• Brent runs through the corrective wave target
  • Double bottom and Triple top patterns spotted

The sentiment deteriorated overnight; global equity benchmark indices dropped with US dollar. At close Europe benchmark indices down between 1.40%-1.80%, besides Dow Jones down 1.80% or 220 points and the S&P down by 1.20%.

  • In commodities, Brent crude plummets nearly 5.00%, recorded the biggest fall of the year. The international oil benchmark price fell to 66.00$ at one point but closed at 66.80$ tad above the 100MA. The price has run through the target suggested by its A-B-C corrective wave structure.

  • In currencies, EURUSD formed a double bottom pattern at 1.1100 whereas the need to close above 1.1270 to escape further correction.
  • The cable managed to hold the 78.6% fib reaction and closed at 1.2660. Interestingly pound was immune to the news that May is expected to resign sooner.
    Ray Attrill is Head of FX Strategy at NAB said “UK prime minister Theresa May will today (Friday) announce her timetable to quit, with reports suggesting the party leadership contest will commence on June 10th and with her remaining at the helm until the latter is complete (a process that will take many weeks, possibly several months).”.
    He also said “UK PM May’s departure fully priced into GBP….but not what follows”

Intraday support zone remains between 1.2600-1.2580. As long as this holds, watch out for a corrective rally for 1.2770-1.2800. A move 1.2700 could strengthen this view.

  • The AUDUSD manage to hold the 0.6860 and closed at a two-day high. Gradually the cross is forming a base at 0.6860, and we believe it is a triple bottom pattern. A daily close above 0.6940 needed to escape further correction. The daily RSI has been recovering, and the oscillator is about to turn to bullish.

  • The dollar index failed to hold the gains above April 2019 high at 98.00, traced out a double top pattern. A daily close below 97.60 could confirm a near-term top.

G10 insights:

EURUSD: Double bottom
AUDSUD: Triple bottom
GBPUSD: Focus on 78.6% fib reaction. Intraday suppoRt finds between 1.2600-1.2580. 
USDCAD: Focus on 1.3520 above this, could extend the rally towards 1.3600.
USDCHF: Traced out another triple top pattern at 1.0120. But overnight, the cross managed to hold the 100MA coincides with 20MA (Weekly). 
Overall, the trend remains bearish and watch out for 0.9950.

Chart of the Day: AUDUSD- Triple bottom formation

As long as 0.6860 supports, watch out for 0.6930 intraday. Alternatively, sell below 0.6860 for 0.6830 and 0.6800 levels.

What’s on today?
Looking at the day ahead, it’s not a busy day in Asia. In Europe, we will get UK Retail sales and US durable goods orders later during the day.

It is important to always keep in mind the risks involved in trading with leveraged instruments.

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