Daily FX & Stock Indices Technical Trend Bias/Key Levels (Fri 14 Dec)

Mix bag for FX with further weakness expected in AUD/USD & NZD/USD. Minor corrective rebound/dead cat bounce for stock indicesfrom Mon, 10 Dec lows likely to have ended.

FX – Mix bag with USD strength seen in AUD & NZD while GBP/USD remains below resistance

  • EUR/USD – Trend bias: Sideways. No change, it has continued to evolve within the short-term range limits of 1.1440 and 1.1300 in the past 2 days even after yesterday’s 13 Dec ECB’s monetary policy meeting where ECB made no changes to its forward guidance and confirmed the winding down of its asset purchase programme at the end of Dec 2018. It added a slight dovish touch to its monetary policy statement where it mentioned that “the balance of risks (to the growth outlook) is moving to the downside owing to the persistence of uncertainties related to geopolitical factors, the threat of protectionism, vulnerabilities in emerging markets and financial market volatility." No change from a technical analysis standpoint in the short-term, remain neutral between 1.1440 and 1.1300. Only a break below 1.1300 sees a push down to retest the 12 Nov 2018 low of 1.1216 (2018 current low). On the flipside, an hourly close above 1.1440 sees a further potential push up to test the 1.1520/1590 (the upper boundary of a medium-term descending channel from 17 Apr 2018 high + Fibonacci retracement/projection cluster).
  • GBP/USD – Trend bias: Down. The pair has indeed bounce back up to retest the 1.2700 key short-term resistance (the former range support + upper boundary of a minor descending channel in place since 07 Nov 2018 high) as it printed a high of 1.2687 on 13 Dec 2018. No change, maintain bearish bias below the 1.2700 key short-term resistance and added 1.2610 as a downside trigger level (the recent minor swing low areas formed on 13/14 Dec that put the a floor on the bears after PM May survived the no confidence vote to keep her in office for now. An hourly close below 1.2610 reinforces another potential impulsive downleg to retest the 11 Dec low of 1.2480 before targeting the next near-term supports at 1.2415/2360. However, a reintegration back above 1.2700 invalidates the bearish breakdown scenario for a squeeze back up to retest the next intermediate resistance at 1.2840 in the first step (minor swing high areas that capped previous rallies since 29 Nov 2018.
  • USD/JPY – Trend bias: Sideways. Evolved into a choppy formation as it continued to whipsaw around 113.20/40 minor resistance zone as it printed a high of 113.70 on 13 Dec U.S. session before it retraced back down to retest 113.40. Convention has been reduced for a drop back down towards the 111.60/40 medium-term range support (the swing low areas of 15/26 Oct 2018 + pull-back support of a major former descending resistance from Jun 2015 high). Thus, prefer to turn neutral now between 113.70 and 113.00 (the minor swing low of 11 Dec 2018. A clearance above 113.70 shall see a further squeeze up to retest the major range resistance of 114.30/114.55 in place since 10 May 2017.
  • AUD/USD – Trend bias: Down. Technical elements have turned bearish at least in the short-term where the pair has broken down below a minor “bearish flag” range support at 0.7215 and ended yesterday, 13 Dec U.S session with a bearish daily “Shooting Star” candlestick pattern. Flip back to a bearish bias in any bounces below key short-term resistance at 0.7220 (the pull-back resistance of the former minor bearish flag range support + 61.8% Fibonacci retracement of the on-going slide from 13 Dec high to today, 14 Dec Asian session current intraday low of 0.7176) for another potential push down to retest the next near-term support at 0.7110/7100 (the pull-back support of the former medium-term descending channel resistance from 26 Jan 2018 high + 76.4% Fibonacci retracement of the previous rebound from 26 Oct 2018 low to 03 Dec 2018 high). However, a break above 0.7220 negates the bearish tone for a push back up to retest 13 Dec high of 0.7246 and even 0.7280 next (50% Fibonacci retracement of the recent decline from 03 Dec high to 10 Dec 2018 low).
  • NZD/USD   Trend bias: Down. Continued to drop lower as expected and broke below 0.6840 short-term downside trigger level as highlighted in our previous report. No change, maintain bearish bias in any bounces below 0.6850 tightened key short-term resistance (the former minor range support from 08/12 Dec 2018 + 50% Fibonacci retracement of the on-going slide from 11 Dec 2018 high to today, 14 Dec Asian session current intraday low of 0.6791) for a further potential slide to target the next near-term support at 0.6710 (the former congestion area of 02 Jul/21 Sep 2018). However, a break above 0.6850 negates the bearish tone for a squeeze back up to retest the minor range resistance of 0.6900/6910 from 10/11 Dec2018).          

Stock Indices (CFD) – The end of the minor corrective rebound/dead cat bounce

  • US SP 500 – Trend bias: Down. The Index has indeed to stage the expected minor rebound as highlighted in our weekly technical outlook and short-term reports (click here for a recap). It rallied to print a high of 2685 on Wed, 12 Dec U.S. session where it has met the 2670/2695 minor corrective rebound target/resistance. Yesterday, 13 Dec, we published a short-term “Featured Trade” on the higher beta Nasdaq 100 that warned the impending bearish reversal where the Nasdaq 100 had indeed staged the expected bearish breakdown below 6777 (click here for a recap). Yesterday’s movement of the major benchmark U.S stock indices have shown technical deterioration that advocates for another fresh impulsive downleg especially on the smaller caps stocks where the Russell 2000 is now just 0.6% away (based on yesterday, 13 Dec close) from its 12 Dec 2018 low of 1423 which is also its key 52-week low.  Flip back to a bearish bias for the US SP 500 with 2655 as the key short-term resistance (the former minor swing low area of 13 Dec 2018 + minor ascending trendline from 13 Dec 2018 high) for a further potential downleg to retest the 2603 recent range support in place since 30 Oct 2018 low. However, a clearance above 2655 invalidates the bearish scenario for the continuation of the corrective rebound to test the next intermediate resistance at 2695 (minor range resistance since 07 Dec 2018 + 50% Fibonacci retracement of the previous decline from 03 Dec high to 10 Dec 2018 low).
  • Japan 225 – Trend bias: Down. Met the minor corrective rebound target/resistance of 21650/720 as per highlighted in our earlier report. Yesterday, 13 Dec it printed a high of  21918 which is within the 50%/61.8% Fibonacci retracement of the previous decline form 03 Dec high to 10 Dec 2018 low + minor descending trendline from 03 Dec 2018 high) before it staged a bearish reversal of 2.5% to print a current intraday low of 21350 in today, 14 Dec Asian session. Flip back to a bearish bias in any bounces below key short-term resistance at 21640 (former minor swing low area of 12 Dec 2018 + 50% Fibonacci retracement of the on-going slide from 13 Dec 2018 high) for a further potential downleg to retest the 20800 swing low of 26 Oct 2018. However, a clearance above 21640 invalidates the bearish scenario for a push back up to retest yesterday high of 21918.
  • Hong Kong 50 - Trend bias: Down. Met the minor corrective rebound target/resistance of 26030/26300 as per highlighted in our earlier report. Yesterday, 13 Dec it printed a high of 26611 before it staged a bearish reversal of 2%  to print a current intraday low of 26048 in today, 14 Dec Asian session. Yesterday, 13 Dec price action has ended the U.S. session with a “bearish Harami” candlestick pattern which indicates weakness in bullish sentiment of the on-going rebound from 10 Dec 2018 low and interestingly, the bearish Harami candlestick has been formed right at the pull-back resistance of the former “bearish flag” range support that was broken down on 06 Dec 2018. Flip back to a bearish bias in any bounces below the key short-term resistance at 26370 (the former swing low of 13 Dec 2018 + gapped down formed on 14 Dec 2018) for a further potential downleg to retest 25800 (former minor swing high of 11 Dec 2018) follow by the 10 Dec 2018 low of 25390 in the first step. However, a clearance above 26370 invalidates the bearish tone for a continuation of the corrective rebound towards the 26740 key medium-term pivotal resistance.
  •  Australia 200 – Trend bias: Down. The minor corrective rebound from 10 Dec 2018 low has printed a high of 5687 on Wed 12 Dec, U.S. session which is just a whisker below the predefined 5708 key medium-term pivotal resistance set for this week in our weekly technical outlook (click here for a recap). Thereafter, it staged a bearish reversal of 1.7% to print a current intraday low of 5584 in today, 14 Dec Asian session. Turn bearish in any bounces below key short-term resistance at 5640 (the former minor swing low of 13 Dec 2018 + 50% Fibonacci retracement of the on-going slide from 12 Dec 2018 high) for a further potential downleg to retest 10 Dec 2018 low of 5522 in the first step. However, a clearance above 5640 invalidates the bearish scenario for a push back up to retest 5687 and even the 5708 key medium-term pivotal resistance.
  • Germany 30 – Trend bias: Down. Met the minor corrective rebound target/resistance of 10950/11000 as per highlighted in our earlier report. Yesterday, 13 Dec it printed a high of 10987 before it stage a breakdown below minor bearish flag range support in place since 10 Dec 2018 low. Flip back to a bearish bias in any bounces below 10980 key short-term resistance (the retest on the former minor bearish flag range support that has seen a bearish reaction in yesterday, 13 Dec U.S. session) for a further potential downleg to retest 10750 before the 10630/584 swing low area of 10 Dec 2018. However, a clearance above 10980 invalidates the bearish scenario for a continuation of the corrective rebound towards 11050 resistance (the former swing low areas of 25 Oct/20 Nov 2018).                     


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