therefore, H4 structure has firm resistance in sight this morning between 110.04/109.93 (green).

Supporting the 110 handle on the daily timeframe is a resistance area plotted at 109.55-110.05. Note 110 is seen in within the upper limit of this area, however. Also located close by is the 2019 yearly opening level at 109.68.

Areas of consideration:

In light of our technical studies, the 110 handle is in focus today as possible resistance. While it is ultimately down to the individual trader, waiting for additional confirmation to form at 110 is encouraged before pulling the trigger, due to round numbers being prone to whipsaws (fakeouts).

In terms of take-profit targets, at this point there’s not much to be garnered from the chart structurally without seeing the approach. Nevertheless, traditional take-profit targets from ABCD patterns are taken at the 38.2% and 61.8% Fibonacci retracements of legs A-D.

Today’s data points: US Building Permits; Philly Fed Manufacturing Index; FOMC Member Brainard Speaks.

USD/CAD:

In recent sessions, the USD/CAD made a run for 1.35, though fell short at a weekly high of 1.3493 in early US trade and turned lower.

On the data front, Canadian CPI rose 0.4% in April, in line with expectations, and the year-on-year rate accelerated to 2.0%, also in line with expectations. Out of the US we also had weaker-than-expected April retail sales. Both reports, according to the charts, were largely disregarded, though the market eventually yielded to selling pressure on news US President Trump would delay tariffs on EU automobiles.

Technically speaking, the H4 candles remain within a 100-point+ range between May’s opening level at 1.3393 and the round number 1.35. Analysis of price action on the daily timeframe shows the unit continues to feed off support drawn from the top edge of a pennant pattern (1.3467). Although the traditional price target (calculated by taking the distance from the beginning of the preceding move and adding it to the breakout price) remains on the chart at 1.3768 (black arrows), the next upside target from a structural standpoint falls in around resistance at 1.3645.

Weekly activity, on the other hand, is chalking up an indecisive tone around its 2017 yearly opening level at 1.3434. Areas outside of this level to be aware of fall in around the 2018 yearly high of 1.3664, and a trend line support etched from the low 1.2247.

Areas of consideration:

The 1.34/May’s opening level at 1.3393 zone is an area of interest today for possible longs. Not only does this base represent the lower edge of the current H4 range, it is also further reinforced by the top edge of the daily pennant formation highlighted above. For conservative traders, waiting for a H4 bullish candlestick to print from this region helps identify buyer intent and also serves as a structure for entry and risk levels to work with.

In the event we fail to reach 1.34 and turn higher, nonetheless, the market may observe a H4 close form above 1.35. Should this occur, traders have the choice of either buying the breakout candle and placing stop-loss orders beneath its tail, or waiting and seeing if a retest scenario takes shape and entering on the back of the rejection candle’s structure. The next upside target on the H4 scale can be seen around 1.3570, though according to the higher timeframes we could be heading much higher.

Today’s data points: US Building Permits; Philly Fed Manufacturing Index; FOMC Member Brainard Speaks; Canadian Manufacturing Sales m/m; BoC Gov. Poloz Speaks.

USD/CHF:

Outlook unchanged.

Despite ranging more than 40 points, USD/CHF prices concluded Wednesday’s segment unchanged. As a result of this, a large portion of the following analysis will echo aspects of yesterday’s outlook.

With downside attempts limited by H4 support priced in at 1.0053, the pair appears poised to approach the underside of 1.01, shadowed closely by a 38.2% Fibonacci resistance at 1.0111. What’s also notable from a technical perspective here is the nearby daily resistance zone (yellow) at 1.0102/1.0140, as well as the underside of a weekly support-turned potential resistance at 1.0110.

Areas of consideration:

Today’s focus remains drawn towards the 1.01 level on the H4 timeframe for shorting opportunities. Conservative stop-loss placement, according to our technical studies, is above the top edge of the daily resistance area at 1.0140.

Aggressive traders, nonetheless, may look to decrease risk size by opting to use the weekly support-turned potential resistance at 1.0110 as a platform to position stops. The initial downside target can be seen at H4 support mentioned above at 1.0053, followed by parity (1.0000).

Today’s data points: US Building Permits; Philly Fed Manufacturing Index; FOMC Member Brainard Speaks.

Dow Jones Industrial Average (DOW 30):

US stocks climbed higher Wednesday, advancing for a second consecutive session amid hopes of thawing trade concerns. Earlier in the day, the Dow Jones Industrial Average erased intraday losses after Treasury Secretary Mnuchin stated US negotiators are likely to travel to China soon.

Traders who read Wednesday’s morning brief may recall the piece highlighted daily support at 25385 (aligning with the 200-day SMA) as a potential platform to base longs from. As you can see, the H4 candles dipped from a high of 25666 and retested 25385 and held firm. Well done to any of our readers who managed to take advantage of this move.

While both weekly (seen reversing course within minor demand [yellow] at 25217-25927) and daily structure shows promise to the upside (next upside target on the daily timeframe can be seen around 26139), traders are urged to take note of a H4 AB=CD (black arrows) bearish resistance formation at 25842/25756 (green). Not only does this area enclose the AB=CD’s termination point at 25785, the zone houses a number of Fibonacci levels within (a Fibonacci cluster). This is similar to the USD/JPY’s H4 chart, which are strongly correlated markets.

Areas of consideration:

Traders currently long this market off the daily support level highlighted above at 25385 are encouraged to consider taking partial profits (or at least reducing risk to breakeven) around the H4 resistance area at 25842/25756. A clearance of this zone has April’s opening level to target at 26026, an ideal second take-profit zone.

Today’s data points: US Building Permits; Philly Fed Manufacturing Index; FOMC Member Brainard Speaks.

XAU/USD (GOLD):

Gold prices are little changed this morning, consequently forming a daily indecision candle yesterday (albeit with a slight bearish twang to it).

As underscored as a possibility in previous analysis, the 2018 yearly opening level at 1302.5 on the weekly timeframe is now serving as resistance. Further pressure to the downside from here may eventually call for a test of the 2019 yearly opening level plotted at 1282.2.

Contrary to the weekly timeframe’s position, though, the daily candles exhibit scope to explore higher ground, targeting the 1310.6 April 10 high, followed by a supply zone at 1333.1-1323.4. Before reaching the said areas, pencilling in the possibility of a retest of channel resistance-turned support (extended from the high 1346.7) may be an idea.

Across on the H4 timeframe, price action is poised to retest April’s opening level at 1292.2 as support, perhaps by way of a 127.2% ABCD approach (red arrows) that terminates at 1289.9. Also reinforcing the said barrier is a 38.2% Fibonacci support value at 1289.3 and a 50.0% support at 1290.1 (green zone). The runway north from here, aside from Tuesday’s high 1303.4, leads to a supply zone coming in at 1312.3-1307.7.

Areas of consideration:

As both daily and H4 timeframes exhibit scope to press higher, a retest of 1289.3/1292.2 as support on the H4 timeframe remains of interest. However, seeing as we’re also trading from weekly resistance, waiting for additional confirmation to materialise before pulling the trigger is certainly something to consider. This could be anything from a bullish candlestick reversal signal, an MA crossover or even drilling down to the lower timeframes and entering based on local structure: support and resistance.

Failure to retest 1289.3/1292.2 before turning higher, focus is then drawn towards the H4 supply at 1312.3-1307.7 for shorts, given the close connection the area has to weekly resistance at 1302.5. Conservative stop-loss placement is seen above March’s opening level at 1314.1.

The accuracy, completeness and timeliness of the information contained on this site cannot be guaranteed. IC Markets does not warranty, guarantee or make any representations, or assume any liability with regard to financial results based on the use of the information in the site.

News, views, opinions, recommendations and other information obtained from sources outside of www.icmarkets.com.au, used in this site are believed to be reliable, but we cannot guarantee their accuracy or completeness. All such information is subject to change at any time without notice. IC Markets assumes no responsibility for the content of any linked site. The fact that such links may exist does not indicate approval or endorsement of any material contained on any linked site.

IC Markets is not liable for any harm caused by the transmission, through accessing the services or information on this site, of a computer virus, or other computer code or programming device that might be used to access, delete, damage, disable, disrupt or otherwise impede in any manner, the operation of the site or of any user’s software, hardware, data or property.

Global Markets:

• Asian Stock Markets : Nikkei up 0.58%, Shanghai Composite up 2.09%, Hang Seng up 0.96%, ASX up 0.71%
• Commodities : Gold at $1295.15 (-0.09%), Silver at $14.81 (-0.03%), Brent Oil at $71.07 (-0.24%), WTI Oil at $61.37 (-0.66%)
• Rates : US 10-year yield at 2.417, UK 10-year yield at 1.106, Germany 10-year yield at -0.073

News & Data:

• (EUR) German Prelim GDP q/q 0.40% vs 0.40% expected
• (CNY) Industrial Production y/y 5.40% vs 6.50% expected
• (CNY) Fixed Asset Investment ytd/y 6.10% vs 6.40% expected
• (AUD) Wage Price Index q/q 0.50% vs 0.60% expected
• (AUD) Westpac Consumer Sentiment 0.60% vs 1.90% previous
• (EUR) German ZEW Economic Sentiment -2.1 vs 5.1 expected
• (GBP) Unemployment Rate 3.80% vs 3.90% expected
• (GBP) Average Earnings Index 3m/y 3.20% vs 3.40% expected

Markets Update:

Asian stock markets are mostly higher on Wednesday following the positive cues overnight from Wall Street, as markets staged a recovery attempt after recent steep losses. Nevertheless, lingering worries about U.S.-China trade tensions weighed on investor sentiment.

U.S. President Donald Trump has continued to express confidence the Chinese will yield to U.S. demands, repeatedly arguing that the U.S. is in a stronger position than China in the negotiations.

Mainland Chinese shares advanced by the afternoon, with the Shanghai composite adding 2.10% and the Shenzhen component rising 2.6%. In Hong Kong, the Hang Seng index added 1%. Japan’s Nikkei 225 rose 0.6% in afternoon trade, while the Topix index added 0.6%. Japanese automaker Nissan Motor saw its shares plummet more than 7% after the company posted 2018 fiscal earnings that were their lowest level in 11 years. In South Korea, the Kospi rose 0.5% as shares of LG Chem jumped more than 2%.

The dollar index against a basket of six major currencies was nearly flat at 97.524 after gaining 0.2% the previous day.

In commodities, U.S. crude futures were down 0.76% at $61.31 per barrel after the American Petroleum Institute (API) reported a bigger-than-expected build in crude oil inventory. Brent and U.S. crude futures had surged the previous day after top exporter Saudi Arabia said explosive-laden drones launched by a Yemeni-armed movement aligned to Iran had attacked facilities belonging to state oil company Aramco.

Upcoming Events:

• 09:15 AM GMT – (EUR) German Buba President Weidmann Speaks
• 01:30 PM GMT – (CAD) Manufacturing Sales m/m
• 01:30 PM GMT – (USD) Building Permits
• 01:30 PM GMT – (USD) Philly Fed Manufacturing Index
• 04:15 PM GMT – (CAD) BOC Gov Poloz Speaks
• 05:15 PM GMT – (USD) FOMC Member Brainard Speaks
• 06:30 PM GMT – (GBP) MPC Member Haskel Speaks
• Tentative – (USD) Treasury Currency Report
• &more…