Daily FX & Stock Indices Technical Trend Bias/Key Levels (Tues 18 Dec)

Risk aversion sensitive AUD/USD & USD/JPY may see further downside while bears remain on control for stock indices.

FX – Further potential downside for risk aversion sensitive AUD/USD & USD/JPY

  • EUR/USD – Trend bias: Sideways. After the breakdown of 1.1300 seen on last Fri, 14 Dec European session, the pair had managed to recover all its losses and traded back up at the start of this week. In today, 18 Dec Asian session, it printed a current intraday high of 1.1360. The recent movement of the pair suggests that it remains stuck in a minor choppy range configuration since 12 Nov 2018 low of 1.1216. Prefer to maintain neutrality stance within a wider range of 1.1440 (also close to the upper boundary of the descending channel from 17 Apr 2018 high) and 1.1216.  An hourly close above 1.1440 sees a corrective rebound towards 1.1590/1620 in the first step (swing  high areas of 11/16 Oct 2018).
  • GBP/USD – Trend bias: Sideways. Recent movement has started to get choppy below 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) with mix elements. The pair looks to have started to evolve into a minor triangle-liked range configuration since 11 Dec 2018 low. Prefer to turn neutral now between 1.2700 and 1.2570 (the lower limit of the minor triangle range). Only a break with an hourly close below 1.2570 renews the bearish pressure for a slide to retest the 11 Dec low of 1.2480 before targeting the next near-term supports at 1.2415/2360. On the flipside, a reintegration back above 1.2700 sees 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: Push down within range. The pair has broken down below the lower limit of the short-term neutrality range at 113.00 as per highlighted in our previous report. Flip back to a bearish bias in any bounces below key short-term resistance at 113.00 (former swing low area of 11 Dec 2018 + 38.2% Fibonacci retracement of the on-going decline from 13 Dec high to today, 18 Dec Asian session current intraday low of 112.52) for a further potential push down to retest 112.20 (the minor swing low areas of 06/10 Dec 2018) before targeting the key medium-term range support of 111.40/10 (26 Oct 2018 low + pull-back support of the former major descending trendline resistance from 05 Jun 2015).
  • AUD/USD – Trend bias: Down. No change, maintain bearish bias 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 slide from 13 Dec to 14 Dec 2018 low) 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 0.7310 next (the pull-back resistance of the former minor “Ascending Wedge” range support from 26 Oct 2018 low.
  • NZD/USD   Trend bias: Down. No change, maintain bearish bias below 0.6850/60 key short-term resistance (the former minor range support from 08/12 Dec 2018 + 61.8% Fibonacci retracement of the recent slide from 11 Dec high to 14 Dec 2018 low) for another potential downleg to retest 14 Dec 2018 swing low of 0.6780 before targeting the next near-term support at 0.6710/6700 (the former congestion area of 02 Jul/21 Sep 2018).  However, a break above 0.6860 negates the bearish tone for a squeeze back up to retest the minor range resistance of 0.6900/6910 in place since 10/11 Dec 2018).                 

Stock Indices (CFD) – Bears remain in control

  • US SP 500 – Trend bias: Down. The Index has pushed down as expected and hit the 2530 key long-term downside trigger level in the last hour of yesterday, 17 Dec U.S. session before it bounced up and managed a daily close above the crucial level of 2530 at 2545 (Click here for this link for a detailed explanation on the key elements as per highlighted in our latest weekly outlook).  Despite yesterday’s last hour rebound into the close, there is no clear signs the indicate a bearish exhaustion in the on-going medium-term (1 to 3 weeks) down move of the S&P 500. Interestingly, the weakest link among the U.S benchmark stock indices will be the Russell 2000 (small caps) as the index has broken below its parallel key long-term downside trigger level at 1454 (also coincides with Feb 2018 swing low) and had a weekly close below it last week. In the short-term, yesterday’s decline has appeared “overstretch” where it faces the risk of a minor bounce at this juncture first before another fresh downleg materialises. Maintain bearish bias in any bounces with key short-term resistance at 2610 (the minor descending channel resistance in place since 03 Dec 2018 high + former range support from 29 Oct 2018 low + 50% Fibonacci retracement of the on-going decline from 03 Dec high to yesterday, 17 Dec low of 2530) for another potential impulsive down move to retest 2530 and breaking below it exposes the next near-term support at 2490/75 (Fibonacci projection cluster + lower boundary of the minor descending channel from 03 Dec 2018 high). However, a clearance above 2610 put bears on hold and a choppy corrective rebound back to retest the 2650 former minor congestion zone of 13/14 Dec + 76.4% Fibonacci retracement of the on-going decline from 03 Dec high to yesterday, 17 Dec low of 2530).    
  • Japan 225 – Trend bias: Down. Today, 18 Dec Asian session intraday high of 21340 has caused a bearish reaction right at a minor descending trendline from 13 Dec 2018 high + former minor swing low area of 17 Dec 2018 + 61.8% Fibonacci retracement of the recent push down from 17 Dec high to yesterday, 17 Dec U.S session low of 20988). Maintain bearish bias in any bounces below 21340 key short-term resistance for a further potential push down to test 20800 in the first step (range support in place since 26 Oct 2018). However, a clearance above 21340 put the bears on hold for an extension of the corrective rebound to retest the former bearish flag range support from 26 Oct 2018 low now acting as a resistance at 21755.
  • Hong Kong 50 - Trend bias: Down. Maintain bearish bias in any bounces below 26220/350 key short-term resistance (gapped down formed on 13/14 Dec 2018) for a further potential push down to retest 11 Dec 2018 minor swing low of 25389 follow by 25000 next (congestion area formed from 29 Oct/13 Nov 2018 + lower boundary of the minor descending channel from 03 Dec 2018 high). However, a clearance above 26350 put the bears on hold again for a further corrective rebound towards the 26740 key medium-term pivotal resistance.
  • Australia 200 – Trend bias: Down. Maintain bearish bias in any bounces below the 5675 key short-term resistance (the minor range top in place since 12 Dec 2018 high) for a potential push back down to retest the 10 Dec 2018 low of 5522 in the first step. However, a break 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. Maintain bearish bias in any bounces with a tightened key short-term resistance at 10900 (minor swing high areas of 14/17 Dec + minor descending trendline from 13 Dec 2018 high) for a further potential push down to retest the 10630/584 swing low area of 10 Dec 2018 before targeting the next support at 10440 in the first step. However, a break above 10900 put the bears on hold for another round of choppy corrective bounce back to test the next intermediate resistance of 10940/11050 (the former swing low areas of 25 Oct/20 Nov 2018).

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