Daily FX & Stock Indices Technical Trend Bias/Key Levels (Wed 14 Nov)

Mix bag for FX, watch EUR/USD resistance at 1.1360. Bearish tone remains intact for stock indices.

FX –  Mix bag, watch EUR/USD resistance at 1.1360

  • EUR/USD – Trend bias: Down. Drifted down lower as expected and hit the minor support/target of 1.2510 as per highlighted in our previous report. It printed a low of 1.1216 on 12 Nov U.S. session before it rebounded by 100+ pips since yesterday, 13 Nov and printed a current intraday high of 1.1322 in today, 14 Nov Asian session. The daily RSI oscillator has not reached an extreme oversold level of 18 and there is no clear bullish divergence signal which indicate that the rebound in place since 12 Nov low of 1.1216 is corrective in nature within a minor downtrend that is in place since 24 Sep 2018 high.  No change, maintain bearish bias in any bounces below the 1.1360 key short-term resistance (upper boundary of the minor descending channel from 24 Sep 2018 high + 23.6% Fibonacci retracement of the on-going decline from 24 Sep 2018 high to 12 Nov 2018 low) for another potential downleg to retest 1.1216 before targeting the next support at 1.1130/1100 (Fibonacci projection/retracement cluster + swing lows of 30 May/20 Jun 2017 + lower boundary of the minor descending channel from 24 Sep 2018 high). On the other hand, a break above 1.1360 negates the bearish tone for an extension of the corrective rebound towards the 1.1500 swing high area of 07 Nov 2018.
  • GBP/USD – Trend bias: Push down within range configuration. Since its recent low of  1.2826 printed on 12 Nov 2018, the pair has started to rebound and did a swift uptick of 200 pips yesterday, 13 Nov after a news broke out that the U.K and EU had agreed on a draft text of a Brexit agreement. Despite yesterday’s rebound the pair is still evolving within a “Descending Triangle” liked range configuration since the 15 Aug 2018 low of 1.2660 with the upper limit/resistance and lower limit/support of the “triangle range” now at 1.3170 and 1.2700 respectively. Yesterday, 13 Nov rebound has challenged the 1.2990 key short-term resistance as per highlighted in our previous report as it printed a high of  1.3047 in the U.S. session before it traded sideways between 1.3047 and 1.2940. Interestingly, the 4-hour Stochastic oscillator has reached its overbought zone coupled with a bearish divergence signal seen in the 1-hour Stochastic oscillator. These observations suggest that the recent rebound has started to lose upside momentum. Tolerate the excess and maintain bearish bias below 1.3047 key short-term resistance (also the 61.8% Fibonacci retracement of the recent decline from 07 Nov 2018 high to 12 Nov 2018 low + minor descending trendline from 07 Nov 2018 high) and added 1.2940 as the downside trigger level where a break below it reinforces a push down to retest the triangle range support at 1.2700. On the other hand, a break above 1.3047 sees a further squeeze up towards the triangle range resistance at 1.3170.
  • USD/JPY USD – Trend bias: Sideways. No change, maintain neutrality stance 114.55 (major range resistance in place since 10 May 2017) and 113.50. A break above 114.55 triggers a bullish breakout from a 18-month range configuration since May 2017 to target the next intermediate resistance at 115.30/50 (medium-term swing highs of 19 Jan/10 Mar 2017). On the flipside, failure to hold above 113.50 revives the push down within range scenario towards the 112.60 support (minor swing low of 02 Nov 2018 + medium-term ascending channel support from 26 Mar 2018 low).                  
  • AUD/USD – Trend bias: Down. Drifted lower as expected and met the first minor support/target of 0.7180 as per highlighted in our previous report. It printed a low of 0.7160 on 13 Nov 2018 before it staged a rebound of 75 pips to record a current intraday high of 0.7237 in today, 14 Nov Asian session. The 4-hour Stochastic oscillator has reached its overbought region. No change, maintain bearish bias in any bounces below 0.7250 key short-term resistance (minor congestion area formed on 09 Nov 2018 + 61.8% Fibonacci retracement of the decline from 08 Nov 2018 high to 13 Nov 2018 low) for another potential downleg to target the next support at 0.7145/7130 (minor ascending trendline in place since 26 Oct 2018 low + pull-back support of the former medium-term descending channel resistance from 26 Jan 2018 high + 61.8% Fibonacci retracement of the recent rebound seen from 26 Oct 2018 low to 08 Nov 2018 high). On the other hand, a break above 0.7250 negates the bearish tone for a squeeze up to retest the 0.7300 swing high of 07/08 Nov 2018.
  • NZD/USD – Trend bias: Sideways. Mix elements, prefer to turn neutral now between 0.6820 (the former medium-term swing low area of 17 Nov 2017 that has rejected previous advances seen on 09 Jul/31 Jul 2018 & 07 Nov 2018) and 0.6680 (the former minor swing high areas of 21/27 Sep 2018 & 02/03 Nov 2018). A clearance above 0.6818 validates a continuation of the corrective rebound towards the next intermediate resistance at 0.7030/7050 (the pull-back resistance of the former primary/major ascending channel support from 24 Aug 2015 low + swing high area of 06/13 Jun 2018). On the flipside, a break below 0.6680 opens up scope for a push down towards the next near-term support of 0.6550 the pull-back support of the former medium-term descending channel resistance from 06 Jun 2018 high).

Stock Indices (CFD) – Bearish tone remains intact

  • US SP 500 – Trend bias: Down. The Index has reversed down and broken below the 2762 medium-term downside trigger level which has validated another fresh impulsive down move structure as expected. Bearish bias in any bounces below key short-term resistance at 2770 (10 Nov 2018 former minor swing low area + minor descending trendline from 07 Nov 2018 high) for a further potential push down to retest the recent 29 Oct 2018 swing low area of 2627/2603. However, a break above 2770 put the bears on hold for a retest on the 2825 key medium-term range resistance as per highlighted in our latest weekly technical outlook.
  • Japan 225 – Trend bias: Down. The recent rebound from its 26 Oct 2018 swing low area of 20800 has managed to stall at the minor descending trendline resistance in place since 01 Oct 2018 high now acting as a resistance at 22300. In addition, the Index has staged a bearish breakdown again below the major ascending channel support from Jun 2016 low now acting as a pull-back resistance at 22080. Flip back to a bearish bias with key short-term resistance at 22080 which also coincides with a minor descending trendline from 08 Nov 2018 high for a further potential push down to retest 20800. However, a break above 22080 sees an extension of the corrective rebound to retest 22300 descending trendline resistance in place since 01 Oct 2018 high.
  • Hong Kong 50 - Trend bias: Down.  Pushed down as expected and hit the minor support/target of 25090 as per highlighted in our previous report. It printed a low of 25013 on 13 Nov 2018 before it staged a 4% rebound to print a current intraday high of 26011 in today, 14 Nov Asian session. Interestingly, the 4-hour Stochastic oscillator has reached an extreme overbought level coupled with a bearish divergence signal seen in the 1-hour Stochastic oscillator. These observations suggest that the recent rebound has started to lose upside momentum. Maintain bearish bias below the 26110 key short-term resistance (gapped resistance of 09 Nov 2018 + former minor swing low areas of 06/07 Nov 2018) for another potential downleg to retest 25013 before targeting the next support at 24500 (swing low areas of 26/30 Oct 2018). However, a break above 26110 negates the bearish tone for a squeeze up towards the 26700 key medium-term resistance as per highlighted in our latest weekly technical outlook.
  • Australia 200 – Trend bias: Down. Tumbled as expected after it broke below the 5875 key medium-term downside trigger as per highlighted on our latest weekly technical outlook. Bearish bias in any bounces below 5827 key short-term resistance (13 Nov former minor low + minor descending trendline in place since 12 Nov 2018 high for a further potential push down towards the 5635 recent swing low area of 26 Oct 2018 in the first step. However, a break above 5827 negates the bearish tone for a steeper rebound to retest 5875.
  • Germany 30 – Trend bias: Down.  Pushed down as expected and broke below the 11400 downside trigger level on 12 Nov and printed a low of 11271 on 13 Nov before it staged a rebound of 2% to retest the 11400/500 zone. Interestingly, the 4-hour Stochastic oscillator has reached an extreme overbought level and the 1-hour Stochastic has flashed a bearish divergence signal. These observations suggest a slowdown in upside momentum of yesterday’s rebound. Maintain bearish bias with 11500 as the key short-term resistance (also the minor descending trendline from 08 Nov 2018 high) for a further potential push down to retest 11271 before targeting the 11050 swing low of 25/26 Oct 2018. However, a break above 11500 put the bears on hold for a bounce to test the 11600/690 key medium-term resistance as per highlighted in our latest weekly technical outlook.

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.