Technical Analysis for Major Currencies

EURO

The Euro versus dollar pair continued to trade to the downside within a minor descending channel with a key support at 1.3935 which is also a neckline for a bearish technical pattern. We expect the pair to decline on the intraday basis to reach 1.3775 at the very least before determining the next short term trend whether to the upside or decline to target 1.3340

The trading range for today is among the key support at 1.3625 and the key resistance at 1.4470

The general trend is to the downside as far as 1.4710 remains intact with targets at 1.2120

Support: 1.3935, 1.3890, 1.3800, 1.3775, 1.3745
Resistance: 1.4025, 1.4060, 1.4120, 1.4175, 1.4235

Recommendation: According to our analysis, sell the pair below 1.3935 with targets at 1.3775 and stop loss with four hour closing above 1.4025

GBP

The Cable is also being pressured to the downside as it faces a support level at 1.6325 where we expect the pair to decline on the intraday basis in an attempt to breach the above mentioned support and target 1.6120 and 1.6020 respectively. The downside trend will remains as far as this level remains intact.

The trading range for today is among the key support at 1.6020 and the key resistance at 1.6685

The general trend is to the upside as far as 1.4840 remains intact with targets at 1.6830

Support: 1.6325, 1.6285, 1.6215, 1.6175, 1.6120
Resistance: 1.6425, 1.6485, 1.6520, 1.6580, 1.6640

Recommendation: According to our analysis, sell the pair below 1.6325 with targets at 1.6120 and stop loss with four hour closing above 1.6425

JPY

The USD/JPY pair was able to build a solid base at the support level (previously breached key resistance for the descending channel) to reach 98.55 forming the neckline for a bullish technical pattern targeting the 100 mark. The short term trend is adjusting to the upside where reaching the technical targets for the pattern may take the pair to 105.00 as far as 96.80 remains intact.

The trading range for today is among the key support at 94.50 and the key resistance at 100.70

The general trend is to the downside as far as 102.60 remains intact with targets at 84.95 and 82.60

Support: 97.90, 97.45, 97.15, 96.80, 95.90
Resistance: 98.55, 98.90, 99.40, 100.00, 100.70

Recommendation: According to our analysis, buy the pair above 98.55 with targets at 100.00 and stop loss with four hour closing below 97.90

CHF

The Dollar versus Swissy pair continued to pressure the key resistance for the downside channel where it breached it successfully to build a solid base at 1.0775 and head towards a new pivot resistance at 1.0840 where we expect the pair is to incline breaking this resistance and initially target 1.0980. Note that we must follow the price action at the latter level where further inclines may alter the short term trend to the upside with targets at 1.1165. For this incline to occur, the pair must breach 1.0840 as far as 1.0770 remains intact.

The trading range for today is among the key support at 1.0585 and the key resistance at 1.1165

The general trend is to the upside as far as 1.0570 remains intact with targets at 1.2245

Support: 1.0770, 1.0745, 1.0665, 1.0640, 1.0570
Resistance: 1.0840, 1.0915, 1.0980, 1.1020, 1.1080

Recommendation: According to our analysis, buy the pair above 1.0840 with taregts at 1.0980 and stop loss with four hour closing below 1.0770

CAD

After building a solid technical base at the 1.1170 support level, the Dollar versus Loonie pair continued to incline in an attempt to reach our suggested resistance level at 1.1310 – 1.1335 which may be a potential reversal zone for a bearish harmonic pattern as seen in the image above. The short term trend is adjusting to the upside after maintaining levels above the breached resistance level for the key downside channel yet we still believe the pair may decline to reach the targets of the harmonic pattern before rebounding back to the upside.

The trading range for today is among the key support at 1.1040 and the key resistance at 1.1480

The general trend is to the downside as far as 1.1870 remains intact with targets at 1.0300

Support: 1.1170, 1.1100, 1.1040, 1.1005, 1.0970
Resistance: 1.1245, 1.1310, 1.1335, 1.1370, 1.1415

Recommendation According to our analysis, buy the pair above 1.1245 with targets at 1.1335 and stop loss with four hour closing below 1.1170

Technical Analysis for Crosses

GBP/JPY

The daily scenario came back into focus, as Sterling versus Japanese yen has formed a hanging man candlestick pattern clarifying that the triple three correction inside our detected channel might have been ended around 161.50-162.25 zones. Now a long black candlestick is needed to support our Elliott count. The bearish harmonic butterfly and RSI 14 support our negative anticipation.

Trading range for today is among key support at 155.85 and key resistance at 167.45.

The general trend is to the downside as far as 167.45 remains intact with target at 116.00.

Support: 160.50, 160.00, 159.35, 158.60, 157.45
Resistance: 161.50, 162.25, 163.00, 163.80, 164.20

Recommendation: According to our analysis, sell the pair at 161.50 with targets at 160.00 and stop loss at 163.50.

EUR/JPY

The classical [head & shoulders top] is in progress, as the European currency versus Japanese yen is developing consecutive bearish candlestick patterns as shown on the above four-hour chart while AROON down has already penetrated 70.00 zone and Envelopes are pressuring the price to the downside. Hence we will keep our negative anticipation on the intraday basis.

Trading range for today is among key support at 134.15 and key resistance now at 140.00.

The general trend is to the downside as far as 141.44 remains intact with targets at 100.00 followed by 88.97 levels.

Support: 136.50, 135.80, 135.25, 134.70, 134.15
Resistance: 137.40, 138.00, 138.25, 139.00, 139.45

Recommendation: According to our analysis, sell the pair at 137.40 with targets at 135.25 and stop loss at 139.20.

EUR/GBP

Protected by 61.8% Fibonacci level of the rally started at 0.6793 and was topped out at 0.9798 as seen on the secondary image of the daily time scale, we still see that the chart needs a fourth wave to complete the Elliott cycle which we discussed before. AROON up has already penetrated value of 30.00, reviving the upside possibility on the short term basis. Hence we will keep our outlook to the upside today as far as 0.8425 remains intact.

Trading range is among the key support 0.8370 and key resistance now at 0.8690.

The general trend is to the upside as far as 0.8020 area remains intact with targets at 1.0000 followed by 1.0400 levels.

Support: 0.8480, 0.8460, 0.8425, 0.8400, 0.8380
Resistance: 0.8525, 0.8560, 0.8600, 0.8640, 0.8700

Recommendation: According to our analysis, buy the pair at 0.8500 with targets at 0.8595 and stop loss at 0.8425.

Fundamental Analysis

Friday was a pretty quiet, rangebound day in most markets, but the price action is very reassuring for medium term downside on GBP/USD, EUR/USD, stocks, and gold. Gold broke the all-important 940 level and should trade lower to next support at 900 (remember ~700ish is our ultimate target though long term). Right now the Diamonds room is working position trade sells on all 3 (GU/EU/Gold).

The patterns over the next few weeks on stocks should prove very important as one of 2 scenarios is likely developing:
a) a primary wave 3 selloff is starting that will take the S&P 500 to 400 or below over the next 6-24 months.
b) another intermediate wave X will zigzag prices to the 800-850 level or a bit lower fairly soon and an intermediate wave Z will take prices to new highs in the late summer or early fall.
The way in which this coming downside develops will make the odds favor one outcome over the other, so I'll let you guys know how this scenario is developing. Right now, I'm short on options better optimized for situation (a) so if (b) develops I'll probably have to take smaller profits on those options and take what I can on the smaller selloff. If you're not in with any puts, you might want to focus more on September contracts and plan to hold them for a few weeks or a month so you can catch the whole (b) scenario move or the first part of the (a) scenario move and then reassess.

As far as news is concerned, there's nothing of note for Monday and the first economic indicators of the week come out Tuesday, so we'll preview those tomorrow.