Gold’s rise from 741.2 extends further to as high as 835.3 before retreating mildly. Though, intraday bias remains on the upside as long as 798.1 minor support holds. Focus remains on 61.8% retracement of 936.3 to 681 at 838.8. Decisive break will will indicate that correction from 1033.9 might have bottomed out at 681 and stronger rise could be seen targeting 936.3 resistance first. However, bounce off from this fibo resistance will affirm original short term bearish case and indicate that fall from 936.3 is still in progress. Below 798.1 will turn intraday outlook neutral first. Further break of 741.2 support will indicate that corrective rise from 681 has completed and bring retest of this low first. Read the rest of this entry »

Daily Report: A Busy Day Featuring BoE and FOMC Minutes

The forex markets are still bounded in tight range in generally as markets are still searching for a theme and direction. Meanwhile, as mentioned before, Swiss Franc remains the weaker one as driven by its pull back in EUR/CHF and GBP/CHF crosses. USD/CHF continues to climb higher. GBP/USD, on the other hand, loses momentum after hitting 1.5080 minor resistance. Dollar index continues to be bounded inside a triangle like consolidation pattern below 87.98. A number important events are scheduled today, including the release of FOMC and BoE minutes as well as US housing and inflation data, which could trigger some volatility in the markets.

BoE MPC minutes are expected to reveal a 9-0 vote for the surprised 150bps cut earlier this month. With core CPI having the steepest drop in at least 11 years and a clear sign of turnaround in inflation trend, markets expect that BoE is now free to have further steep rate cuts from BoE to avoid a prolonged recession in the UK economy. Indeed, markets are pricing in another 100bps cut over the next 12 months. The minutes are expected to affirm this view. But the impact on Sterling might be minimal.

FOMC minutes, on the other hand, is expected to elaborate on the perceived dovish bias of Fed and provide details of the discussions between board members, including those in the intermeeting cut before Oct 29. Markets are pricing in 90% chance of another 50bps cut from Fed on Dec 16 and the minutes will likely have little impact to this view based on current economic and inflation outlook.

Consumer inflation in US has peaked at 5.5% in Jul and is expected to continue the down trend in Oct. Headline CPI in US is expected to moderate drop sharply by -0.8% mom in Oct, with year-over-year rate steeply down from 4.9% to 4.0%. Core CPI is expected to rose 0.2% with year-over-year rate down to 2.4%, after plateau at 2.5% for three consecutive months from Jul to Sep.

NAHB builder confidence surprised the markets yesterday by plummeting sharply from then record low of 14 in Oct to new record low of 9 in Nov. Such pessimism is expected to be reflected in today’s new residential construction data too. Housing starts is expected to continue the down trend and drop from 0.82m to 0.78m annualized rate. Building permits is also expected to drop from 0.81m to 0.78m annualized rate.

Weekly Review and Outlook: Sterling Dived in Volatile but Indecisive Markets
Dollar and yen were broadly higher last week on risk aversion as economic data continued to confirm the global economy is entering into recession. However, the overall short term outlook in the forex markets remained rather mixed. Dollar index made a new high at 87.98 but failed to sustain there and retreated back into established range below 87.87. Indeed, looking at the monthly currency heat map, most of the pairs are still kept inside last month’s range with the exception of some Sterling pairs and USD/CHF. Developments in EUR/USD, EUR/JPY, AUD/USD, AUD/JPY argue that these pairs are still bounded in consolidation after last months’ sharp fall. The indecisiveness in forex markets could be attributed to the lack of direction in the stock markets. DOW dived to as low as 7965 but staged a strong rebound before weakening again towards the end of the week. And, the index is still staying in established range of 7884 and 9785 as consolidation continued. Gold is still bounded between 681 and 778. Crude oil, on the other hand extended the down trend to below 55.
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GBP/JPY’s fall from 165.02 continues today and reaches as low as 147.63 so far. At this point, intraday bias remains on the downside as long as 154.23 minor resistance holds. Further decline is expected to retest 139.02 low first. Break will confirm that recent down trend has resumed. On the upside, above 154.23 will turn intraday outlook neutral. Further break of 157.63 will indicate that consolidation from 139.02 is still in progress and could retest 165.97 resistance before completion. Read the rest of this entry »

Daily Pivots: (S1) 1.5261; (P) 1.5482; (R1) 1.5601

GBP/USD’s fall from 1.6671 extends further to as low as 1.5347 before recovering mildly. At this point, it’s still uncertain on whether such decline represents resumption of the prior down trend or it’s merely part of the consolidation that started at 1.5269. Nevertheless, intraday bias remains on the downside as long as 1.5884 minor resistance holds and retest of 1.5269 low should be seen. Sustained break will confirm that recent down trend has resumed for 161.8% projection of 2.0158 to 1.7445 from 1.8668 at 1.4278 next. On the upside, though, above 1.5884 will suggest that fall from 1.6671 has completed and consolidation from 1.5269 is still in progress for another rise to 1.6771 before completion. Read the rest of this entry »

Silver recovers mildly today ad is back above 103 level. Though, the short term outlook remains mixed for the moment. The case that a short term bottom is in place at 8.4 is still mildly in favor. But a break of 11.195 resistance is needed to confirm. In such case, stronger rally should be seen towards 13.88 resistance. On the downside, however, below 9.2 will argue firstly flip intraday bias back to the downside for retesting 8.4. Secondly it will also argue that recent down trend is still in progress.

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Nymex Crude Oil (CL)

Crude oil continues to stay in tight range between 61.3 and 70.6 today. Intraday outlook remains neutral for the moment. Nevertheless, the three wave structure of the price actions from 70.6 argues that it’s corrective in nature. In otherwise, it supports the view that a short term bottom is in place at 61.3 and further rally is to be seen. Above 70.6 will confirm and bring rise to test trend line resistance at 87.43. On the downside, however, below 61.3 will indicate that recent down trend has resumed for 100% projection of 147.27 to 90.51 from 110.45 at 53.69.

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Daily Pivots: (S1) 134.27; (P) 136.41; (R1) 138.03

EUR/JPY weakens further to 133.78 today and at this point, more downside is expected as long as 138.65 minor resistance holds. Retest of 132.19 low is in favor. Break will confirm that recent down trend has resumed for next long term fibonacci level at 129.46 (50% retracement of 88.97 to 169.96). On the upside, though, above 138.65 will suggest that consolidation from 132.19 is still in progress for another test of 141.73 before completion. But still, upside should be limited below 147.03 resistance and bring down trend resumption.

In the bigger picture, the sharp fall from 169.96 is still in progress and has taken out long term fibonacci level of 38.2% retracement of 88.97 to 169.96 at 139.02 without hesitation. The development so far suggests that fall from 169.96 is developing into a five wave decline and EUR/JPY is probably in the middle of it only. Medium term outlook will remain bearish as long as 147.03 support turned resistance holds and another fall is still expected even in case of correction, targeting 61.8% retracement of 88.97 to 169.96 from at 119.90.

Daily Pivots: (S1) 100.89; (P) 101.35; (R1) 102.10

USD/JPY’s rise from 99.27 extends further today and reaches as high as 102.41 so far. But after all, price actions from 97.92 is still treated as consolidation in the whole fall from 110.66. As long as 103.49/54 resistance holds, such decline from 110.66 should still be in progress. Below 99.27 will bring retest of 97.91 low and break confirm recent decline has resumed for retesting 95.77 low. However, sustained break of 103.54 will argue that fall from 110.66 has completed and focus will turn to 106.14 resistance for confirmation.

In the bigger picture, medium term rise from 95.77 has completed at 110.66 with bearish divergence condition in daily MACD. Also, the three wave structure of such rise argues that it’s just correction, or part of the consolidation to the down trend from 124.13. Hence, deeper fall is now expected to retest 95.77 low. Break will confirm that whole down trend from 124.13 has resumed and should target 61.8% projection of 124.13 to 95.77 from 110.66 at 93.13 first. On the upside, above 106.14 resistance will indicate that fall from 110.66 has completed. This will suggest that medium term consolidation from 95.77 is probably still in progress. In such case, another test of 110.66 could be seen before resuming the down trend from 124.13.

EUR/USD’s rebound from 132.19 was limited at 141.73 and reversed. Further fall is now mildly in favor to retest 132.19 low. Break will confirm that recent down trend has resumed for next long term fibonacci level at 129.46 (50% retracement of 88.97 to 169.96). On the upside, though, above 138.96 will suggest that consolidation from 132.19 is still in progress for another test of 141.73 before completion. But still, upside should be limited below 147.03 resistance and bring down trend resumption.

In the bigger picture, the sharp fall from 169.96 is still in progress and has taken out long term fibonacci level of 38.2% retracement of 88.97 to 169.96 at 139.02 without hesitation. The development so far suggests that fall from 169.96 is developing into a five wave decline and EUR/JPY is probably in the middle of it only. Medium term outlook will remain bearish as long as 147.03 support turned resistance holds and another fall is still expected even in case of correction, targeting 61.8% retracement of 88.97 to 169.96 from at 119.90.

In the long term picture, the three wave corrective structure of the up trend from 88.97 (00 low) to 169.96 suggests that it’s merely a correction to the multi decade down trend from 285.56. The impulsive nature of the fall from 169.96 indicates that it’s likely resuming the down trend. Hence, 61.8% retracement of 88.97 to 169.96 at 119.90 should at least be reached with odds of extending the down trend further to retest 88.97 low in the long run.