Trading Plan for EUR/USD and GBP/USD for August 16, 2017

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Technical outlook:

The EUR/USD hourly chart setup has been presented here for an alternate view in continuation to what was discussed yesterday. The pair failed to print fresh lows, instead, it is setting up for a complex corrective wave structure as labeled here. Going forward if EUR/USD does not break below 1.1687 levels, we should expect a rally towards at least 1.1800 or towards 1.1850 levels as seen in Red Color here. The termination point of the wave (1) is clear at 1.1687 levels but that of the wave (2) could be either at 1.1800 or 1.1850 levels, depending on the structure of correction. A safe way to trade the above pair would be to sell on rallies from here. Immediate support is seen at 1.1687 levels, while resistance is strong at 1.1910 levels respectively. It is more probable for EURUSD to form a lower top near 1.1800 levels before reversing lower again.

Trading plan:

Please remain long with a stop below 1.1687, targeting 1.1800 and then reverse with a stop above 1.1910.

GBP/USD chart setups:

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Technical outlook:

The GBP/USD short term structure has been presented here with probable wave counts. Please note that now with yet another low printed today at 1.2837 levels, the impulsive drop from 1.3267 levels looks to be complete. Furthermore, the pair has produced a 60/70 pip impulsive rally as well, which could be the first leg up at a small degree. This also indicates that the much-awaited counter trend rally might have finally triggered. Please note that if the above wave count holds well, a three wave counter trend rally A-B-C is expected to complete through 1.3010/20 and subsequently 1.3100 levels as seen here. Also note that 1.3100 levels are the Fibonacci 0.618 resistance as well, of the entire drop between 1.3267 and 1.2837 levels respectively. Immediate support is seen at 1.2837 levels, while resistance is at 1.3020 levels respectively.

Trading plan:

Long now from 1.2860/70 levels, stop below 1.2837, target 1.3020 and 1.3100

Fundamental outlook:

Watch out for FOMC Minutes today at 0200 PM EST.

Good luck!

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NZD/USD Intraday technical levels and trading recommendations for August 16, 2017

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Daily Outlook

The NZD/USD pair has been trending up within the depicted bullish channel since January 2016.

In November 2016, early signs of bullish weakness were expressed on the chart when the pair failed to record a new high above 0.7400.

A bearish breakout of the lower limit of the channel took place in December 2016.

In February 2017, the depicted short-term downtrend was initiated in the depicted supply zone (0.7310-0.7380).

However, a recent bullish breakout above the downtrend line took place on May 22. Since then, the market has been bullish as depicted on the chart.

The price zone of 0.7150-0.7230 (Key-Zone) stood as a temporary resistance zone until a bullish breakout was expressed above 0.7230.

This resulted in a quick bullish advance towards the next supply zone around 0.7310-0.7380 which was temporarily breached to the upside.

The recent bearish pullback was executed towards the price zone of 0.7310-0.7380 (newly-established demand-zone) which failed to offer enough bullish support for the NZD/USD pair.

Re-consolidation below the price level of 0.7300 enhances the bearish side of the market. This brings the EUR/USD pair again towards 0.7230-0.7150 (Key-Zone) where price action should be watched for a possible BUY entry.

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Intraday technical levels and trading recommendations for EUR/USD for August 16, 2017

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Monthly Outlook

In January 2015, the EUR/USD pair moved below the major demand levels near 1.2100 (multiple previous bottoms set in July 2012 and June 2010). Hence, a long-term bearish target was projected toward 0.9450.

In March 2015, EUR/USD bears challenged the monthly demand level around 1.0500, which had been previously reached in August 1997.

In the longer term, the level of 0.9450 remains a projected target if any monthly candlestick achieves bearish closure below the depicted monthly demand level of 1.0500.

However, the EUR/USD pair was trapped within the depicted consolidation range (1.0500-1.1450) until the current bullish breakout was executed above 1.1450.

The current bullish breakout above 1.1450 allows a quick bullish advance towards 1.1850 and 1.2000-1.2100 where price action should be watched for evident bearish rejection and a valid SELL Entry.

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Daily Outlook

In January 2017, the previous downtrend reversed when the Head and Shoulders pattern was established around 1.0500. Since then, evident bullish momentum has been expressed on the chart.

As anticipated, the ongoing bullish momentum allowed the EUR/USD pair to pursue further bullish advance towards 1.1415-1.1520 (Daily Supply-Zone).

The daily supply zone failed to pause the ongoing bullish momentum. Instead, an evident bullish breakout is being witnessed on the chart. The nearest supply level to meet the pair is located around 1.2080 (Level of previous multiple bottoms) where bearish rejection can be anticipated.

On the other hand, the price zone of 1.1415-1.1520 stands as a prominent DEMAND zone to be watched during the current bearish pullback.

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Global macro overview for 16/08/2017

Global macro overview for 16/08/2017:

The US economy is slowly, but surely overcoming the headwinds. The recent data from US manufacturing sector in form of an Empire State Manufacturing Index (a monthly survey of manufacturers in New York State conducted by the Federal Reserve Bank of New York) revealed, that the index strengthened from 9.8 to 25.2 points. This was substantially above consensus expectations of 10.0 points and the strongest reading since September 2014. The main reason for such a good data was a modest recovery in shipment index ( from 10.5 to 12.5 points), new orders ( from 13.3 to 20.2 points). The inventories were the only index with a negative reading at the level of -3.1 points. Moreover, forward-looking indicators strengthened significantly on the month with the 6-month outlook index at 45.2 from 34.9 the previous month.

Manufacturing of late has shown some tentative signs of strength, helped by a recovery in the oil sector as prices have stabilized and the recent data should have a significant impact in boosting confidence in US manufacturing sector. Business activity is growing stronger and the employment is increasing at a faster pace. The only doubt is whether companies can push through price increases, but the next few months will bring more data and a more certain outlook will be generated.

Let's now take a look at the EUR/USD technical picture at the H4 time frame. The price had bounced three times from the level of 1.1686, so any further violation of this level will open the road towards the next technical support at the level of 1.1612. The overall market conditions are neutral, but the diminishing upward momentum indicates, that bears are still in control over this market.

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Fundamental Analysis of AUD/USD for August 16, 2017

AUD/USD has been in a bearish volatile trend recently after bouncing back from 0.8050 resistance area. Today AUD MI Leading Index report was published with a positive value at 0.1% from the previous negative value of -0.2% and Wage Price Index was published as expected at 0.5% which previously was at 0.6%. On the USD side, today Building Permits report is going to be published which is expected to decrease to 1.25M from the previous figure of 1.28M, Housing Starts report is expected to be unchanged at 1.22M and Crude Oil Inventories report is expected to show less deficit at -3.0M from the previous figure of -6.5M. USD has been quite strong recently due to positive economic reports which also showed in this currency pair whereas the dominant currency AUD could not hold the gains for long. As of today, AUD has been quite positive with its economic reports and some high impact USD economic reports are yet to be published but AUD is expected to have an upper hand over USD in the coming days.

Now let us look at the technical view, the price is currently bouncing off the support area of 0.7750 to 0.7840. After a constant impulsive bullish trend, the pair has recently retraced towards the support area and currently the bullish bias is expected to continue higher towards 0.8050 and 0.8150 resistance area in the coming days. As the price remains above the support level of 0.7750 with a daily close the bullish pressure is expected to continue further.

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Global macro overview for 16/08/2017

Global macro overview for 16/08/2017:

The FOMC Meeting Minutes for the month of July is scheduled for release at 06:00 pm GMT and this will be the event of the day or even week. Let's recall that in the last statement FOMC stated that the process of reducing the balance sheet total will begin in the near term and inflation is lower than assumed by the Fed mandate. In response to such a combination, the US Dollar was heavily overestimated. The question of the balance sheet is not in doubt, as market participants expect it to shrink as early as in September. Patrick Harker, the President of Federal Reserve Bank of Philadelphia, one of the larger doves at FOMC, has recently announced that the process will be painfully boring and predictable. In this light, one should focus on the description of price trends and the number of decision makers and to what extent they are concerned about the weakness of inflation and how many believe that this is a transitional phenomenon. Taking into account the weakness of the US Dollar after the July meeting and still extremely negative market sentiment towards the US currency, it is highly possible to see a bigger chance for a positive Dollar reaction after today's FOMC publication.

Let's now take a look at the US Dollar Index technical picture at the H4 time frame. The market is trading inside of a nave channel just below the key technical resistance at the level of 94.47. Any violation of this resistance and the golden trend line would put the bulls back into control over this market. The next potential technical resistance is at the level of 95.06 and 95.44.

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Demand for the dollar is growing

Strong growth in retail sales in July contributed to the return of demand for the dollar. According to a U.S. Census Bureau report released on Tuesday, sales rose 0.6% in July, well above the 0.4% forecast. Moreover, the June report was also revised upwards, and instead of a 0.2% decrease, we now need to start from an increase of 0.3%.

The evidence suggests that the weakness of the consumer sector is not as deep as previously thought, and revenue growth is sufficient to ensure sustainable demand. At the same time, maintaining a high level of consumer demand is also ensured by the fast growth of household debt. According to the Federal Reserve Bank of New York, the total debt of households in the second quarter was 12.84 trillion dollars, which is 552 billion more than a year ago. These data indicate that citizens are waiting for positive changes that will improve their economic condition in the future, and are ready to spend more, depending on the growth of incomes. At the same time, it is not possible to postpone the reforms because the increase in household debt, according to World Bank research, has a positive effect only in the outlook for the year, after which the reverse dependence is included. An increase in household debt by 1% relative to the GDP leads to a decrease of 0.1% in the long-term outlook.

The retail data was not the only positive signal. Import prices rose by 1.5%, which was better than forecasts, while the growth of export prices was 0.1%. The Federal Reserve Bank of New York reported an increase in business activity in the manufacturing sector to 24.2p, which is a three-year high and well above the projected 10.0%.

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Investors continue to wait for the start of the reform program announced by Trump during the pre-election race. The report of the Treasury on the inflow of foreign capital published yesterday showed that investors are leaving Treasuries. The lowest level was reached in November 2016, after which the demand for bonds is growing every month and should again become positive in the near future. The dynamics of the return of foreign investors in the debt securities of the US government and the stock market indicate a significant potential for confidence in the expected reforms.

Investors are not at all worried regarding the poor collection of taxes, or the devastation of the Treasury's cash desk, nor of Trump's first setbacks in confronting the Congress on medical reform. The expectation of economic growth, asset returns amid rising Fed rates and tax cuts outweigh any concerns.

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Strong data releases on Tuesday led to a revision of the forecasts for the interest rate hikes. A few days ago, investors, according to CME, saw a 35.9% probability of another rate increase this year. Then yesterday it rose to 49.5% - a very strong growth in a short period. The volatility is caused, from one side, by the wide spread of estimates in the current situation and of the real state of the U.S. economy. And also, on the other hand, reflects the desire of investors to see a positive program.

The Federal Reserve Bank of Atlanta raised its forecast for US GDP by 3Q to 3.7% on Tuesday, supporting the trend on its expectations for positive changes.

Thus, a number of indirect data indicates a strong deferred demand for the dollar, and the publication of the Federal Reserve's minutes for the July meeting again causes the increased interest. Despite the fact that the meeting was "passing" and was not accompanied by a change in macroeconomic forecasts or a detailed press conference, it is the last before the key FOMC meeting on September 14 and should contain benchmarks for rates and a reduction in the balance sheet.

On Monday, the US president ordered an investigation into China against intellectual property infringement cases. This move was not unexpected, as preparation for it was conducted for a long time.However, this is the first time in many years a real possibility was expressed to use not only Article 301 of the 1974 Merchant Act to unilaterally set barriers for export goods, but also the Law "On International Emergency Economic Powers" from 1977, which gives the US president the right to monitor any economic operations in the event of a threat to national security.

The beginning of active actions will contribute to increased tension and will cause the long-awaited demand for the dollar. Months of correction, which began in January, is nearing its completion.

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Fundamental Analysis of EUR/JPY for August 16, 2017

EUR/JPY is currently residing inside a corrective range of 128.50 to 130.60 area. EUR has been quite stronger than JPY today despite recent positive JPY reports. Today, EUR Italian Prelim GDP reports are going to be published which is expected to rise to 0.4% from the previous value of 0.2% and Flash GDP report is expected to be unchanged at 0.6%. On the other hand, JPY recently showed positive economic reports as well like Revised Industrial Production report was published with an increased value at 2.2% which was expected to be unchanged at 1.6% but having positive economic reports JPY could not quite dominate the EUR despite the Holiday observed in France and Italy for Assumption day. As of the current scenario, JPY is looking quite weaker which is helping in the gains of EUR as of recent observation of the market which is expected to continue further in the coming days. Though JPY has Trade Balance report to be published on Thursday which is expected to show a rise to 0.20T from the previous figure of 0.08T if the report gets published as a forecast or better than the expectation we might see gains on JPY soon.

Now let us look at the technical view, the price is currently residing inside the range of 128.50 to 130.60 corrective structure and inside the range, the price is currently residing above the dynamic level of 20 EMA which signals further bullish move in this pair. As of the recent impulsive bullish move directing to further upcoming bullish move in this pair, so the bullish pressure is much expected in this pair with a recent target towards 130.60 and if price breaks above the level with a daily close then we will be targeting 132.20 resistance level in the future. As the price remains above 128.50 support level with a daily close the bullish bias is expected to continue further.

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Technical analysis of USD/JPY for August 16, 2017

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All our targets which we predicted in Yesterday's analysis have been hit. The pair is expected to trade in upside range. The technical outlook of the pair is positive as the prices recorded higher tops and higher bottoms since August 11. The rising 50-period moving average is playing a support role. The relative strength index is above its neutrality level at 50.

Hence, as long as 110.25 holds on the downside, look for a further rise to 110.85 and even to 111.25 in extension.

Alternatively, if the price moves in the opposite direction, a short position is recommended below 110.25 with a target at 109.80.

Chart Explanation: The black line shows the pivot point. The current price above the pivot point indicates a bullish position, while the price below the pivot point is a signal for a short position. The red lines show the support levels and the green line indicates the resistance level. These levels can be used to enter and exit trades.

Strategy: BUY, Stop Loss: 110.25, Take Profit: 111.25

Resistance levels: 111.25, 111.70, and 112.05

Support Levels: 109.80, 109.40, 109.00

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Elliott wave analysis of EUR/NZD for August 16, 2017

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Wave summary:

EUR/NZD is now broken above resistance at 1.6236 as expected. A clear break above this resistance will confirm a continuation higher towards 1.6969 as the next larger upside target. On the way higher, minor resistance will be seen at 1.6349 and again at 1.6636.

The former resistance at 1.6263 should now act as support, with backup support at 1.6088.

R3: 1.6636

R2: 1.6470

R1: 1.6349

Pivot: 1.6236

S1: 1.6088

S2: 1.5982

S3: 1.5920

Trading recommendation:

We are long EUR from 1.5510 and will move our stop higher to 1.6050. If you are not long EUR yet, then buy near 1.6088 if possible or buy a clear break above 1.6236 and use the same stop at 1.6050.

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Elliott wave analysis of EUR/JPY for August 16, 2017

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Wave summary:

The clear break above the minor resistance-line near 130.00 is not consistent, with our expectations of a deeper correction towards 125.08. The break above this minor resistance-line indicates that the X-wave already has completed the test of 128.00 and a new zig-zag rally towards 137.36 now is developing.

Support is now seen at 130.00 and again at 129.39, which should be able to protect the downside.

R3: 131.40

R2: 131.12

R1: 130.54

Pivot: 130.00

S1: 129.39

S2: 128.89

S3: 128.53

Trading recommendation:

We are short EUR from 129.70, but will take our stop for a loss of 65 pips + reverse the position to a bought position in EUR here at 130.35. The new stop will be placed at 129.35.

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AUD/JPY testing major resistance, remain bearish

Forex analysis review
AUD/JPY testing major resistance, remain bearish

Trading plan for 16/08/2017

Trading plan for 16/08/2017:

No special or remarkable moves were noticed overnight. Variation of currencies does not exceed 0.1%. EUR/USD is trading around 1.1740, USD/JPY around 110.65 and GBP/USD 1.2865. Precious metals are trying to erase part of yesterday's losses. Crude Oil is up 0.5% after the API report (drop in inventories by 9.2 million barrels), although the increase in volume is clearly not the strongest. The mood of the Asian stock market mixed. Hang Seng comes out 0.7% over the line, the Shanghai Composite loses 0.3% and the Nikkei 225 oscillates around yesterday's closing price.

On Wednesday 16th of August, the event calendar is busy with important economic releases. During the London session, the UK will post Claimant Count Change and Unemployment Rate data. The Eurozone will present Revised GDP data. During the US session, Canada will post Foreign Securities Purchases and US will present Building Permits and Housing Starts data. Later in the session, the latest FOMC Meeting Minutes will be released.

GBP/USD analysis for 16/08/2017:

The Average Earnings Index data, Unemployment Rate, and Claimant Count Change data are scheduled for release at 08:30 am GMT and the market participants expect the Unemployment Rate to stay unchanged at the level of 4.5% and Claimant Count to increase slightly from 6.0k to 7.2k people. Yesterday's inflation data revealed, that CPI index was steady in July, which was surprising news for the global investors. This is why wages growth could be the key number in today's release. A softer pace of grow may renew concern that consumer spending will suffer in the months ahead. However, so far a good news is expected: analysts see the annual rate for average weekly earnings including bonuses holding steady at 1.8%. Any number better than expected will make British Pound rally in the short-term across the board.

Let's now take a look at the GBP/USD technical picture at the H4 time frame. The market had bounced from the technical support at the level of 1.2845, but the overall bounce was very limited in range. The next important resistance is at the level of 1.2930 and only a V-shape reversal from current lows would put the bulls back in control over this market. Otherwise, the deterioration might increase and the next important technical support is seen at the level of 1.2793.

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Market Snapshot: Crude Oil bounces after data

The price of Crude Oil had bounced from the golden channel support around the level of $47.02 and currently is trading in the middle of the range. There is still a chance for a possible break out above the resistance at the level of $48.18 as the oversold market conditions support this scenario. On the other hand, break out below the support at the level of $6.88 will open the road towards the next support at the level of $45.39.

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Market Snapshot: USD/CAD back inside the channel

The price of USD/CAD got back to the blue channel zone and tested the resistance at the level of 1.2770. The market is still trading above the short-term golden trend line and any violation of this line would suggest further deterioration towards the technical support at the level of 1.2651 and below. On the other hand, the next technical resistance is seen at the level of 1.2855.

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Technical analysis of USD/CHF for August 16, 2017

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USD/CHF is expected to trade in a higher range and continue its upward movement. The pair is trading above the key support at 0.9690 (the low of August 15), which should limit the downside potential. The relative strength index lacks downward momentum. Even though a continuation of consolidation cannot be ruled out, its extent should be limited.

Regarding the U.S.-North Korea tensions, North Korea's state media reported that leader Kim Jong Un has delayed a decision on firing missiles towards Guam and he waits to see what the U.S. does.

On the economic data front, the U.S. Commerce Department reported that retail sales rose 0.6% on month in July, higher than +0.4% expected and the biggest gain since December. Excluding cars, retail sales were up 0.5%, still higher than +0.4% expected.

Hence, above 0.9690, look for a further upside to 0.9750 and even to 0.9770 in extension.

Chart Explanation: The black line shows the pivot point. The present price above the pivot point indicates the bullish position, and the price below the pivot points indicates the short position. The red lines show the support levels and the green line indicates the resistance levels. These levels can be used to enter and exit trades.

Strategy: BUY, Stop Loss: 0.9690, Take Profit: 0.9750

Resistance levels: 0.9750, 0.9770, and 0.9805

Support levels: 0.9670, 0.9630, and 0.9600

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Technical analysis of GBP/JPY for August 16, 2017

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The targets which we predicted in the previous analysis have been achieved. GBP/JPY is under pressure and expected to trade in a lower range. The pair recorded lower tops and lower bottoms, which confirmed a negative outlook. The declining 50-period moving average suggests that the prices have a potential for a further decline. The relative strength index is mixed with a bearish bias.

To conclude, as long as 142.75 holds on the upside, expect a new drop to 141.70 and even to 141.20 in extension.

Alternatively, if the price moves in the opposite direction as predicted, a long position is recommended above 142.75 with the target at 143.35.

Strategy: BUY, Stop Loss: 141.70, Take Profit: 142.80.

Chart Explanation: the black line shows the pivot point. The price above the pivot point indicates the bullish position; and when it is below the pivot points, it indicates a short position. The red lines show the support levels and the green line indicates the resistance levels. These levels can be used to enter and exit trades.

Resistance levels: 143.35, 143.75, and 144.35

Support levels: 141.20, 140.50, and 140.00

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Technical analysis of EUR/USD for Aug 16, 2017

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When the European market opens, some Economic Data will be released, such as Flash GDP q/q and Italian Prelim GDP q/q. The US will release the Economic Data, too, such as FOMC Meeting Minutes, Crude Oil Inventories, Housing Starts, and Building Permits, so, amid the reports, EUR/USD will move in a low to medium volatility during this day.

TODAY'S TECHNICAL LEVEL:

Breakout BUY Level: 1.1796.

Strong Resistance:1.1789.

Original Resistance: 1.1778.

Inner Sell Area: 1.1767.

Target Inner Area: 1.1739.

Inner Buy Area: 1.1711.

Original Support: 1.1700.

Strong Support: 1.1689.

Breakout SELL Level: 1.1682.

Disclaimer: Trading Forex (foreign exchange) on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.

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USD/JPY testing major resistance, prepare to sell

THe price is approaching major resistance at 110.88 (Fibonacci retracement, horizontal overlap resistance) and we expect to see a bearish reaction off this level for a drop to at least 109.67 support (Fibonacci retracement, horizontal overlap support).

Stochastic (21,5,3) is reversing nicely below our 97% resistance level and we expect to see a corresponding drop in price from here.

Sell below 110.88. Stop loss is at 111.44. Take profit is at 109.67.

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Technical analysis of USD/JPY for Aug 16, 2017

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In Asia, today Japan will not release any Economic Data but the US will release some Economic Data, such as FOMC Meeting Minutes, Crude Oil Inventories, Housing Starts, and Building Permits. So, there is a probability the USD/JPY will move with low to medium volatility during this day.

TODAY'S TECHNICAL LEVEL:

Resistance. 3: 111.27.

Resistance. 2: 111.05.

Resistance. 1: 110.83.

Support. 1: 110.56.

Support. 2: 110.34.

Support. 3: 110.13.

Disclaimer: Trading Forex (foreign exchange) on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.

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Technical analysis of USD/CHF for August 16, 2017

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Overview:

  • The USD/CHF pair continues moving upwards from the of zone 0.9693. The bias remains bullish in nearest term testing 0.9763 or 9800. The market has been trading around the area of 0.9693/0.9600 this week. The pair rose from the levels of 0.9693 and 0.9600 (the level of 0.9693 and 0.9600 coincide with the ratios of 78.6% Fibonacci retracement and 50%) to a top around 0.9733. The first support level is seen at 0.9639 followed by 0.9600, while daily resistance 1 is seen at 0.9763. According to the previous events, the USD/CHF pair is still moving between the levels of 0.9693 and 0.9763 in coming hours. On the one-hour chart, immediate resistance is seen at 0.9763 which coincides with the double top. Currently, the price is moving in a bullish channel. This is confirmed by the RSI indicator signaling that we are still in a bullish trending market. The price is still above the moving average (100). Therefore, if the trend is able to break out through the first resistance level of 0.9763, we should see the pair climbing towards the second daily resistance at 0.9800 to test it. However, it would also be wise to consider where to place stop loss; this should be set below the last support 0.9600. Overall, the trend is still calling for a strong bullish market as long as the trend is still above the spot of 0.9693.
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USD/CHF approaching major resistance, prepare to sell

The price has reached our profit target perfectly from Monday. We prepare to sell below major resistance at 0.9770 (Fibonacci extension, horizontal swing high resistance) for a push down to at least 0.9671 support (Fibonacci retracement, horizontal overlap support).

Stochastic (34,5,3) is seeing major resistance below 98% and has reacted very well off it. We expect to see a further drop below this level.

Sell below 0.9770. Stop loss is at 0.9809. Take profit is at 0.9671.

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NZD/USD has broken major support, prepare to sell

The price has broken our major support-turned-resistance level at 0.7258 and we prepare to sell below this resistance level (Fibonacci retracement, horizontal pullback resistance) for a further push down following our bearish channel momentum to at least 0.7196 (Fibonacci extension, horizontal swing low support).

RSI (21) sees resistance at 63% and also a recent bearish exit signaling that we're expecting more bearish momentum.

Sell below 0.7258. Stop loss is at 0.7286. Take profit is at 0.7196.

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Technical analysis of NZD/USD for August 16, 2017

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Overview:

  • As expected, the NZD/USD pair has kept moving downwards from the level of 0.7288. Yesterday, the pair dropped from the level of 0.7288 (this level of 0.7288 coincides with the ratio of 23.6%) to the bottom around 0.7224. Today, the first resistance level is seen at 0.7288 followed by 0.7328, while daily support 1 is seen at 0.7175. According to the previous events, the NZD/USD pair is still moving between the levels of 0.7288 and 0.7175; for that, we expect a range of 113 pips (0.7288 - 0.7175). If the NZD/USD pair fails to break through the resistance level of 0.7288, the market will decline further to 0.7175. This would suggest a bearish market because the RSI indicator is still in a positive area and does not show any trend-reversal signs. The pair is expected to drop lower towards at least 0.7175 with a view to testing the daily support 1. On the contrary, if a breakout takes place at the resistance level of 0.7329, then this scenario may become invalidated.
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EUR/JPY forming a nice reversal pattern, remain bearish

The price is approaching major resistance at 130.07 (Fibonacci retracement, Fibonacci extension, bearish divergence) and we expect to see a strong reaction off this level for a drop to at least 128.92 support (Fibonacci retracement, horizontal swing low support).

Stochastic (34,5,3) is seeing major resistance below 94% and also sees bearish divergence vs price signaling that a reversal is impending.

Correlation analysis: We're seeing JPY strength with drops on AUD/JPY, EUR/JPY, and USD/JPY.

Sell below 130.07. Stop loss is at 130.35. Take profit is at 128.92.

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AUD/JPY testing major resistance, remain bearish

The price is back to testing our selling area. We remain bearish looking to sell below strong resistance at 86.57 (Fibonacci retracement, Fibonacci extension) for a corrective drop towards 85.42 support (Fibonacci extension, horizontal swing low support).

Stochastic (34,5,3) is seeing major resistance at 91% and has reversed nicely from there.

Correlation analysis: We're seeing JPY strength with drops on AUD/JPY, EUR/JPY, and USD/JPY.

Sell below 86.57. Stop loss is at 85.42. Take profit is at 87.17.

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EUR/USD dropping perfectly towards profit target, remain bearish

The price has started to drop really nicely towards our profit target. We remain bearish below major resistance at 1.1824 (Fibonacci retracement, horizontal overlap resistance, pullback resistance) and we expect to see a drop below this level to at least 1.1615 support (Fibonacci retracement, horizontal swing low support, Fibonacci extension).

RSI (34) sees intermediate resistance at 56% which is holding the price down really well. As long as RSI remains below 56%, we will maintain our bearish bias.

Sell below 1.1824. Stop loss is at 1.1928. Take profit is at 1.1615.

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Daily analysis of major pairs for August 16, 2017

EUR/USD: The EUR/USD has reluctantly generated a bearish signal on the 4-hour chart. The price has gone below the resistance lines at 1.1800 and 1.1750, now going towards the support lines at 1.1700 (which was previously tested this week), and 1.1650. The support lines may even be exceeded as the USD/CHF, which trades in the opposite direction to the EUR/USD continues to go upwards.

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USD/CHF: Bulls have made a commendable effort to push price northwards, and there are some tangible results for their action. Price has gone north this week, testing the resistance level at 0.9750, which may be exceeded as another resistance level at 0.9800 is aimed. The Williams' % Range period 20 is now in the overbought region. The bulls' intent is quite strong.

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GBP/USD: The GBP/USD has dropped further downwards, creating an interesting bearish signal in the market (just as certain other majors have also produced signals). The price has gone down by over 150 pips this week, now testing the accumulation territory at 1.2850, which would be breached to the downside as the bearish movement continues.

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USD/JPY: A clean bullish signal has eventually been generated on this currency trading instrument. Price has gained about 150 pips this week, now above the demand level at 110.50. The EMA 11 has crossed the EMA 56 to the upside, and the RSI period 14 has crossed the level 50 to the upside. The next targets are the supply levels at 111.00 and 111.50, which would be tested very soon.

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EUR/JPY: This cross has continued to make a bullish effort, which would eventually result in a bullish signal once the price goes above the supply zone at 130.50. The market is currently volatile, but a directional movement is expected very soon. There are demand zones at 129.50 and 129.00.

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Ichimoku indicator analysis of USDX for August 16, 2017

The Dollar index continues its expected bounce on a larger degree as we have expected for the past two weeks after making a major importance low two weeks ago. The trend is bullish as long as we hold above August lows. I expect the upside to continue for a couple of index points higher.

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In the short-term price has pushed again above the Ichimoku cloud and this confirms our bullish short-term view. Support is at 93.55-93.10 and resistance at 95-96. I expect this upward move to continue for at least one more week.

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On a weekly basis, we observe the early stages of a bullish reversal. I expect the price to move at least towards the red line indicator (tenkan-sen). A break above it will open the way for a back test of the weekly Kumo (cloud). This would be the main scenario.

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Ichimoku indicator analysis of gold for August 16, 2017

Gold is pulling back but the overall trend remains bullish. We have a weekly breakout and a back test in play. A short-term support that could justify a reversal is very close.

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In the 4-hour chart, the price is above the Kumo. RSI (5) is oversold and turning higher. Support is at $1,260. I see low chances of moving below the cloud. It is highly possible to see an upward reversal soon to new highs above $1,300. Resistance is at $1,280.

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Black line -long-term resistance

Blue line -long-term support

The gold price has broken last week above the long-term trend line resistance. This week we see a back test. I expect the price to hold above it and continue higher towards $1,450 over the coming months.

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Fundamental Analysis of GBP/USD for August 15, 2017

GBP/USD has been impulsively bearish recently which lead to a great fall from 1.3250 to 1.2850. Due to Brexit uncertainty, the currency is affected and found losing a good amount of pips today against USD. Today GBP CPI report was published with unchanged value of 2.6% which was expected to increase to 2.7%, PPI Input report was published with worse than expected value at 0.0% which was expected to be at 0.4% from the previous value of -0.3% and RPI report was published with a slight rise to 3.6% which was expected to be unchanged at 3.5%. Due to the majority of worse high impact economic report published today GBP has turned quite weaker which is expected to continue further in the coming days. On the other hand, today USD Core Retail Sales report was published with better than expected value at 0.5% from the previous value of 0.1% which was expected to be at 0.3%, Retail Sales report was published with an increase to 0.6% which was expected to be unchanged at 0.3%, Empire State Manufacturing Index was also published with better than expected figure at 25.2 from the previous value of 9.8 which was expected to be at 10.1 and Import Prices met the expectation at 0.1% which previously was at -0.2%. USD had a respectable number of economic reports with better figures which lead to further gains on the USD side making GBP get weaker in comparison. As of the current scenario, USD is expected to continue the gains for the coming days until GBP comes up with a better high impact economic report.

Now let us look at the technical view, the price is currently residing at the edge of trend line support and as of the impulsive price action recently is expected to be bearish in the coming days. The bullish trend has been quite volatile along the way but the bullish bias is still expected to continue further until price breaks below 1.2750 with a daily close. As the price remains above the 1.2750-1.2800 support area the bullish bias is expected to continue further.

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Daily analysis of USDX for August 16, 2017

USDX had a strong rally and was the strongest currency against the major competitors and it's now consolidating above the 200 SMA at H1 chart. To the upside, a resistance can be found around the 94.11 level, at which a breakout should expose the 94.58 level, while a pullback can take the index to retest the 200 SMA.

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H1 chart's resistance levels: 94.11 / 94.58

H1 chart's support levels: 93.74 / 93.28

Trading recommendations for today: Based on the H1 chart, place buy (long) orders only if the USD Index breaks with a bullish candlestick; the resistance level is at 94.11, take profit is at 94.58 and stop loss is at 93.66.

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Daily analysis of GBP/USD for August 16, 2017

The pair had a quite volatile session amid holidays in most of the European countries on Tuesday. Support zone of 1.2850 is being challenged by the bears and if we see a breakout below that area, we can expect further continuation towards the 1.2761 level. Such move strengthened the bearish bias and one could expect more downside in the days ahead. MACD indicator is entering the oversold territory.

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H1 chart's resistance levels: 1.2958 / 1.3021

H1 chart's support levels: 1.2850 / 1.2761

Trading recommendations for today: Based on the H1 chart, sell (short) orders only if the GBP/USD pair breaks a bearish candlestick; the support level is at 1.2850, take profit is at 1.2761 and stop loss is at 1.2938.

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Brent Stretches the Rope

The US dollar strengthening due to the de-escalation of the conflict on the Korean Peninsula, the growing probability of the Fed's monetary tightening in December from 36% to 49%, an unpleasant surprise from Chinese demand and growing volumes of shale oil production lowered the prices of futures for Brent and WTI to the three-week lows. The market once again engaged in its favorite activity - a tug of war. Clearly, the reduction in OPEC production increases the possibility of the North Sea oil grade rising to $60 per barrel, but the American hedgers have immediately priced it in. And, contrarily, a drop to $40 per barrel will prompt the cartel to toughen its aggressive commentary, while this will cause shale producers to be worried.

There are so many contradicting information on the market today that even traders with 30-year experience flee from there, claiming that they broke away from the fundamentals and that trading robots have control of the ball. If OPEC begins to hint at extending the agreement beyond March 2018, then this is no longer perceived as a "bullish" signal. This is, rather, a sign of weakness, a forced measure to balance the market. According to the latest IEA study, global reserves at the end of the second quarter declined by 500 000 b/d and amounted to 3 billion b/d. Nevertheless, the figure is higher than the upper ceiling of its five-year average for this period of time, and on the sidelines of the market there are speculations that the cartel requires the extension of the agreement to reduce production for a long period to bring it back to the historical range.

The growing uncertainty makes hedge funds extremely cautious about changing their trading positions. By the end of the week by August 8, net-long positions for WTI increased by a modest 0.8%. This is only the third time this year when the indicator has changed by less than 1%. Speculators are unsure of what to do, and are preferring to wait for new drivers.

The dynamics of oil prices and speculative positions on WTI

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Source: Bloomberg.

As soon as information was received that the volume of Chinese oil refining in July fell to the lowest levels since September 2016, while shale oil production forecasts in the US showed the ninth month of gains in September 2017 (6.15 million b/s), these became the basis for closing long positions for Brent and WTI.

Another thing that played a role was the US dollar which strengthened against the backdrop of the moderate "hawkish" comments of New York Fed chief William Dudley. He said he would support the idea of a third hike in the federal funds rate in 2017 if the US economy continues to gain momentum. As a result, the USD index went up, putting pressure on black gold.

Over the medium term, it is hardly worthwhile to wait for exploits from "bulls" or "bears". The market has found its trading range ($40-60 per barrel) and it is ready to remain in this range for a long time. Technically, it is mirrored in the retreat of Brent quotes to the lower border of the upstream trading channel after the realization of a target of 88.6 percent over the inverted "bat" pattern. The breakthrough of diagonal support will increase the risks of correction in the direction of $48.85 and $47.7. On the contrary, the retreat will bring back the "bulls" to life.

Brent, daily chart

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