Fundamental analysis of GBP/USD for August 22, 2017

GBP/USD has been quite bearish recently after breaking below the 1.2950 level. There has been a good amount of correction in this pair, before it broke out. There has been lack of positive news from the United Kigdom and lack of support from the ECB after the Brexit, so the pound fails to gain over the US dollar. Today the United Kingdom published the CBI Industrial Order Expectations report with an increase figure at 13 from the previous figure of 10 which was expected to decrease to 8. Despite the better economic report, GBP failed to gain over USD which signals weakness of the British currency. Speaking about news from the US, today the HPI report is going to be published which is expected to increase slightly to 0.5% from the previous value of 0.4%. Besides, the Richmond Manufacturing Index is expected to decrease to 11 from the previous figure of 14. Though the expectations of the USD reports are quite mixed, any better-than-expected data will cause further gains on the USD side in the coming days. Moreover, the US rate hike announcement and Yellen's speech are expected this week so USD may get additional support to rise against GBP.

Now let us look at the technical view. The price has recently broken below the trend line of March 2017 and retested it as well, which is expected to provide more bearish pressure in the coming days. As the price breaks below 1.2800-1.2750 support area with a daily close, further bearish move with a target towards 1.2550 is expected to be hit in the coming days. On the other hand, if the price remains above the 1.2800-1.2750 support area with a daily close, then we can see bullish intervention in the process. As the price remains below 1.2950, the bearish bias is expected to continue further.

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Fundamental analysis of USD/JPY for August 22, 2017

USD/JPY has been impulsively bearish after bouncing off the resistance area of 110.00-60 recently. USD/JPY was trading with bearish bias yesterday due to lack of positive economic reports on the USD side but as there are certain chances of a rate hike announcement this week, USD is expected to recover again in the coming days. Moreover, Yellen's speech on Friday is expected to have strong impact on the current market scenario. Yesterday, Japan's All Industrial Activity index showed a positive value at 0.4% which previously was negative at -0.8% and was expected to be at 0.5%. Though ths report could not quite fulfill the expectations yesterday, it provided support to the Japanese currency, whereas USD had no economic reports or events. Today the HPI report is going to be published in the United States which is expected to have a slight increase to 0.5% from the previous value of 0.4%. Besides, the Richmond Manufacturing Index is expected to decrease to 11 from the previous figure of 14. Today the upcoming US reports are expected to produce minimal effect on the market despite mixed expectations. As of the current scenario, USD is weaker than JPY due to the recent downbeat economic reports whereas the rate hike announcement this week may inject some positive sentiment towards the USD which might lead to recovery against JPY in the future.

Now let us look at the technical view. The price is currently showing some bullish move despite the impulsive bearish price action yesterday. Currently the price is expected to reach the resistance area of 110.00-60 in the coming days before it bounces off again for further bearish pressure with target towards 108.50 support area. On the other hand, if the price breaks above the 110.60 resistance level with a daily close, then we will be looking forward to see another bullish pressure towards 112.30. As the price remains below 112.30 with a daily close, the bearish bias is expected to continue further.

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Technical analysis of USD/CHF for August 22, 2017

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Overview:

  • The USD/CHF pair continues moving upwards from 0.9639/0.9600. The bias remains bullish in the nearest term testing 0.9763 or 0.9800. The market has been trading around the area of 0.9639/0.9600 this week. The pair rose from the levels of 0.9639 and 0.9600 (these levels coincide with the ratios of 61.8% 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. The USD/CHF pair is still moving between the levels of 0.9693 and 0.9763 in coming hours. On the one-hour chart, the 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 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. The trend is still calling for a strong bullish market as long as the trend is still above the level of 0.9600 (50% of Fibonacci retracement levels).
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Technical analysis of NZD/USD for August 22, 2017

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Overview:

  • The NZD/USD pair still is moving towards the resistance area of 0.7329-0.7360 in order to fall again from the level of 0.7329 (this level coincides with the ratio of 38.2%).
  • Usually, history repeats itself. However, the first resistance level is seen at 0.7288 followed by 0.7328 and 0.7360, while daily support 1 is found at 0.7175.
  • According to the previous events, the NZD/USD pair is still moving between the levels of 0.7288 and 0.7175; hence, we expect a range of 113 pips.
  • 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.
  • Contrariwise, if a breakout takes place at the resistance level of 0.7329, then this scenario may become invalid. Therefore, we still expect the bearish market as long as the trend is below the price of 0.7359 (R3).
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Global macro overview for 22/08/2017

Global macro overview for 22/08/2017:

The Canadian wholesale sales declined in June as inventories rose. According to Statistics Canada, the Wholesale Sales fell 0.5% over the course of June, missing expectations for a 0.6% gain after an upwardly revised 1.0% rise in the prior month. In real terms, sales declined 0.7% to give a 6.3% annual increase. For the second quarter, sales rose 2.5% with a 1.7% gain in real terms.The biggest decline was noted in food and drink sector (1.0%), but the overall fall was seen in five of the seven sub-sectors anyway. Inventories rose 0.6% on the month and have increased in ten of the last eleven months with the inventory/sales ratio rising to 1.30 from 1.28 previously.

Changes in Wholesale Sales can be used as an early indicator for the overall direction of the retail sector, consumption, and the economy. Nevertheless, the Bank of Canada will likely remain confident of a robust economic growth despite the weaker-than-expected data. Economists suggested the weak report was unlikely to cause concerns because only one monthly decline was registered. Moreover, both retail and wholesale sales revealed generally strong growth momentum in previous months.The doubts might increase if the slide persists over the next few months, especially in the housing sector, because it might start to have a negative impact on wider consumer spending trends. In the current situation, the low unemployment rate, high GDP projections, and the inflationary pressures are still supporting the Bank of Canada's intention for one more rate hike in October. This will likely result in a broader appreciation of the Canadian dollar across the board.

Let's now take a look at the EUR/CAD technical picture on the H4 timeframe. Bears have managed to retrace 50% of the previous swing up and stopped at the level of 1.4729. Currently, the price is trying to bounce from the oversold market conditions, but the technical resistance at the level of 1.4877 remains a tough nut to crack so far.

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Global macro overview for 22/08/2017

Global macro overview for 22/08/2017:

According to a survey conducted by the US National Association for Business Economics in August, only 17% of economists think Janet Yellen will remain in the Fed President's chair for the next term (after February 2018). The current shortlist include Gary Cohn (current White House economic adviser), who has 49% chances, former Fed member Kevin Warsh (9%), Stanford University economist John Taylor (6%), and Glenn Hubbard of the University of Columbia (4%).

The results of a survey of as many as 176 economists on the possible future of the Fed Chairperson appeared several days before the Jackson Hole symposium. Can it be the last public appearances at this place by Janet Yellen? In the current situation, all speculations regarding the future of Jannet Yellen are premature. The reason is quite simple: Trump's administration has far more problems to solve than the appointment of a new Fed boss. Moreover, Yellen's monetary policy in recent months has been linked to a gradual and balanced monetary tightening and a weaker US Dollar, which in fact is a preferable situation for Trump.

Global investors will get familiar with more details from the Fed on Friday afternoon when Jannet Yellen will give a speech at Jackson Hole. There are many possible scenarios being anticipated right now by markets, but the most important issue is a question, whether there will be any changes in long-term expectations of FOMC members regarding interest rates that will be introduced at the Fed next meeting in September. Anything else seems to be pure speculations.

Let's now take a look at the US Dollar Index technical picture on the H4 timeframe. The price has broken out from the navy channel around the level of 93.30 and bounced from the technical support at the level of 93.02. Currently, the price is testing the channel line from below in oversold market conditions. The next technical resistance is seen at the level of 93.63.

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Trading plan for 22/08/2017

Trading plan for 22/08/2017:

Dollar appreciation is visible from the morning, but the rise lacks momentum. The weakest currencies are JPY (-0.21%) and CHF (-0.23%). The Asian indices record quite a positive session - the impact is on the rise of industrial metal prices. The Hang Seng is up 1%, the Shanghai Composite added 0.2%, but the Nikkei 225 can not move away from yesterday's closing price.

On Tuesday 22nd of August, the event calendar is light, but market participants will keep an eye on the ZEW Economic Sentiment data from Germany, Retail Sales from Canada and House Prices Index from the US.

Analysis of EUR/USD for 22/08/2017:

The ZEW Economic Sentiment data are scheduled for release at 09:00 am GMT and market participants expect a decrease in all three components of the ZEW data. The German ZEW Current Situation is expected to slide from 86.4 to 85.2 points. At the same time, the ZEW Economic Sentiment index is expected to fall from 17.5 to 14.8 points. In the EU the Economic Sentiment is expected slide from 35.6 to 34.6 points. So, the August update of Germany's ZEW Economic Survey is expected to dip mildly, but there is always something to worry about when looking ahead in the German economy. The most recent concern is "diesel gate", that had begun two years ago with Volkswagen emissions scandal. This is still a very serious risk for the reputation of German high-quality auto and industrial sector of the economy. The ZEW Expectations benchmark is on track to fall to 13.3, a five-month low, suggesting more overall trouble in the second-half of the year. On the other hand, the hard data still indicate that German economy is currently a high-performer and economic growth remains robust.

Let's now take a look at the EUR/USD technical picture on the H4 timeframe. The market is still consolidating the gains in the narrow trading zone between the technical support at the level of 1.1614 and technical resistance at the level of 1.1908. This sideway move might last even until Friday when the fundamental event in a form of Mario Draghi's speech in Jackson Hole might trigger a breakout in either direction.

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Market Snapshot: USD/JPY close to breaking out lower

The price of USD/JPY had tested the technical support at the level of 108.79 four times already, but no follow through has occurred so far. A slight bullish divergence between the price and the momentum oscillator indicates a bullish corrective move towards the next technical resistance at the level of 109.84 before any breakout happens.

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Market Snapshot: DAX still under the trend line

The German index DAX is still trading below the golden trend line dynamic resistance around the level of 12,100. The key level for bulls is technical resistance at the level of 12,338, so this level must be violated before any new low below the technical support at the level of 11886 will happen. Otherwise, bears will confirm their strength and might try to push the prices lower towards the next important technical support at the level of 11,425.

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Elliott wave analysis of EUR/NZD for August 22, 2017

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Wave summary:

We continue to look for more upside pressure towards 1.6236 and above here for continuation towards 1.6969 as the next larger target. On the way towards this target minor resistance will be seen at 1.6349 and again at 1.6636.

In the short term only an unexpected break below minor support at 1.6040, will delay the expected rally higher.

R3: 1.6349

R2: 1.6236

R1: 1.6197

Pivot: 1.6100

S1: 1.6084

S2: 1.6040

S3: 1.6000

Trading recommendation:

We bought EUR at 1.6125 and will place our stop at 1.6025.

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Elliott wave analysis of EUR/JPY for August 22, 2017

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Wave summary:

EUR/JPY seems to have bottomed just above the ideal 127.19 target (the low has been seen at 127.52). The break above minor resistance at 128.45 was the first indication that the x wave from 131.40 has completed and wave Z towards 137.36 is developing now.

In the short term, we would like to see a firm break above 129.18 and more importantly a break above resistance at 130.40 confirming the expected rally higher to 137.36.

R3: 130.40

R2: 129.50

R1: 129.18

Pivot: 129.00

S1: 128.63

S2: 128.42

S3: 128.04

Trading recommendation:Our stop+revers at 128.50 was hit for a minor profit on our short position and a new long position. We will place our stop at 127.75.

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Trading plan 21 - August 25, 2017

Trading plan 21 - August 25, 2017

The general picture: Increase in volatility is expected.

The week began with agitation: the military exercises of South Korea and the US will start on Monday which can cause a new outburst in tension in Korea. Although the market did not decline largely, the tension has risen.

Among the expected events, the most important is the meeting of the heads of the world's largest securities in Jackson Hole in Canada to be held on Thursday and Friday, August 24-25. The speeches of both the ECB leaders and the Fed are much awaited. Also, the Fed Chairman Yellen will speak on Friday, August 21, at 14.00 London time. On Friday, the markets can actively win back orders for U.S. durable goods at 12.30 London time.

The main movement of the current trend is probably a strong one but up or down fluctuations (in dollars) is almost 50/50.

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Formed a narrow consolidation within the following boundaries:

- Daily scale 1. 1660 - 1.1790

- Weekly scale 1.1660 - 1.1910

Formally, the EUR/USD remains in the growth trend but a considerable distance has been achieved that makes a strong pullback (up to 1.1500) or even a downward turn possible if there are important news factors. At the same time, a new strong wave of growth is quite possible and a breakout to the top of 1.1790 followed by another breakout in 1.1910 and a rate of 1.2000. Moreover, both a strong upward movement and a strong pullback are possible to occur within the week.

Buying is recommended after a breakout in the 1.1790 while selling is advised below 1.1660.

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Fundamental analysis of EUR/USD for August 21, 2017

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Fundamental analysis of EUR/USD for August 21, 2017

Ichimoku indicator analysis of USDX for August 22, 2017

The US dollar index has broken the channel and the cloud support. This is a bearish sign. Price is now back testing the breakdown level. I expect to see more selling pressures against the dollar over the coming sessions.

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Red lines - bullish channel

The dollar index has not only broken below the 4 hour Kumo but also has moved out of the bullish channel. Short-term trend is changing to bearish again. Price is now back testing the lower end of the channel. Usually price gets rejected and that is what I expect in the short term.

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Red lines - bearish channel

The dollar index daily candle got rejected at the tenkan-sen yesterday and is moving lower. Price as mentioned above has moved below the bullish channel. These signs are bearish and that is why I expect the dollar index to get rejected once again and move to new lows.

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Ichimoku indicator analysis of gold for August 22, 2017

Gold price could not break above the resistance at $1,300 yesterday and is turning lower. The corrective phase in gold may be not over yet, so we could see lower price levels again. Weekly support and important for the medium-term trend is at $1,247.

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Magenta lines - expected price movement

The short-term support is at $1,282. If broken, we should expect gold price to move towards the 4 hour Kumo (cloud) at $1,275 and bounce strongly from that level. Overall, a move lower in gold prices is not a bearish signal for me but a buying opportunity.

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Black line - long-term resistance

Blue line - long-term support

Price has broken the long-term trend line resistance and is trading above the weekly Kumo. The weekly support is found at $1,247. A pullback towards $1,250 is not out of the question and it would be a gift for gold bulls. We remain bullish on gold in the longer term.

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Daily analysis of major pairs for August 22, 2017

EUR/USD: This pair made some bullish effort on Monday – but that seemed not significant enough to affect the ongoing neutrality of the market. A breakout that can put an end to the current neutrality would happen before the end of this week, and that would make price go above the resistance line at 1.1900 or below the support line at 1.1650. A movement to the downside is more likely, but the support line at 1.1750 ought to be breached to the downside first (it has been tested many times without being broken).

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USD/CHF: There is a bearish signal on the USD/CHF pair. The bearish signal would become stronger once the support levels at 0.9600 and 0.9550 and breached to the downside. There could also be a bullish movement, which may render the short-term bearishness invalid, for USD is supposed to go upwards this week, while CHF becomes weak.

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GBP/USD: This pair moved sideways yesterday in the context of a downtrend. There is the Bearish Confirmation Pattern in the chart, but further sideways movement could result in a short-term neutrality. There would be a movement above the distribution territory at 1.3000 or a movement below the accumulation territory at 1.2750, before there is a directional bias. The current impediment is the accumulation territory at 1.2850, which needs to be breached at first, after being tested many times.

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USD/JPY: This currency trading instrument reflects some power tussle between bulls and bears. The overall bias is bearish and price could continue going downwards, reaching the demand levels at 109.00 and 108.50. Rallies in the market can be taken as opportunities to sell short at better prices.

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EUR/JPY: This pair made some bullish effort on August 22, 2017, while the major bias remains bearish. Unless price goes above the supply zone at 130.00 (which could threaten the current bearish bias), it is expected to drop from here, testing the demand zones at 126.50 and 126.00, even going lower than that.

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Technical analysis of EUR/USD for Aug 22, 2017

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When the European market opens, some economic data will be released such as the ZEW Economic Sentiment and German ZEW Economic Sentiment. The US will also publish the key reports such as the Richmond Manufacturing Index and HPI. So, amid the reports EUR/USD will move with a low to medium volatility during this day.

TODAY'S TECHNICAL LEVELS:

Breakout BUY Level: 1.1868.

Strong Resistance:1.1861.

Original Resistance: 1.1850.

Inner Sell Area: 1.1839.

Target Inner Area: 1.1811.

Inner Buy Area: 1.1783.

Original Support: 1.1772.

Strong Support: 1.1761.

Breakout SELL Level: 1.1754.

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/JPY for Aug 22, 2017

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In Asia, Japan today will not release any important economic data but the US will unveil some key news such as the Richmond Manufacturing Index, HPI m/m. So there is a probability that USD/JPY will move with low to medium volatility during this day.

TODAY'S TECHNICAL LEVELS:

Resistance. 3: 109.77.

Resistance. 2: 109.56.

Resistance. 1: 109.34.

Support. 1: 109.08.

Support. 2: 108.87.

Support. 3: 108.65.

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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EUR/JPY approaching major level of resistance, prepare to sell

Price is approaching a major level of resistance at 128.95 (Fibonacci retracement, horizontal pullback resistance, Fibonacci extension) and we expect to see a strong reaction off this level for a push down to first 127.56 support (Fibonacci retracement, horizontal swing low support) before 127.04 (Fibonacci extension).

Stochastic (34,5,3) is seeing the major resistance below 93% and we expect to see a strong reaction from this level.

Sell below 128.95. Stop loss at 129.54. Take profit at 127.56 and 127.04.

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GBP/USD approaching major resistance, prepare to sell

Price is approaching major resistance at 1.2930 (Fibonacci retracement, horizontal pullback resistance, bearish divergence) and we expect to see a strong reaction off this level for a drop to at least 1.2844 support (Fibonacci extension, horizontal swing low support).

Stochastic (34,5,3) is seeing the major resistance below 88% and also sees a bearish divergence vs price signalling that a reversal is fast approaching.

Sell below 1.2930. Stop loss at 1.2974. Take profit at 1.2844.

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NZD/USD testing major resistance, remain bearish

Price is now testing the major resistance at 0.7337 (Fibonacci retracement, horizontal swing high resistance, bearish divergence) and we expect a drop from this level to at least 0.7223 support (Fibonacci extension, horizontal swing low support).

Stochastic (34,5,3) is reversing nicely below our 96% resistance and we also see a bearish divergence vs price signalling that a reversal is impending.

Sell below 0.7337. Stop loss at 0.7373. Take profit at 0.7223.

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USD/JPY testing major support, remain bullish for a push up

Price is once again testing our major level of support at 108.85. Our plan is to buy above this major support of 108.85 (Fibonacci extension, horizontal swing low support) for a push up to at least 110.28 resistance (Fibonacci retracement, horizontal overlap resistance).

Stochastic (21,5,3) is bouncing off nicely from our 2.3% support with good upside potential.

Buy above 108.85. Stop loss at 108.28. Take profit at 110.28.

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AUD/JPY dropping nicely towards profit target, prepare to buy on major support

Price has dropped perfectly towards our profit target. We prepare to buy above major support at 86.02 (Fibonacci retracement, Fibonacci extension, horizontal swing low support) for a push up first to 87.01 (Fibonacci retracement, horizontal overlap resistance, Fibonacci extension) before a further push up to 87.38 resistance (Fibonacci retracement, Fibonacci extension, horizontal overlap resistance).

Stochastic (34,5,3) is seeing strong support above 1.5% where we expect a further bounce from.

Buy above 86.02. Stop loss at 85.72. Take profit at 87.01 and 87.38.

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AUD/USD approaching major resistance, prepare to sell

Price has slowly creeped up towards our selling area and is starting to form a really nice reversal pattern. We prepare to sell on major resistance at 0.7964 (Fibonacci retracement, horizontal swing high resistance, Fibonacci extension, bearish divergence) for a push down to at least 0.7874 support (Fibonacci retracement, horizontal overlap support).

Stochastic (21,5,3) is seeing the major resistance below 95% where we expect a drop from. We also see a bearish divergence vs price signalling that a reversal is impending.

Sell below 0.7964. Set stop loss at 0.7997 and take profit at 0.7874.

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Daily analysis of USDX for August 22, 2017

USDX remains weak and bears took were in control during the Monday's session. Currently, the index is piercing the support zone of 93.28 and is looking to test the next bottom around 92.97. However, overall structure is choppy and we would prefer to stay on hold until the index does a significant break of the range that had been established earlier.

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H1 chart's resistance levels: 93.72 / 94.11

H1 chart's support levels: 93.28 / 92.97

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 93.72, take profit is found at 94.11 and stop loss lies at 93.33.

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Daily analysis of GBP/USD for August 22, 2017

GBP/USD had a quiet start of the week and remains supported by the 1.2850 level. The 20 SMA at H1 chart is getting closer to the current price in the Cable and it could act as a dynamic resistance across the board. If it gives up, further gains are expected towards 1.2958 level. Above it, the next barrier is placed at the 1.3021 level.

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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, place sell (short) orders only if the GBP/USD pair breaks a bearish candlestick; the support level is found at 1.2850, take profit lies at 1.2761 and stop loss is at 1.2938.

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The yen floats with the flow

Despite the absence of important events in the economic calendar for the Land of the Rising Sun, the Japanese yen can still easily claim a role of the most interesting currency for the last full week of August. The reason could be seen in the reduced sensitivity of the major world currencies to macroeconomic statistics. So, the US dollar was rather calm about the strong data on the labor market, the retail sales, and the consumer sentiment index from the University of Michigan. Add to that the dollar's response to the political situation in the US. The dollar hardly reacted to the dissolution of Donald Trump's economic advice, the rumors about the departure of Gary Cohen from the White House, and the resignation of Stephen Bennon. The policy continues to eclipse the economy. In such conditions, the demand for the assets-shelters goes off scale.

It is a wonder if the Bank of Japan could foresee the direction of the policy which targets the yield curve that indicates that it will not be able to control the yen's rate. Theoretically, pegging the USD / JPY pair to the yield of US Treasuries in a situation where the Fed raises the federal funds rate should have sparked a green light before the devaluation of the local currency, increased inflation expectations, and accelerated consumer prices. In practice, it turned out differently. Geopolitics and the loss of faith of investors in Donald Trump lead to lower rates of the US debt market and falling quotations USD / JPY.

Dynamics of USD / JPY and US Treasury yields

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Source: Trading Economics.

In such cases, few people look at the internal statistics for the Land of the Rising Sun. What difference does it make if the GDP in the second quarter was the best growth since the beginning of 2015 (+ 1% m / m)? Does it matter that external demand does not keep pace with domestic demand? This, coupled with the revaluation of the yen, is reflected in the outstripping of import dynamics (+ 16.3% y / y) over exports (+ 13.4% y / y). The main driver for change in USD / JPY pair is the events occurring in the States. Meanwhile, the yen appears to only go with the flow.

Dynamics of Japan's exports and imports

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Source: Bloomberg.

In this respect, further dynamics of the analyzed pair will depend on the change in the world view of investors. It was not expected that Trump's economic advice would be so effective that their dissolution would finally kill the hopes for the dispersal of the US GDP to 3%. It wasn't expected as well that the withdrawal of the main supporter of the trade war with China will lower the bond yields below its current amount. Rather, the expectations were on the contrary. Putting things in order in the White House will increase the chances of realizing the tax reform and will strengthen the dollar.

It is generally believed that the "bears" for the USD / JPY pair will soon have new trump cards in the form of a problem with regards to the ceiling of the national debt and the potential correction of US stock indices. Nevertheless, few believe in the technical default of the United States. That's why the rollback of the S&P 500 is said to come for a very long time, but it is still there. The factors are clearly short-term and their repayment will make it possible to buy the dollar.

Technically, a break below the supports at 109 and 108 activates the pattern AB = CD and will increase the risk of continuing the downward path towards the direction of 104. On the contrary, the inability of the "bears" to keep the quotes below the lower limit of the upward trading channel will be an indication of their weakness.

USD / JPY, daily chart

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